[PODCAST] Refining Donor Engagement Strategies
Our own Steven Shattuck recently joined our good friend Jeff Jowdy on his Beacon Podcast to discuss creative ways nonprofits can engage with donors.
You can listen to the full conversation here.
Be sure to check out previous episodes of The Beacon Podcast here >>
Announcer: Welcome to The Beacon, your connection to nonprofit success. Now here’s your Lighthouse Counsel host.
Jeff: Hi, welcome to The Beacon Podcast, your connection to nonprofit success. I’m Jeff Jowdy, your host for today’s discussion on your nonprofit and managing its engagement with those outside the organization. Our guest today is one of my favorite experts in the nonprofit arena and an all-around great guy, Steven Shattuck, the Chief Engagement Officer at Bloomerang. Steven, welcome to The Beacon Podcast.
Steven: Thanks for having me.
Jeff: This is always a treat and for our listeners who are not familiar with Steven, you will soon be and need to be. But from getting his start in the nonprofit sector as a fundraising video producer and digital content creator for organizations like Butler University, the Girl Scouts, American Heart Association, to speaking at conferences, you will know that Steven is definitely a creative person. He curates Bloomerang’s education content and hosts the weekly webinar series focused on thought leaders in the nonprofit sector and he’s contributed content to a variety of organizations.
He’s also an AFP Center for Fundraising Innovation committee member, a Fundraising Effectiveness Project work group member and a Hartsook Centre for Sustainable Philanthropy at Plymouth University study fundraising steering group member and co-author of “Fundraising Principles and Practice,” the second edition.
Now this is, I love this. You are the recipient or were of the David Letterman Scholarship. I love it. So Steven graduated with honors from Ball State University with a degree in telecommunications and creative writing. And again, Steven, welcome and thanks for being here.
Steven: Yeah, thanks for having me. This is fun.
Jeff: You are certainly a go-to expert on engagement. And with engagement, who should a nonprofit be primarily focused on? Would it be the previous donors, potential new donors? Who should they be reaching out to?
Steven: Well, I like the question because I think the question itself is an important one to ask and if you’re a fundraiser or if you’re a donor database manager, if you’re dealing with donor data anyway, if you’re asking that question, you are already, you know, light years ahead of a lot of your peers. Unfortunately, a lot of nonprofits don’t communicate individually to different types of donors. So getting over that hump and understanding that that is a good thing to do, I think it’s a first step. So it’s a great question and I think that once you’ve decided, hey, we want to segment our communications, and we want to do different things for different types of donors, then you’ve got to decide, okay, what are you going to do for it?
And there’s a lot of ways to kind of approach that. And I think that you could talk to, you know, a true expert. Not necessarily me, I don’t really consider to, I don’t really like to call myself that word, but I appreciate the kind sentiments. Now you could ask someone that question, and they could say first-time donors are the best, and that wouldn’t be wrong. You could say, you know, high value donors are the best to concentrate. I don’t think that would be wrong either.
I think it all kind of boils down to what’s important to your organization. How are you doing in different arenas? Really though you can’t go wrong with first-time donors. But we were talking before we started to hit the record button about the importance of first-time donors and you know you mentioned my work with FEP, the Fundraising Effectiveness Project. My experience with that data and with that report that comes out every year, always kind of geared towards first-time donors because as a sector we only retain about 32% of first-time donors.
We only get a second gift from a 32.5% of first-time donors. And that to me is really low, right? Because if your cost per acquisition was more than the gift amount that that first-time donor gave, you may have negative ROI right off the bat from that first gift. So you need a second gift from that donor just to break even, let alone, you know, achieve sustainability or high lifetime value or any of those good things. So I think a good place if you’re thinking about segmenting communications and, you know, segmenting your database, I like first-time donors. Getting that second gift is really, really critical because the 60% 68% 67% of those first-time donors never give again. Then you know, you don’t have to kind of that baseline for sustainability.
So I like first-time donors. You can make a very strong case for concentrating on monthly donors. I think that is a really good segment to do something special for because a monthly donor is a good bequest prospect. They’re a good major gift prospect. So they trust you, they love you, they gave you their credit card number. They said yeah, you know, take out 20 bucks a month. Very high retention rates there, very high lifetime value. So you want to keep those people.
And then high value donors, you know, I think if you had to choose between stewarding a donor who gives you $1,000 a year versus one who gives you $50 a year, I think some common sense comes into play there. I don’t like ranking people by their gift amount necessarily, but all things being equal, yeah, you might want to make sure that that high value donor is retained and is upgrading and is doing other things with you. But no matter what you do, as long as you’re doing some segmentation, you should feel good about that because most nonprofits don’t do that.
