Turn First-Time Donors Into Repeat Donors - Nonprofit 911 Webinar

On September 24th, Network for Good invited myself and Tom Ahern to join them for their Nonprofit 911 webinar series. We discussed how to keep the love alive after a first donation using effective donor communication and retention strategies. In case you missed it, you can watch the replay here:

Nonprofit 911 is a free training series of webinars on nonprofit marketing and online fundraising, supported by Network for Good and our guest speakers.

Full Transcript:

Moderator: Nonprofit 911: Turn First-Time Donors into Repeat Donors with
Tom Ahern and Jay Love. I’m Bradley, coordinator for the Network for Good
Non-Profits Outreach Team, and moderator for today’s call. Joining the call
is my colleague, Melissa Mindy, and we want to talk about some light
housekeeping before we get started. I’ll mute you, so I invite you to
submit questions via the Q&A panel on the right side of your screen at any
time, and feel free to send questions to all panelists so that we don’t
miss any.

Everybody will receive a PDF copy of the slides and recording in your inbox
within 24 hours. You can access this presentation and many others on
Nonprofit911.org. Network for Good is a non-profit social enterprise that
empowers non-profits and corporate partners alike to unleash generosity and
advance good causes. NFG helps non-profits fund their missions through
simple, affordable and effective online fundraising services. In addition,
we offer training through our online learning center, our interactive
online community, and this new webinar series.

Much of our expertise comes from processing nearly a billion dollars in
donations from more than 100,000 non-profits since our 2001 founding by
Internet pioneers, AOL, Cisco and Yahoo!. This is part of our free 911
training series designed to help non-profit professionals excel in their
online outreach. We host these webinars several times a month to feature
some of the most brilliant minds in our sector. They, along with experts
from various fields, present to help you succeed in winning hearts, minds
and donations. The latest schedule is available at Nonprofit911.org.

And now to introduce today’s speakers, Tom Ahern and Jay Love. Tom Ahern of
Ahern Donor Communications is considered one of the world’s top authorities
in the field. He specializes in applying the discoveries of psychology and
neuroscience to the day-to-day business of acquiring and retaining donors.
He has four well-received books on the topic with two more in the pipeline.
His recent clients for cases, direct-mail newsletters and training include
Catholic Relief Services, Save the Children, Princeton University and many
small and local non-profits.

Jay Love is CEO and co-founder of Bloomerang and currently services as the
senior vice-president of Evectra. Aside from these positions, Jay held
titles at Social Solutions, Black [inaudible 0:02:32], E-Tapestry and
Master Software Corporations. He currently serves on the boards of numerous
non-profits and one private tech company. Because of his valued experience,
Jay has given more than 2,000 speeches with the charity sector, winning his
expertise around the world. Tom, Jay, I’m so excited to have you both join
us today and speak to our audience. I’m going to pass control to you and
the floor is now yours. Thank you.

Jay: Thanks so much, Kara. And I’m going to actually turn things over to
Tom, the first several slides of the presentation, the first 25 minutes or
so. Tom, take it away.

Tom: Okay, and thank you very much. Can you hear me okay? Good. So the
first question you see on your screen is an answer to the title of the
presentation, Turning First-Time Donors into Repeat Donors. So why would we
bother doing that? Jay, give me the slide please. Here [inaudible 0:03:42]
and it is a bottom line. It is a financial bottom line. 70%, and sometimes
the number’s even more grave because I’ve seen as high 80% of first-time
donors do not make a second gift. So you spend all this money bringing them
into your organization, getting that first date gift, and then they
disappear within 12 months and you don’t see them again. [inaudible
0:04:10] philanthropy and somebody else’s organization or mission.

So this is a number. The question is, is it a really bad number or is it an
okay number? And the answer is it’s a horrible number. These kinds of
results in the for-profit, commercial world, like for instance I use Nike
here, if you had a product or service and 70% of your first-time buyers
never made another purchase from you, typically the company’s out of
business and you’re losing your job.

So these numbers cannot be sustained. This is a chokepoint on growth, and
so non-profits can’t do more of their mission. It’s a sign that something
is not working properly in the relationship you have with your donors. And
today, the only thing I look at are the communication issues of the various
clients that come to me. That’s what I’m focusing on is communication. So
let’s look at the next slide, Jay.

Here, lifetime value, LTV. Get familiar with these very Roman-looking
letters because lifetime value is the single most important metric that we
have in the non-profit industry. And it’s a metric, incidentally, that
comes from the for-profit world. And what it describes is the first-time
gifts, every gift made by a new donor to the [inaudible 0:06:04] last one
which can be way down the road and could be in fact a charitable bequest.

The clients a couple months ago, we got a piece of mail back and it said on
the outside from the post office, it said deceased. So we ran to the
database to see who this was, and discovered it was a woman who had made
her last gift at 101 and had been acquired actually when she was probably
in her 50s. So you’re looking at a lifetime of giving that’s almost 50
years long. And consider how much that adds up to; it’s a lot of money. And
yet most of the people you’re bringing in who might go to 101, you’re
losing in the first year. So this is a financial tragedy because your non-
profit needs this cash in order to do good.

