What I Would Do First

July 22, 2008

I’m sure you’ve seen all the gloomy articles and blog posts floating around noting the threat to nonprofit fundraising posed by a sinking economy.

A threat compounded by data indicating further fall-off in new donor acquisition and retention rates throughout much of the charitable community, as fellow Agitator Roger has commented on. Roger concluded his assessment with this recommendation:

"Now’s the time to take another look at next year’s budget and make sure you’re spending more, not less, to achieve on donor satisfaction and loyalty to hold on to your base."

Now, "hold on to your base" can mean a lot of things, from programmatic strategies to emphasize the work and activities you know (because you’ve done the donor research) brought your core donors in; to fine-tuning member/donor communications to report and celebrate results, results, results … and how your donors made those possible; to ensuring that in-bound member/donor inquiries are effectively handled; to tactical adjustments to donor renewal campaigns (the copy, the contact scheme, etc.).

All of these are important and can make a big difference. And because renewals are the most profitable fundraising activity you undertake, from your biggest donor to the rank-and-file, any retention improvements you achieve will yield significant net revenue.

Maybe you don’t control every aspect of the programmatic and marketing mix that can combine to strengthen donor retention. Perhaps as a fundraiser you "merely" control the nuts & bolts of the renewal process. Even so, now’s the time to show folks just how critical smart execution can be to the bottomline.

Start by taking a really careful look at your renewal program … everything from copy to the number, nature and timing of renewal contacts. Larger organizations tend to test each element of their renewal efforts very carefully, as they should … judiciously fine-tuning complex programs on an ongoing basis. Smaller organizations might be quite disorganized and even desultory in their approach, not even having what I’d call a renewal program … instead virtually "cut & pasting" stale year-end or annual appeals.

But the dropping renewal rates in the community — and the reality that donors will husband their charitable resources during stressful economic times — suggest that there should be no higher priority than fresh examination of renewal programs. Nothing should be taken for granted.

When "the boss" asks what should be done to protect revenue over the coming year, were I you, I’d say: "Bust our chops to improve renewal rates!" Then I’d add: "And get the rest of the organization focused on that goal too."

Sound simple, or obvious? Try it!

Tom

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The Latest Wake-up Call

July 7, 2008

At the very time when the stock market is dropping, unemployment is rising and fundraisers are attempting to read the tea leaves in preparation for next year’s budgets, Target Analytics has released their Index of National Fundraising Performance for the 1st Quarter of 2008 … and the picture ain’t pretty.

Not only did the number of direct response donors continue to decline, but, for the first time, the increases in revenue per donor that have compensated for the decline in number of donors failed to prevent an overall revenue drop.

The Index’s authors say the falling donor populations “may be due to a mix of factors including economic changes, a changing generational profile in the United States, changing attitudes of donors about giving, and a change in focus by fundraisers toward higher-dollar donors.

Whatever the reasons the numbers are a bit spooky:

·The number of new donors has declined 7.6 % over the past two years. (However, the rate of decline has slowed from 5.3% in the first quarter last year to 2.3% in this first quarter of 2008.)

·Retention rates continued to fall with first-year donor retention dropping 6.6% in Q1 2008 over the same quarter a year before.
·And reactivation rates declined 5.0% from Q1 2007 to Q1 2008.

Among the 72 organizations included in the Index only those in the environmental and animal welfare sectors escaped the pain. For advocacy groups (what Target Analytics calls the “Societal Benefit Sector) there is sunshine among the clouds. New donor growth rose 6.1% in Q1 2008 with 69% of the organizations in this sector showing positive donor growth.

The news wasn’t as encouraging for groups in the International Relief Sector where new donor acquisition declined 23%–the greatest decrease of any sector –and reactivation rates were down significantly as well, falling 21.6% from Q1 2007 to Q1 2008.

And we shouldn’t be looking for clear skies and a return to growth in the near-term future. As the economy slows, so does giving.

Now’s the time to take another look at next year’s budget and make sure you’re spending more, not less, to achieve on donor satisfaction and loyalty to hold on to your base.

Roger

 

Posted by rcraver | Filed Under Don't Miss these Posts, Hot Research, Measuring Up, advocacy, charities, demographic trends, direct mail, donor retention, fundraising, loyalty, nonprofit management, nonprofits, research | Leave a Comment 

Improving Your “Store Experience”

May 23, 2008

I just came across this study conducted by the IBM Institute for Business Value of customer "Advocates" in the retail setting.

For this consumer study, "Advocates" were defined as meeting three criteria:

  • they recommend their retailer to their friends and family;
  • they would increase their purchase amount if their retailer offered products found at other stores; and,
  • they would stay with their retailer even if another retailer offered a competitive product.

Now, wouldn’t we all like donors who met those critieria?!