They send out the same email newsletter, the same appeal, the same thank you letter to all donors regardless of recency, frequency, channel, gift amounts, you know, all those different signals that make up individual donors. So do segmentation. That’s the number one thing. Personally, I would concentrate on those first-time donors just because you want to increase the retention rates there.
Jeff: Excellent. So segmentations is the key. What have you found are the most effective methods for engaging with donors and prospective donors?
Steven: Yeah, I think that’s where you kind of get into the meat and potatoes of the segmentation. A new donor who has given once, they probably need to hear different things from you than someone who has given, you know, 10 years in a row like clockwork because those are two very different donors. Even if the gift amount is the same, I think that’s one reason why it’s really important to move past gift amount in terms of messaging and segmentation because the frequency and the recency is really what should drive the messaging and the content.
So for example, I think one thing you might want to do if you do segment that way is first-time donors, you want to get to know them, right? A lot of times we kind of jump right in with a new donor, act like where their best friends, act like there is this really strong relationship that when we assume they already know everything there is to know about us as an organization. And conversely, we make a lot of assumptions about that.
So what I tell people who kind of buy into all of the things that saying is if you segment by first-time donors, get to know them. That first gift is not the end is the end goal. That’s the starting point.
So asking those people, why do they give? You know, what’s your connection to our cause? Why did you do give? Who are you? Because when we get the answers to those questions, if we get them, you’re not going to get them all the time. But when you do get those answers, you can tailor the messaging and the content based on what they tell you.
So rather than trying to guess or maybe experiment, let’s find out, you know, “Oh, well, I gave to you because I had a grandmother who died of Alzheimer’s,” versus someone who gave because they saw a peer to peer campaign, you know, their best friend who was doing an Alzheimer’s walk. Like those are very different types of first-time donors. Even if their frequency and the gift amount is the same, you have maybe a channel difference or a reason for giving difference and you want to communicate to those two donors very differently. Even though maybe on paper they look like the same kind of donor.
So I guess my short answer, I kind of gave a long answer there. My shorter answer is get to know them. Ask them questions, right? Find out who they are, why they gave. Maybe what they expect out of you. You can ask them what is it that you would like us to send you? And there’s a lot of research actually there’s a mountain of research that shows that donors like to be asked those questions. They see it as an engagement point. They like it when nonprofits show interest in them. Even if they do not respond to you, just the act of asking those questions is going to be a good thing. So get to know those new donors.
For those more long-term donors, making sure that you’re telling them stories, you’re telling them the stories of what their gift is doing out in the world. Again, research shows that you cannot tell too many impact stories, case studies, success stories, whatever you want to tell them, but making sure you’re always putting a spotlight on the donor. Hey, this year you’ve fed this many families. This year you helped put this kid through college and now he’s the first person in his family to have a degree. Telling those stories, making sure that the donor understands what it is their donations are doing out in the world.
I think if you do those two things and nothing else, there’s a lot of other things you could do, they’re very worthwhile. But if you were to stop there, you are going to be in really good shape compared to how other nonprofits operate.
Jeff: Excellent. So you mentioned asking and sharing stories and repeating those and I would do one of them for our listeners. If you’re looking at software you were sharing earlier, it’s pretty exciting that Bloomerang, you can ask questions in the wide variety of methods that you now have a survey feature built in.
Steven: Yeah, you can send a survey right to donors in your Bloomerang database. So you can segment by new donors versus existing donors, you know, longer term donors. And then the other thing we haven’t talked about is lapsed donors. You know, you don’t have to write those people off and consider them gone forever. You don’t have to remove them into your database. You can do something with those people that have stopped giving. Those are great people to ask questions of, hey, did we do something wrong? What would it take for you to give again?
And I think you have to tread lightly there for sure but I would consider lapsed donors to be a segment of donors or constituents at least that you should be communicating to in a different way from other types of donors. Maybe they simply lost touch. Maybe they moved, maybe they passed away, and the only way you’re going find out those things is if you to segment your communications, maybe invest in data services to find out if they have moved or passed away or something like that, but do something differently with them.
Don’t just continue sending them direct mail year after year without that giving because it’s either going undelivered, it’s not hitting the mark. You may have offended them in some way. Don’t be afraid to ask and find out what those things are potentially
Jeff: I know that you’re extremely creative and also know that you’re grounded in data from your involvement with Bloomerang and the Fundraising Effectiveness Project and more. So how about are there things that you observe that a lot of nonprofits are doing that they think are effective, but as you look at the data, they really aren’t effective?
Steven: Well, you know, I always go back to events is kind of one thing that sticks out in my mind and I will preface that by saying there are many, many organizations that do events very well, that have high ROI, that bring in a lot of money and everyone’s happy and it doesn’t maybe cannibalize other methods of giving or burnout employees.