What’s next? The good news is, and actually this is only good news here
today because these things are very easy to make improvements in. If you do
a relatively small improvement in your retention, your donor retention, and
that of course is what the Bloomerang product is supposed to help you with
is to prompt you to do the right things in the communication side. The 10%
improvement you might get will improve revenue 50% immediately that year.
Of course, if you’re holding on to more of your donors, you’re getting much
more life-time value, LTV, out of those people. It’s just the beginning of
a ramp in your profitability.

Here [inaudible 0:08:02], show me the love. [inaudible 0:08:06]. For some
reason, to get my attention, for somebody who’s gotten my attention, for
some reason you’ve [inaudible 0:08:19] my interest and therefore I have
trusted you against all my natural instincts, incidentally, with the first
gift. Now what? Well, look, look at a very good example. Next slide, Jay. I
like stealing from the [inaudible 0:08:44], the people that I know, because
I know their numbers and I know them personally. I know they’re succeeding.

Now this is Food for the Poor. They’re located, their headquarters, down in
Florida. They are a wonderful organization. They work in Central and South
America. What it says there, and the name of the organization, they’re
feeding people that otherwise are not getting enough food or missing meals,
basically on starvation. It’s a faith-based organization and that’s always
an advantage because there we know more or less values that [inaudible
0:09:28] through their gifts.

Look at the cover. They’re a donor news letter, and Angel Aloma, the
executive director down there, has revamped all their communications and
made them very what is called donor-centered. You’re going to see the word
You, which is the big, operative word, in donor-centered communications,
the you being donor. So why you matter? It’s the entire cover of their
donor newsletter. Go to the next slide.

Here’s the question that you need to ask yourself. Are we treating in
communications our donors and our [inaudible 0:10:15] superheroes? If you
say I don’t know, the real answer is no, you’re not. And if the answer is
well, a little bit, then the other thing you can do is make a little bit a
lot because the investment of love would result in a significant bump in
revenue. The people that [inaudible 0:10:51] this advice and went out and
tried this advice found that [inaudible 0:10:55] went up 1,000% typically.

And that’s what we’re looking for is these kind of like how can we get an
astonishing new result rather than the same old result we’ve been getting?
And the way you do this is by treating your donor as a superhero. Next
slide please, Jay. Let’s talk in this fashion, I call it donor-negligent,
is the general approach to reporting in say a donor newsletter or a field
letter or on the website or that matter. The charity says we did this
amazing thing. Oh, look at this amazing program; we did that too.
[inaudible 0:11:45]. If you happen to have sent in a gift, put your name on
a list. [inaudible 0:11:51]. To use a sports analogy coming out of me
today, if you’re putting your donors up in the stands and the organization
down on the field playing the game . . . and up in the stands, the donors
are applauding with their checkbooks.

But that’s not really very involving. I want to be involved. I want to feel
as if I’m a part of the charity, and of course I should be made to feel as
if I’m part of it because I’m giving you my hard-earned money and you
aren’t giving me anything. So it’s . . . fundraising is a type of
marketing; it’s a type of sales. It’s not different, but actually in one
way. If I’m handing over my hard-earned cash, [inaudible 0:12:46] of
service, I get something back from them. If I give my hard-earned cash to a
charity, what I normally get back from them is the negligent behavior.

Let’s look [inaudible 0:12:59] by Jay. This is an example, and I’ve been
picking on this example for a number of years now so I’m sure the Red Cross
in the UK have nothing good to say about me if they’re even aware I exist.
But this is a moment in time, and it’s so common to non-profit reporting.
It came off their homepage. What had happened was there was a natural
disaster in Pakistan. A lot of people living in the UK had immigrated from
Pakistan to the country, so now they’re looking. And bad news back in the
homeland. They flood the Red Cross with money to help the people back home.

Here the Red Cross in the UK reports on it: what we are doing in Pakistan;
how we’re helping survivors. I’ve scored all the we’s because that is
indicative of corporate communications which is a type of public relations
activity. And it is the typical behavior, particularly of branding. They do
it better than the charities. They don’t do it as well sometimes as the
smaller charities. Let’s look at the next slide, Jay. It is donor
recognition, state-of-the-art, as practiced by almost every charity I have
ever encountered. And all it is is a list of names; that’s it. There isn’t
much emotional gratification from putting my name in a list.

And there are some other subordinate issues which is of course the emotion
attached to a list. If you spell my name wrong, I will hate you and not
give you a check again. And also if you really want to get under my skin
personally, this is just me as a donor, and we give to many causes, break
the list up by how much somebody gave so the people in the cheap seats can
feel like they’re kind of [inaudible 0:15:10].