As you would expect, customers who are Advocates (as opposed to Apathetics or Antagonists) are far and away the most valuable in profitability terms.

In the retail setting, the factors that induce customers to become Advocates are, in order of importance:

  • Store experience — the critical tangibles and intangibles that make it pleasant, enjoyable and easy to shop, triggering a variety of positive emotions along the way (this factor is by far the most important, and is also the strongest determinant of customer Antagonists!)
  • Convenience
  • Assortment
  • Quality
  • Customer service (personally, I’m surprised this didn’t rank higher)
  • Multichannel
  • Product availability

Importantly, the study notes that simply "meeting expectations" (e.g., with respect to attractive pricing) does not guarantee Advocates; it is the price of entry. 78% of all customers say their primary retailer meets their expectations, but across all retailers studied, the average percentage of customer Advocates was by comparison only 21% … and the highest was Wegmans at 53%. Other leaders by segment were Nordstrom (large-format apparel, 28%), Costco pharmacies (pharmacies, 27%), Barnesandnoble.com (online retailers, 27%), and The Children’s Place (mall-based specialty, 22%).

Can we apply the "Store Experience" concept to nonprofits and their donors?

Certainly it should apply pretty readily to "bricks & mortar" nonprofits — museums, theaters, hospitals, schools and others with a physical embodiment that donors can experience (or, in many cases, such as service agencies, observe).

It gets a lot harder for nonprofits dealing in intangibles, like policy advocacy, or remote impacts, like international disaster relief or medical research. In those cases, progress and results can be reported … and maybe even visually depicted. But the donor has little "experience" of the organization itself other than in the sense of customer experience (do they thank me for my contribution, correct my address, take me off their telemarketing list?).

This is one of the reasons I’m such a fan of online video. This medium does at least permit the donor to virtually "experience" their nonprofit’s leaders and "see" programs in action. And certainly a nonprofit’s website creates a virtual world that can communicate a personality or ambiance, and be more welcoming and enjoyable to use (or not).

Any other ideas out there as to how a nonprofit can enhance its "Store Experience?"

Tom

Posted by tbelford | Filed Under Don't Miss these Posts, Hot Research, branding, donor retention | Leave a Comment 

Forget The Mistletoe, Concentrate on the Mistrust

January 8, 2008

OK, you've had plenty of time to revel in the year-end returns and swap stories about the holiday office party. Now it's time to turn over a new leaf for the New Year and pay serious attention to a problem we've been warning about over and over–the problem of donor loyalty and retention.

The current issue of Contribute, the glossy magazine that bills itself as “The People and Ideas of Giving”, should get you focused on the problem of retention for the year ahead. In an article entitled, Donor drain: As mistrusts grows, loyalty goes, writer Tracie McMillan leads with the plight of the National Wildlife Federation which has been losing 300,000 donors a year — nearly 1/3 of its close to 1 million members.

Of course, NWF isn't alone. The fact is that the 'donor drain' is endemic. A survey authored by Bill Levis of the Urban Institute points out that most non-profits lose 52% of their contributions each year which is then offset by a 62 percent gain in new or upgraded donations. In short, according to Levis non profits are losing almost as much as they're gaining, pouring a river of money into a nearly open drain.

Why? Well according to the most recent Harris Interactive Survey, cited also in the currernt issue of Contribute magazine, 56% of the 3,040 Americans surveyed said they are “more concerned about the misuse of funds than they were a decade ago. (For an interesting take whether donor trust can be restored see Contribute's Roundtable featuring , among others the irrascible and always insightful Pablo Eisenberg.

Frankly, I'm personally not convinced that the erosion of donor loyalty has much to do with fraud and misuse as it does with the failure of fundraisers and communicators to keep up with the changes in consumer/donor mindset. Tom Belford dealt with this in an earlier Agitator post titled “The Secret Sauce of Brand Loyalty” and his insights are worth re-reading.

So what's a fundraiser to do? Well for starters a good dose of courtesy and common sense won't hurt: Thank your donors immediately after they contribute and frequently recognize their importance and the impact they're having…give them details on how their contributions are being used and the difference they make…focus on keeping your donors fully informed and sincerely make them feel appreciated.

Beyond common sense and courtesy watch for signs of disaffection: changes in giving and involvement patterns –down-grading, less frequent contributions, less responsiveness to e-actions and e-appeals. Any fundraiser worth her or his salt should have a system in place for spotting and taking action on those donors whose giving behavior telegraphs the early warning signs that they are moving out of the zone of affection into the swamp of disaffection.

Finally, download your free copy of the CMS-DonorTrends White Paper on Donor_Loyalty.

Happy New Year!