That’s one thing I can attest to you. I have a wife that has been working for nonprofits for a whole career, almost 12 years now. Burnout from events is a real thing. I can definitely attest to that. You mentioned in the intro I used to make fundraising videos. A lot of those were for events and I can tell you that that is usually a very stressful process.
It goes back to the ROI thing. If you can spend 100 hours on an event that you barely break even on, you know, what would happen if you spent 100 hours thanking donors, calling them just to say, “Hey, you know, you’re gift did these awesome things throughout the year. We are so grateful to you. We can’t wait to tell you all the great things that are going to happen next year to your gifts. We just appreciate you so much.” That’s powerful. If you could maybe steer some of those hours towards stewardship and if you are segmenting your stewardship, it may even be the most impactful.
The other thing is online giving. I’m a millennial and I work at a tech company, a fundraising tech company. To hear someone like me maybe be a little bit, you know, bearish on online giving. I always kind of like to remind people, you know, if it’s less than 10% of overall giving, don’t beat yourself up too much over things like Giving Tuesday and you know how your online donation form looks. I think that will grow. I don’t think we should ignore those things.
I think that more and more people will give online as the years go by, but don’t sacrifice things like direct mail, which is still very, very impactful. Print newsletters are great. They still do really, really well. I think a lot of people have kind of abandoned those for maybe email newsletters, which I’ve seen not be as effective.
So don’t be in too big of a hurry to kind of rush into the future into those digital channels at the expense of things that have always worked and I think will always work. Well done direct mail, well done direct response, phone calls, pick up the phone, call a donor and tell them that you appreciate them. Voicemails are just as good. Even though if we’re getting into the 21st century here, don’t forget about some of those analog things that are still really impactful.
Jeff: Excellent. In terms of data, Steven, what would you recommend a nonprofit focus on? What does that essential data that nonprofits need to have on donors that can really help enhance their engagement strategy?
Steven: I think why someone gave is a really, really powerful one because it will help drive everything that you send to them going forward. So ask, don’t be afraid to ask, especially on the new donor side, you know, how did you find out about us? You know, what drove you to give today? Do you have some connection to this cause? If it’s an organization that is fighting a specific disease, I think that’s definitely an appropriate question to ask. A lot of data I saw a study by the late great Jerry Panas and to the bequest prospects and one of his top signals for a good bequest prospect was some sort of personal connection to the mission.
So if you can uncover those things, and the good news is that donors are like to be asked, right? There’s a lot of research. The Donor Voice did an interesting research study into donor loyalty and they found that opportunities for feedback from the donors, so listening feedback is something that donors really like and it’s something that keeps them around when you can do those things. And everyone benefits because the people who do respond, you can use that information to guide your efforts.
So why someone gave, we recommend people do that at Bloomerang. Make sure you have that filled out as a field on someone’s donor profile because you can report on it. These are the people who had a loved one who had this illness. These are people that, you know, whatever all those things are, and you can tailor your communication that way.
From a metric standpoint, I think a data point that’s very important, and it probably won’t surprise you to hear me say this, but you know, your donor retention rate, how many donors are you retaining from one year to the next and drilling down into, you know, what’s your first-time donor retention rate versus maybe how many monthly donors you retain or maybe how many event donors or online donors. The more you can dig into that data, the better.
And then another one that I like is the lifetime value of a donor. Sometimes when you look at the most recent gifts, and that’s what we judge that donor on. That person gave $100 donor last year, so we’re going to put them into, you know, the $100 donor bucket. But hey, they’d been giving $100 for 15 years and we don’t expect them to stop doing that. But you know, they might, we don’t expect them to.
So the lifetime value, we know the entire value of how much that donor has given and how much we can expect them to give in the future, that’s a much greater number and you may want to communicate to that person differently versus someone who gave $1,000 once five years ago and hasn’t given again. So looking at the kind of the holistic picture of the donor life cycle, the lifetime value of that donor, I think it’s a really good thing to look at. If you’re looking at lifetime value and your retention rates, you’re going to be in good shape for sure.
Jeff: Awesome. Thank you, Steven, for your great insight on donor engagement and we really look forward to having you back again, but thank you so much.
Steven: Yeah, anytime. We’ve got to have you on our webinar series too. We’ve got to have you back too.
Jeff: I would enjoy that. And for our listeners, Bloomerang is one of the companies that we are proud to recommend. So if you have needs in technology and donor relationship management software, you have to have a conversation with Steven and our friends at Bloomerang. You can check them out at bloomerang.com and there you can also see the archives of his fantastic weekly webinars series and follow Steven on Twitter @BloomerangTech, @BloomerangTech. And again, to our listeners, thank you for joining us for this episode of The Beacon Podcast, your connection to nonprofit success.
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