[inaudible 0:15:13], Jay. What your donors think you [inaudible 0:15:22],
your organization perceive them? All they are is a checking account
attached to a life support system. And this is . . . we hear about donor
fatigue, but I think that first of all, I don’t [inaudible 0:15:40] is
exactly as anticipated. I don’t think it’s because donors get sick of being
asked for gifts from their favorite charities. What I do think it is is
they get sick of being treated like an ATM machine where you just go up,
hit some buttons and it pops out into your hand.

So we’ll look at the solution for this. The solution is to move away from
donor-negligent writing and move toward donor-centered writing. It’s a very
simple modification, because you’re using the same information. You’re
inverting who gets the credit. So in the donor-negligent, we did this great
thing. By the way, if you sent in a check . . . well now we’re saying
[inaudible 0:16:36]. And that’s important. Physically, the donor gets the
highest priority. With your help, all the amazing things we talked about
happened. And just important, part two, without your help, it wasn’t
possible.

So giving the donor all the credit, and let’s go to the next slide.
[inaudible 0:17:03] ultimately do, I do a lot of direct mail and direct
mail’s a brutal medium. It’s a gladiatorial contest with very tiny response
rates. Sometimes you get no response. So you really have to work hard. And
what I am doing now in my acquisition direct mail, bringing in new donors,
is I make sure they understand there is an important job that has to be
done and you’re the only ones who can do it.

And I’m very clear in my own head that what I care about when I’m acquiring
these new donors is not their money. What I care about is their
participation. Building my donor pyramid; I’m building out the base and I
want to talk to them not about cash but what we make possible. And I’ll
show you some examples of this. This is nothing I wrote. I don’t want to
take credit for somebody else’s work. This is wonderful work that came out
of [inaudible 0:18:10]. It’s for Barnardos which is a well-known charity in
the United Kingdom and in Ireland. It’s been around since the 1800s. So it
deals with troubled kids, orphans, stuff like that, families.

Here’s a direct mail acquisition pack from Barnardos, and kids like Jenny,
look at Jenny, she’s got the appropriate face for direct mail charity
dealing with children, which is a troubled face. The smiling face does not
raise as much money. In fact, the frowny face raises 50% more in tests than
the smiley face. Frowny faces going in, and let’s say kids like Jenny need
heroes like you. That simple-seeming statement is actually a masterpiece of
copyrighting for direct mail in charity work. [inaudible 0:19:14] word’s
kids. They need heroes. And so they’re giving you your self-appreciation.
Who am I? I am the hero to a child like this because I’m willing to trust
my hard-earned money to this good cause. Let’s go to the next one, Jay.

This goes back to the poor, and this is the inside spread, the centerfold,
for their donor newsletter. So in real-life it’s two 8.5 by 11 pages, a
nice big spread. And look at it, their lives, right in the headline, in the
big type. And that’s where you have to have these messages, in the big
type. If you’re putting your donor love into the body copy, it will not
work because most people never, ever read the articles but they read the
big type. That’s what we know from eye motion studies.

Their lives depend on you, the big type says. Without you, innocent lives
are lost says the big type. Local hospitals cannot save critically
malnourished children in Guatemala [inaudible 0:20:27], and Sister Rosa
looks to you. So basically this page demonstrates first-rate donor love,
first-rate donor centricity. It also demonstrates what you should be doing
instead of what you probably are doing.

The weird thing about donor newsletters, I’ll just say in passing, is they
are not actually about the organization. They’re actually, when they work
and they produce revenue, they’re actually about the charity. The next one?
I’ll just wrap this up because actually we need to move along pretty fast.
Here’s Planned Parenthood in Minnesota. This is their annual report. This
is the cover of their annual report. And right away, and this is because
they have drunk the Kool-Aid, open thanks to you. And there has never been
a tougher year for Planned Parenthood than it is right now with all the
people lining up hoping to defund them.

[inaudible 0:21:12], SmileTrain, well-known so everybody’s familiar with
it. Look at this email that came in. This child received free [inaudible
0:21:43], and that’s important, surgery thanks to supporters like you. And
there’s the wonderful before and after photo. Just, you know, it’s tight;
it’s fast; it gets the message across; I feel good. And that’s really what
your job is, to give me the joy of being a donor. Next slide, and this is
the next and last major of my portion.

How much of this do you do? Well, you want [inaudible 0:22:18]. You want to
stay in very close touch. [inaudible 0:22:21] for instance, CARE, next
slide, their [inaudible 0:22:28]. So Lisa Sargeant just did a wonderful
thing for the rest of us. She’s the [inaudible 0:22:35] guru in the non-
profit world. She has a first-time gift indicator. She wanted to see how
they would respond or how they acted after that. And you can see here this
list, which she [inaudible 0:22:53]. There’s something coming in three
weeks after; something coming in four weeks after; seven weeks; eight
weeks; nine weeks; ten weeks. It’s every week something is coming in from
CARE.