Roger Craver

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Five Trends to Heed and Benefit From in 2008

January 7, 2008

Tom and I aren't in the crystal ball business, but we do take some pride in spotting significant trends with the potential to help or harm our readers and the causes they serve.

Here are our top five trend picks for 2008:

1. Donor acquisition and retention will continue on a downward spiral.

An uncertain economy, diminishing consumer confidence, U.S. presidential election year fundraising and politics, and the inexorable exit of the World War II donor generation from the giving stage will all combine to make '08 a tough, tough year for acquisition and retention - particularly for those who continue doing the same/old, same/old hoping for a different result. Here at The Agitator we'll be watching and warning on this subject again this year as we did in 2007.

2. Active donors will give more but to fewer organizations.

This trend, underway for several years, will accelerate in '08:

… partly due to demographic changes (Boomers and Gen Xers more skeptical and demanding than WWII generation) [ Download your free copy of the CMS/DonorTrends Boomer White Paper to see why. ]

… partly to more readily accessible online information about causes (from organizations themselves, from rating and watchdog services, and greater involvement by donors themselves in rating and judging nonprofits. Click here to see the latest example of what the Chronicle of Philanthropy calls a “Zagat's for Charities”, a donor participation/evaluation site called Great Non-Profits.

…and partly because of increasing sophistication and skill of fundraisers and nonprofit executives who understand what it takes to build donor loyalty and commitment, and who have the guts and foresight to make the long-term investment required.

3. New media, until now mostly hype and buzz, will become increasingly bankable.

Not only is more and more money being raised online through social networking, e-appeals, and the conversion of advocacy activists into donors, the really important trend is that fundraisers, not webmasters and other assorted techies, are gaining more control of the online world successful organizations must master.

And most important of all is that realistic expectations and integrated plans are becoming increasingly apparent. Older donors (the best kind) have been online for years (often in the form of their online activism and advocacy), but few organizations have shown the skill or determination to discriminate in how they deal with different segments of their online audiences– something no competent off-line fundraiser would dream of.

In short, more and more organizations are becoming comfortable with marketing online WITHOUT expectations of immediate financial returns, understanding that platforms like You Tube, Second Life, Facebook and Flickr may help them to educate and attract the next generation of donors down the line.

At the same time, fundraisers are also beginning to understand the financial value of social network/peer-to-peer fundraising, realizing that “user generated content” also means “user generated money.” And, in what is likely to be the next and more sophisticated use of social network fundraising, some organizations have discovered that there can also be a “high dollar” or “middle donor” component in social network fundraising.

As an illustration of what's possible even with donors who are NOT regular netizens, look at a campaign developed by HJC New Media called “The NO GO GALA” of Canada's Crohn's and Colitis Foundation. Here, high dollar donors have their own personal pages and personal goals of $20,000, $40,000 and more. Not only did these high rollers make their own personal pages, but others, not feeling technically savvy enough, had the organization create pages for them and provided copy and addresses for the emails to their friends.

4. Back to the future.

The move to better integration, more fundraising-oriented thought, and less infatuation with techniques that glow in the dark that we're seeing in the online world is also occurring off-line as well. Of course there will always be the fashionable new, new thing of the moment - data mining, modeling, video emails, YouTube, My Space, you name it- but, mercifully, the year ahead will see more focus on the basics of good fundraising and donor communications.

And it's about time. With donor retention in big trouble, and donor skepticism and the desire to be involved on the rise, and with competition increasing at warp speed, we're long overdue for a back-to-basics correction.

“Basics” as in effective and prompt acknowledgement of gifts, detailed reporting on results and accomplishments to the donors, and real and effective ways to evolve them. In one of the early pieces on The Agitator I recalled the good manners and mighty effective communication skills of Helen Keller with her donors.

What was good in the first half of the last century it's even better -and more important - in 2008.

5. Transparency and Involvement: The new, new things you can bank.

Last but certainly not least is the trend toward more transparency and involvement for donors. I'm not talking about scandal and cover-ups (although there is likely to be more than the usual amount of those in '08). I'm focused on making clear to donors how their money is being effectively spent, the results you're getting for their contributions.

Just giving donors online access to your organization's Form 990 won't cut it. And pay particular attention to creating opportunities for involvement. Not just an occasional survey, but also perhaps an occasional conference call and briefing where they can ask questions and commune with other donors. Or, a visit to your office and a brown bag lunch with you and some program folks. Or better yet some meaningful and actual hands on involvement in your mission.

Survey after survey tells us that more and more potential and actual donors are “test driving” the organizations they intend to invest more in. Make sure your nonprofit gives the donor the opportunity to get behind the wheel.

So, jump on board these trends - and prosper. Ignore them at your peril.

