Your Secret to Mindblowing Fundraising – Improve Donor Retention Just 10%

mindblowing 176x300 Your Secret to Mindblowing Fundraising   Improve Donor Retention Just 10%

Double the value of our donors? That would be mind blowing, dude!

Imagine what it would mean to your mission if you doubled the lifetime value of all of your current supporters.

I recently listened in on an interview between Gail Perry and Jay Love of Bloomerang. It’s a great listen, and the two of them fired me up to write another post on the importance of focusing your efforts on donor retention.

Do you know even know what percentage of donors you’re retaining? According to Jay, less than 5% of fundraising offices know this answer!  So, you’re not alone.  But you can do better.

Knowing your retention rate enables you to move it to something better.  Did you know that a 10% increase in donor retention can increase the lifetime value (in dollars) of your donors by as much as 200%? This is research from Dr. Adrian Sargeant… plus Penelope Burk revealed this years ago in her groundbreaking “Donor-Centered Fundraising.”

Lifetime value means donor commitment.  Your donor’s enduring passion for your cause.  And you’ve got to inspire folks to get them to become loyal supporters.

What are you doing to inspire? Attrition rates are sky high.

Say you brought in 1000 new donors last year.  Sounds good, no? But… those 1,000 will shrink to 400 this year. And to 160 in the next year. After five years you’ve got only 10 folks left.  I’m NOT KIDDING!  You’re on a treadmill. In and out. In and out.

Attrition is getting worse and worse.  AFP and The Urban Institute study revealed the depressing data.  After reviewing millions of records in thousands of databases, they found that average donor retention was 39%. So, yes, attrition was 61%.

Do you have a donor retention program?  A donor retention budget?

If not, be afraid. Be very afraid.  And use your fear to scare your leadership straight!  Show them the data.  Share the study with them.

If you’re not adding resources to build relationships with your donors – and keep them over time – you’re being pound wise and penny foolish.

Here’s a simple way to calculate your donor retention:

How many donors did you have in 2012?

How many of the exact same donors donated again in 2013?

What % of your previous year’s donors were retained?

Anything over 50% is excellent these days. So pat yourself on the back! If it’s less, don’t be surprised.  And know that wherever you’re at, you can improve if you put in place an intentional donor retention plan.

Here’s a way to calculate lifetime value:

This is the total net contribution a donor generates during their total giving to you, over their lifetime.  You must know the average number of years your donors stay with you, plus the average gift amount (for most organizations the average gift is between $100 – $200).  And the average number of years of giving from the thousands of organizations surveyed by AFP and The Urban Institute is 1.9 years.

Whoa!  Wouldn’t you like those folks you acquire through direct mail or online to stay with you longer than that?

If you’re like most nonprofits, you’re spending the lion’s share of your time acquiring new donors. And they don’t stay longer than two years. Treadmill city! It’s exhausting… no wonder you’re so tired.

If your retention is not what you’d wish it to be, take a look at your donor acknowledgment program  The easiest thing for you to do is develop a culture of gratitude.  Make this an institution-wide culture.

Your second gift is so much more valuable than the first one.

You need a second gift strategy.

  • You need a donor welcome package.
  • You need to pick up the phone and thank.
  • You need to send a hand-written note.
  • You need to get first-time donors engaged with you in other ways.
  • You need to reinforce the decision they made and show them the impact of their giving.

You need a donor relationship strategy.

  • You need effective donor communications that tell inspiring stories.
  • You need to always think from your donor’s perspective.
  • You need to use digital marketing and peer-to-peer tools.
  • You need integrated marketing and fundraising plans.
  • You need a comprehensive stewardship strategy.
  • You need to connect with donors frequently.
  • You need to use the word “YOU” a lot.
  • You need to ask donors about their preferences.

You need a robust gratitude program:

  • You need to be prompt – thank within 48 hours.
  • You need to be personal – no ‘form’ letters – people build relationships with other people; not with organizations.
  • You need to change your thank you letter frequently.
  • You need different thank you letters for different campaigns.
  • You need different thank you letters for different donor segments.
  • You need to thank more than once, preferably from different people.

You need to treat all donors – offline and online – equally.

Someone who happens to give online is not worth less to you than someone who gives through the mail.  Don’t have a two-class thank you system.  The immediate email thank you is great, but it’s not enough.

Do you know why donors leave you?

Find out.  The number one reason retail customers leave is lack of interest by the business in them. (this was followed, in this order, by death, relocation, won over by competitor and handling of complaints).  What are you doing to show interest in your donors?

The primary reasons that donors leave are related to poor communication on the part of the nonprofit: no memory of every supporting you; asked for inappropriate sum; feeling other causes is more deserving; not reminded to give again and weren’t informed about how the gift was used.

If you want to build loyalty, you’ve got to build relationships. Loyalty is also important because your repeat donors are the ones who make legacy gifts.  And legacy gifts are major gifts.  Having them can make a HUGE difference to your bottom line. (in fact, anyone who lets you know they’ve moved is10 times more likely to leave you a legacy gift – are you capturing this information?).

Be a better friend.

Find out more about your donor. Learn what they like. Be open and receptive. Respond when they reach out to you.  Listen for cues. Be helpful. Show them their impact. Show them that you know them. Be personal.

To learn more…

You can read more about this in 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report, Target Analytics, Blackbaud, by Helen Flannery and Rob Harris (particularly of interest is data about donor retention rates through different giving channels and characteristics of online donors) and in Growing Philanthropy in the United States, by Adrian Sargeant and Jen Shang.

Or get my How to Cultivate an Attitude of Gratitude and Keep Your Donors. It’s a quick, yet meaty, read with lots of practical tools, tips, templates and samples. And my usual money-back guarantee if you don’t find it helpful. But you will!

So… make this your year to increase donor retention just 10%, and the lifetime value of your donors by a mind blowing 200%!!!

 Photo: Flickr, Walt Jabsco

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About Claire

I’m Claire and I want to help you raise more money, reach more people and build long-lasting relationships with your supporters. Take a look in the archives.

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  1. […] hard on the numbers in making the case for attention to donor retention. In a blog article titled Your Secret to Mind-blowing Fundraising – Improve Donor Retention by Just 10%, she lists four “needs” that are essential for turning a first-time donor into a loyal […]

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