And it’s not always an appeal. Sometimes it’s reporting, it’s other things
and other offers and so-forth. Next slide. Just to give you a sense,
[inaudible 0:23:18] with your donors and here’s an online retailer in seven
months, like an [inaudible 0:23:28] or somebody like that, will send 125
emails. So you’re probably nowhere near what you could be doing in terms of
staying in touch with people. Next slide. Remember, this is very important.
You’re trying to involve them in something, because that’s the way the
donor looks at it. Actually, the cash aspect of it is the least interesting
part of a gift to the donor. They want to get involved with something, and
they do not want to be treated like a cash cow. That’s a pretty nice cow,
too. Let’s go to the next slide.

This is your checklist. This is from The Agitator, and if anybody knows
what in the world they’re talking about in fundraising, it’s the guys, Rob
Raver, Tom Belford, at the Agitator. These guys are the pyramid. They have
been hugely successful in all their non-profit endeavors and they know what
works, and these are the seven pieces of advice they give. So let’s now
take it out, this last little section for me. Next slide. All donor
communications is this little circle. There’s really not that much
activity. You ask me for my help, then you thank me for my help, then you
report to me what you did with my help.

You’ve got these three items: you’ve got appeal, you’ve got thank yous,
you’ve got newsletters. The newsletters are your reporting mechanism. And
that is a cycle and it never quits. How you acquire the donor, [inaudible
0:25:32], you have to have a reporting mechanism which is often . . . look
at what you’re good at. They’re terrific at asking. They can [inaudible
0:25:42] acceptable, but they really don’t come up to the mark is in the
reporting. So let’s look at the next, because there is a little variation
here. Also, you want to remember this. This is neuroscience, and I’ll show
you that neuroscience just in a second. When you ask me, you want to
flatter me. When you thank me, you want to flatter me. And when you report
to me, you want to flatter me.

So all your thank yous are these kind of robotic thank you, got your gift.
Your gift is now recorded. Here’s your bill that you can put in front of
your accountant. You want to get into more language. You don’t want your
computer doing your donor relations program.

Let’s look at the next slide. The neuroscience behind that flattery, see,
it turns out somehow, and I have no idea why this works or was important to
evolution, but it turns out our brain cannot distinguish between sincere
flattery or insincere flattery. All flattery is good. So in other words,
you cannot make a mistake. You cannot over flatter me as a donor. And it
isn’t that you were doing insincere flattery anyway, because anybody that
gives you money and they don’t expect anything back from that, is really
doing you a huge favor. So if you don’t feel gratitude, well, maybe you’re
in the wrong industry.

Finally, let’s look at . . . because there is some pushback on this. We all
grew up on [inaudible 0:27:17] like the number eight of the seven original
sins. You’ve got a bad rep. You’ve got Edmund Burke in a kind of wig thing,
flattery corrupts both the giver and the receiver, but, next slide. Edmund
Burke was in the 1700s or something. We have neuroscience. We don’t have to
listen to this guy’s opinion. It’s rubbish. That’s it for me, Jay.

Jay: Tom’s got a little bit of a thing about his newsletter. I will
mention something here. Tom’s newsletter is one of those that you welcome
into your inbox every single week that it comes. It always has good
information and I urge you all to take a look at it and see. So for any of
you that came late, I’m going to go a little bit into some of the same
statistics just as a slight repeat. But why is it so important to retain
first-time donors?

Well, I was a statistical and math major in college so I do a lot of things
with math behind the scenes here. So it’s amazing Tom and I get along as
well as we do, because I’m sure he’s much more of the other side of the
brain than I am on many of those things. But [inaudible 0:28:42] to look at
this particular side, because it lets you know, keep in mind we’re pointing
to the attrition rate which is the second column there. If you start with
1,000 donors and you have an attrition rate of 20%, you can see in five
years you diminish down to 328 donors. But start with 1,000 donors and you
have an attrition rate of 60%, still a little bit better attrition rate
than most first-time donors fall into, you go from 1,000 down to just 10 in
five years.

It’s sort of scary because as we dig into the actual data from non-profits,
this was the data from the fundraising professionals in the Urban
Institute. When they look at the retention here, we can see that the new
donor retention, and this was taken from the data from hundreds and
thousands of donor databases in summary form, the donor retention was 27%.
But what happens if you can turn those individuals over on the right-hand
side, the upper right-hand corner there? If they become a repeat donor just
the second time, or the second-year donor, the retention rate on the
average is 70%.

[inaudible 0:30:00] there for you and makes such a huge difference if we
can move people from that first time to the second time for that. I
mentioned this study, you work here, that nearly seven out of every ten
donors from the previous year did not donate at all the next year. And
where we can apply this information, and a mutual friend, Dr. Adrian
Sargeant, works with us here at Bloomerang quite a bit and talking about
just the small improvement overall of 10% in your overall retention can
double the lifetime value of your database.

And tom spent some really good time talking about the lifetime value and
what it can mean to your organization. If you ever want a very good,
involved and strategic board meeting, put the monthly reports away and
discuss the concept of lifetime value with your board members. I’m going to
bet the majority of your board members, just like myself who serves on
about seven different non-profit boards, was not aware of what the average
lifespan of a donor in our database was, and what the average gift was.
Most people far underestimate both of those two numbers thinking that we’ve
got people who stay with us for 20, 30 or 40 years and their average gift
is $500 or $1,000. And usually that’s the case for almost every non-profit
going.

And when I talked to Dr. Sargeant and he talked about this lifetime value,
I said can you prove to me with a spreadsheet or something? And this is
what he did for me. We took a look at a database here, 5,000 donors with an
average gift of $200, and we talked a retention rate of 41% moving to 51%.
And you can see what a difference even just the first year makes. Instead
of $451,000 you raise $561,000. So it was a difference of $110,000. And
there’s another $100,000 difference in the next year. You also notice
people stay with you, in some cases, for four additional years. So there’s
a difference here of $820,000 raised from these same donors versus $1.3
million almost on the right-hand side. And don’t forget, this is not
counting the stewardship. That’s where the extra bump comes in. The people
that have been with you three, four or five years or longer are the most
likely ones to bring in additional donors. They’re the most likely ones to
be stewards of your organization, and that’s where the doubling of the
lifetime value can come into play.

Now those of you that do not know how to calculate your retention rate, and
I know this is often the case. I was just in a room full of fundraising
officers in Chicago a couple weeks ago. I had about 150 people in the room
and asked them what the retention rate was for their database. Out of that
150 folks, only three folks raised their hands and said they knew what the
retention rate was at that point in time. It’s very simply taking the
number of donors in the current 12 months, and dividing it by the number of
donors in the previous 12 months from the same pool.

So let’s give an easy mathematical example. You have 1,000 donors in 2011.
Out of those 1,000 donors, 450 of them gave again in 2012. That would give
you a retention rate of 45% which meant 55% was your attrition rate. They
moved out.

This is one of the things that we measure very closely with our Bloomerang
product, and this donor retention wheel is measuring that information for
you on a daily basis. And just to give an idea what the donor retention
meter does, it’s sort of like the Dow Jones of your database so you can
tell exactly what’s happening. When people look at the Dow Jones, they
always want to know what the difference is of the Dow Jones from a week ago
or several weeks ago so they have a point of reference. This goes back
exactly 365 days, and reflects the changes your database is going through
on a daily, weekly and monthly basis, making that come to life.

So it’s automatic and it’s no guesswork. We tend to find what is watched is
very quickly addressed. People can see what changes are being made in their
behavior that makes a difference in the donor behavior. So Tom talked about
defining the lifetime value before, but to repeat again, it’s the total net
contribution that a donor generates during his or her lifetime in your
database. And I love this example of someone making their last gift at 101,
because the average lifetime in a donor database for most organizations, if
you encompass all the new donors that come in, especially in this day and
age of so much peer-to-peer fundraising and event-based fundraising, etc.,
most organizations below two years is the lifetime in a database for most
individuals that are there. And average gift is going to be probably
somewhere between $100 and $200 for most databases.

So you can sort of figure out and math out yourself when you’re looking at
the value. So why [inaudible 0:35:29] so important here? Well we’re looking
at the value segments, and almost every fundraising segment I’ve been in,
there’s been some sort of a pyramid. And what we’re talking about here,
most people tend to come in at the bottom two sections of the pyramid. Over
time, the value moves up as time increases and this reflects itself in that
the average gift, many times, moves up. There’s a capital campaign or some
type of campaign that allows a [inaudible 0:36:02] in there. But more
importantly, as people move up this pyramid, two important things happen.
It becomes a very strong habit with their giving, but I think it’s also
very important that they are stewards of your organization and they become
wonderful prospects for requesting and plan giving. It’s usually these
people that are right in the middle of this pyramid that have been giving
over time are your very, very best chance for [inaudible 0:36:36] to
happen. Such a big difference for that.

So I wanted to compare, much like Tom did, the commercial sector and not-
for-profit sector of why customers leave. And this was taken from a retail
study. And from this retail study, 1% of the customers left due to death;
three due to location; 5% only were won over by competitors; 14% due to bad
complaint handling, and lack of interest from us, 77%.

And if that doesn’t go to the point of what communications can mean and
what a difference it might make there? And a wonderful case in point, I
often tell the point of the retail dry cleaner that’s located right between
where I live and my office is at. I have been going to this dry cleaner now
for about 12 years and have yet to be called by my first name. And it’s
only the owner and one or two other staff members that are there every
morning, they go in there. It’s usually once a week or once every two
weeks.

And probably for the past five years, every single time I’ve gone in there,
I’ve handed them my debit card and they can see my name printed on there.
So after being associated with Tom and Adrian, I started an experiment.
Tom, I don’t think I ever told you about this, but I started this
experiment about a year ago, that I started calling the employees by their
first name every time just to see if that would change it around. And to
this day, they still have not called me by the name Jay when I walk in
there.

Let’s take a look, and this is Dr. Adrian Sergeant’s research, the key
reasons for donors leaving. One is they’re no longer able to afford
support, but I want to think about it as I unveil the rest of these, how
many of the rest of these involve [inaudible 0:38:31] in some form or
another. Why donors are leaving? No memory of ever supporting. [inaudible
0:38:39] did not make much of an impression there on that individual if
that’s the case. The organization asked for inappropriate sums. Well they
probably used some sort of wrong formula or tried to automate it in some
way that was inappropriate for the results that happened there.

They feeling that other causes are more deserving. Well actually they were
not aware of what they’re going for and how important that work was or that
mission was. Not reminded to give again. There is this balance of how much
communications, and that’s why I’m a big, big believer of surveys and
having surveys help define for us. The organization did not inform how the
monies were used. We did not feel connected. So when you think about that,
this whole communications and acknowledgement process is just so vital
because it literally takes care of most of these reasons for people
leaving, particularly first-year donors.

What about retaining donors? These are really important for turning first-
time donors into repeat donors. Drip feed mission performance data,
particularly if you present it in such a manner of what they did to affect
the mission and the mission performance. Connect often. Once again, I’ll
point back. I think it’s very important for any first-time donor that you
send a survey within the first 90 days and ask them their opinion on a few
days, most importantly how often and in what manner they would like to be
communicated with.

Be personal. Using any sort of database at all, it should be very easy to
be able to segment that. The cardinal rule I use, if someone comes in and
their first gift is the average gift amount of your database, you’ve got to
do something different and something special. Also, if someone’s coming in
as a repeat donor, let them know how special they are and let them know
they are a repeat donor. There should be a different thank you letter for
the first-time donor versus the repeat donor versus the higher-level donor
versus the lower-level donor. Simple segmentation into four quadrants there
alone will make a big difference.

And go back and change those thank you letters if you’ve got a database.
Thousands of people put databases in, and one of the saddest things I often
will find is I’ll go back to an organization five, six or seven years later
and they’ll still using the same single thank you letter that read like the
robotic letter we were talking about earlier that they send out to every
donor: new, repeat, high, low, board members, etc. It’s sort of an attached
receipt letter, and they haven’t changed it since the day we loaded it in
there.

Retention is built just like a good, personal relationship. If we
[inaudible 0:41:44] we want to do it often and in multiple means, sometimes
in person, sometimes by phone, sometimes electronically, sometimes written.
And then the next one here, find and use numerous human connectors. If
someone brought an individual to your organization, this is particularly
true in the peer-to-peer [inaudible 0:42:03]. If somebody sponsors someone
that’s a participant in your event, let the thank you letter come from the
participant or let the follow-up letter come from the participant and say
why they participated in the event and why they asked you to be a sponsor.
Such an important bit of information using those connectors.

And then as we said earlier, always communicate what are my funds doing?
What are my funds doing that are making a difference, and what would it
mean if I wasn’t there to support you? Those are so, so vital.

With those items in mind there, we wanted to leave the last 15 minutes for
some of the questions. So I’ll turn it back over to our master of
ceremonies and see what questions they would like to fire at Tom or myself
here.

Moderator: Thank you both so much for all of that information. I hope a
lot of people were attain that knowledge from your presentation. And thank
you to everyone who’s already submitted a question. We have some great ones
in the queue, and we’d like you all to discuss them. We have a question
from Joann, what is the industry standard or range for lifetime value?

Tom: I’ll leave this to you.

Jay: Yeah, what I have seen is the average timeline is slightly less than
two years, because you’ve got a lot of people that are there less than a
year, and you’ve got some people that are over. So it’s going to be
somewhere between one and two years. And for most organizations, it’s going
to be somewhere between $100 and $200.

So you can do the math there that the lifetime value on the average is
going to be those two multiplied together. Obviously you’ve got exceptions
on both sides, but that’s going to be the sort of middle-of-the-road
average for most organizations. Tom, what would you add to that?

Tom: Yeah, the average of course is a reflection of what we think right
now is a fairly unsuccessful effort by charities in their communications
work. Is it going to be . . . if you were to let’s say isolate ten best
practices, organizations who are doing everything perfectly, would they
have those same averages? I don’t think so. I think they’d have much rosier
averages than that.

Jay: The good thing is you can compare the lifetime value of your repeat
donors, those who have been with you two years or more, versus the overall
average of the organizations you get out of most databases. And boy, the
stark difference between those two would make anybody work very hard to
make sure that every first-time donor becomes a repeat donor.

Moderator: And we have another question. How do we bring lapsed donors
back? Those that have given in the past, but haven’t given last year so
they’re not factoring into any rates. Is there any hope in winning them
back?

Tom: Some direct mail program? I mean I write these kinds of letters,
donor letters. The thing I think we need to recognize is some of our bad
practices. Using a term like lapsed suggests that it’s their fault. They’re
not running from anything. They’ve gone on with their life; you’re just not
part of that anymore. And I think a genuine appeal to them, some kind of
you gave to us once and that is so important to us but we’ve noticed that
you’ve stopped giving. We hope that’s not for any . . . well, we don’t want
to say at that point. You want to be friendly, you want to be honest, you
want to be open, you want to be sincere. You want to love them to death.

And so many times people lapse, I think, just because you haven’t done a
great job of communicating with them. It’s not their fault. It’s they show
up in your mailbox when you want to ask for money. And that is all over.
This is very interesting. I was privileged to hear from the campaign guy
how Brown University did their KAPLA campaign and exceeded their goal. They
said when we get out on the road and we start talking to major donor
prospects around the country, they said the number one thing, complaint,
they heard was we never hear from you except when you want money.

I think it’s probably a complaint you would hear from almost every donor
base in the world because few charities spend any quality time doing
relationship building that’s honest and does not have some ulterior motive.

Jay: There’s a huge difference between a lapsed donor, a donor above your
average gift amount, versus a lapsed donor that’s below. If someone’s above
your average gift amount [inaudible 0:47:37], I think it’s maybe well worth
the effort of writing a hand-written note calling them, the human connector
to reach out to them. If someone’s in, particularly if they’re at two or
three times your average amount, don’t rely just on the variable written
letters and techniques Tom’s talking about. But make the extra effort,
because the potential lifetime value if you can save that person and bring
them back into the fold is thousands and thousands and thousands of
dollars. And it may be well worth making a personal outreach.

Moderator: We have another one from Karen. It’s hard to quantify or show
donors what their money did in an environmental organization or any
organization that doesn’t have dramatic stories like dealing with children
or pets. Do you have any suggestions on how those [inaudible 0:48:36] pull
on your heart strings. How can they show what your money’s doing?

Tom: The stock and trade for instance of donor newsletters is the before
and after story. So a child came in from the Sudan who was starving. Now
three months later she’s looking really healthy and bouncy. So that’s the
child story. Now environmental groups, I have a place in my heart for them
because I believe actually the environmental movement, the global warming,
they’re inept at explaining what the problem was or getting out of their
own [inaudible 0:49:24] that the rest of us, it kind of crept up on us and
here we are. The world will be a cinder in another 1,000 years.

So environmental groups, their tendency is to [inaudible 0:49:40] at the
donors. The donors are not scientists, and one of the great things, lessons
that I learned from a guy named Richard Radcliffe, a researcher in London,
was I’ve interviewed over 17,000, not a misprint, 17,000 donor personally,
mostly in focus groups, about why they make gifts. And he said I’ve got to
tell you they are, in his words, staggeringly ignorant of the [inaudible
0:50:09].

He said that shouldn’t be interpreted as a bad thing; it should be
interpreted as [inaudible 0:50:16]. Frankly, the reason I would support an
environmental cause is because it matches my values. I don’t need to know
in detail or statistically what the progress we’ve made, like saving some
salamander or something. You don’t have to quantify. What you have to do to
retain me is love me to death, and out to me on a regular basis that this
fight we’re in matters.

And with an environmental group, it is a fight all the time. Right now, you
couldn’t have more attention being paid in the general news media to the
consequences of climate change, global warming and so forth. [inaudible
0:51:17], my first reaction is why do you want to do that? Because I’m a
little bit suspicious.

Jay: I feel that Tom, too, in this day and age of media. One of the
groups, I can’t remember what it was, showed a time lapse of the effect on
a glacier and it was, although it was less than 30 seconds, it was so
powerful. And it was simple for them to slip it into the email and use the
video and make that come to life.

Tom: Yeah. You know, one of the things, one of the advantages, is
understanding the psychology behind why people are giving to you in the
first place. I would say with environmental groups, one of the key things,
advantages you have emotionally speaking, is what’s called loss aversion
which is built into the human brain. Loss aversion, to give you my
misinterpretation of it, I’m sure I’m screwing it up, but as I understand
it, loss aversion is something you appreciate, like, want, admire, need.
And I say but that’s the way. [inaudible 0:52:29] tendency, your internal
mental tendency, is to say no, no, no, isn’t there something we could do to
keep that from going away? I don’t want that to go away. And that’s where
your group steps in as an environmental group and says we are going to make
sure everything we can possibly do is done, but we can’t do that without
your help. There you go.

Moderator: Great. Now the question about the donor retention calculation
that you made, Jay, from Amanda and a few others, the calculation for donor
retention, does that account for donor acquisition as well? Does retention
appear higher if new donors are factored into the current year?

Jay: Well if you brought the new donors in. But they’re not actually
retained until they give the second time; they’re still just new donors. So
the retention rate is only looking at whether people make a second gift
transaction, and usually over a specified time period for that. So if you
count a random donor, that’s really a retained donor. So you’re accounting
your overall revenue. But keep in mind we’re talking about retention. We’re
seeing if someone cares enough about your organization to use their
checkbook or credit card a second time, and they’re retained. And remember,
they’ve done it a second time, [inaudible 0:54:04], the ability to retain
them from that point on goes from 20 or 30% up to 70% or higher and that is
a huge, huge difference in your overall success for the organization.

In fact, that’s why the [inaudible 0:54:22], the time that we let our staff
spend on acquiring new donors versus focusing care and love on existing
donors. Which one’s going to raise the most money for us and affect our
mission the most over the course of a decade?

Moderator: You spoke out against donor lists, and a couple of our
listeners would like to know what you suggest for organizations to do other
than listing donors on websites or programs, etc. Just to make sure no
donor feels slighted they don’t see their name.

Tom: Yeah, let me clarify in case I made the wrong impression with you.
I’m not saying don’t do donor lists, because they are a convention and
people expect it and therefore you should do it. What I’m saying is if that
is the extent of your donor recognition program, then you’ve got 1% of what
you need to have in place. It’s [inaudible 0:55:33]. You need . . . which
is basically donor love, and you need love to be expressed through your
acts, your [inaudible 0:55:44] and your reporting mechanisms.

Moderator: Excellent. We only have time for another question. We really
want to respect everyone’s time and keep this webinar at an hour. So for
this last one, I know our sector is very torn on this, donor gifts. Do you
recommend sending thank you gifts to large donors? Or to any donors. T-
shirts, mugs, etc. Does that detract from the efforts of an organization?

Tom: Do you want me to kill it, Jay?

Jay: I’ll let you kill it first, Tom. You know how hard premium donors are
to keep.

Tom: What you’re talking about are premiums, and they come in all
varieties, front-end premiums, back-end premiums, [inaudible 0:56:34].
Let’s take the tote bags. What we are trying to prove actually right now,
Adrian Sargeant and I and Jen Shang and some people working in public
television across the country, we’re trying to prove you can make just as
much money without premiums, i.e. DVDs of [inaudible 0:56:55] as you can
with them. It’s going to be an interesting . . . it’s going to be an
interesting experiment to tell if it’s working, but we’ve got a lot more
research to do.

The proof is, you can always bring in more people if you give them stuff.
For one thing, that locks into another factor in [inaudible 0:57:21] called
reciprocity. So in reciprocity, basically you send me something and you get
more unnecessary, unneeded, self-sticking address labels. And even though I
don’t want them, I didn’t ask for them, I have no use for them because I’ve
got a drawer full of them, I will consider because of psychological
reciprocity a token gift. So $10, $15, $20. And it looks like this is
successful. I know down in Australia, Sean Shriner’s group has done a lot
of work with them. They swear by them. They think they can make it all
work. And you know, it’s another tactic. I’m sure [inaudible 0:58:18] is a
long-term tactic, but frankly if you’re only holding onto people for a
couple years, what does it matter?

Jay: The thing I would add to that Tom is what money that you would be
putting into the thank you gifts and stuff, consider using some of those
dollars for maybe additional staff that can make the thank you a much more
powerful statement. Maybe hand-written notes, maybe actual thank you phone
calls. Things that will make a very lasting impression from the donor and
separate you from the crowd.

Moderator: That is a hot topic within the non-profit sector, and it’s
great to get your opinions on that. Many thanks to Tom Ahern and Jay Love
for joining us and providing such amazing insight and information on donor
retention. And thank you to all of our participants for being so engaged
and sending in such great questions. I’m sorry we didn’t get to all of
them, but we’ll continue the conversation in our follow-up email and also
I’d encourage you all to reach out to Jay and Tom via social media. Jay is
@JayBarclayLove. Tom, do you have a Twitter or do you have some way people
could reach out to you?

Tom: I have Twitter. My Twitter handler is @TomAhern, all one word, no
spaces.

Moderator: Yes?

Jay: Also people, if they just go to the Bloomerang.co website too,
there’s al to of additional information there if anybody so desires that
too.

Moderator: Excellent, thank you for that. We’ll have a linked to the
slides of this presentation on Nonprofit911.org tomorrow, and you’ll also
get a copy in your inbox shortly along with the recording for the
presentation and some information on Tom and Jay. Please join us on our
webinar next Tuesday. It’s build a [inaudible 1:00:21] network to grow
profit. It’s October 1st at 1:00 p.m. Eastern, and we’re joined by
philanthropists and offers Jeff Walker and Jennifer McCray. You can
register for that webinar and find out about future opportunities at
Nonprofit911.org. And with that, I’d like to conclude today’s session.
Please remain with us a few moments later to provide us with some valued
feedback via webinar survey. And thanks again for joining us, and thank you
everyone for unleashing generosity. Bye-bye.