And if you're wondering what trends I've left out you should also consider: the importance of focusing on women as donors and leaders…the importance and urgency of launching an aggressive legacy marketing campaign…the rise of new methods of giving like minimum contribution donor advised funds…the 1001 uses you can make of Google Maps…mergers and acquisitions in the non-profit sector and on and on.

Should be a fascinating 2008!

Roger Craver

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The Secret Sauce Of Brand Loyalty

November 20, 2007

Here's a report on top brands as researched by marketing consultancy Brand Keys.

#1 on the list is Google; #2 is Yahoo. Catalog-driven companies do well, led by L.L.Bean at #4 and J. Crew at #6 (Sears, Eddie Bauer and Land's End were in the top 25).

The report cited above mentions convenience as a driver of brand loyalty. It's tough to conceive of (and nurture) loyalty to a nonprofit brand in terms of convenience, since most nonprofits do not deliver a service or products to their donor constituencies.

But loyalty is really built upon something deeper than “convenience” in the sense of facilitating or easing a purchase. And nonprofits can deliver on that “something deeper.”

The “something deeper” is trust.

A consumer would not pick up the phone or click the mouse if she did not trust L.L. Bean to meet her expectations of quality, service and suitability without question. That trusting relationship would have been built over time through a series of “successful” interactions between the consumer and the company, where her expectations were indeed met … and even better, exceeded.

Most interactions between nonprofits and their donors (sticking with that single constituency for this post) consist merely of the former passing along information to the latter, in the form of emails, web content, letters, newsletters and other publications. And at occasional junctures, a financial transaction occurs.

During that process, the donor forms an impression and draws a conclusion based on that impression. Ideally something like this …

“This organization knows what they're doing … they are effective and successful … they use my contributions with care and efficiency … they are accomplishing (or making discernible progress against) the needs/goals I had in mind … they appreciate me … I've begun to trust them … I feel good about 'them'.”

And where the organization offers meaningful paths and opportunities for donor involvement (e.g., volunteering, online networking), the process can and should reach even further, to … “I am one of them.”

How well do your interactions with your donors lead them down that path, which for them begins with an emotional need (save this, fight that, help them), proceeds through a “test” stage with practical questions and observations, and hopefully ends with an emotional commitment … at least trust, and maybe a sense of belonging?

Examine your nonprofit's interactions with donors through this lens. Are your communications meaningful and instrumental in terms of building a relationship of trust?

If so, you're on the way to building brand equity — and loyalty — for your nonprofit.

Tom

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Making First Impressions

August 28, 2007

Unfortunately, your nonprofit might have literally only one or two interactions with a new donor or member before they tune out and disappear forever.

So first impressions indeed matter, whether delivered by mail, telephone or email.

In most cases, your second opportunity to make a “first impression” is when you acknowledge the donor's initial gift … your welcome letter, call or email.

Increasingly that second contact is an email.

Here, from the commercial world (Avenue A/Razorfish), is some useful advice on making as positive an impression as possible with your welcome email. The core principles apply to the nonprofit fundraising setting — personalize, reinforce benefits, include a call to action of some kind — plus some considerations unique to the online medium.

And as one commenter noted, it's also smart to establish some expectation about how future contacts might unfold — e.g., likely content, frequency. Even better, provide your donor with some options to customize the communications flow.

Worth a look.

Tom

Posted by admin | Filed Under General Post, donor retention, email marketing, online fundraising | Leave a Comment 

No Mercy Shown

August 20, 2007

At the recent DMA Nonprofit Conference, Jennifer Donahue of NARAL presented her strategy for successful integration of direct response fundraising channels.

As reported by Fundraising Success, one element of NARAL's fundraising credo is: “No mercy shown the donor (be vigilant and consistent in staying connected to your donor base).” This along with the advice to shepherd donors through the channels “because you know them better than they know themselves.”

Really?!

Over the years, I've heard donors (and nonprofit boards) voice plenty of complaints about over-solicitation. But what did “we” (fundraising consultants and nonprofit staffs conspiring together) usually continue to do? Keep right on soliciting, because “the data” indicated that enough donors would keep on responding to make the process cost-effective.

How many of you have struggled to come up with yet one more “special appeal” topic?!

To be sure, smarter fundraisers learned to segment their files, so as to waste less money and effort on less responsive donors. But still, the ethos has always been, re-solicit, re-solicit, re-solicit till the ROI on the segment breaks down.

How many donors are fatally alienated in this process, hidden by the aggregate data? Who knows. Those donors who fell by the wayside are considered chaff anyway.

My thinking on this has evolved over the years.

I wouldn't “mail them til they drop” anymore to squeeze out every last dollar of net income.

I think a wiser strategy these days would be to work my butt off to:

  • identify my historic sources of highest value donors, and prospect those sources as deeply as possible;
  • test and push my initial acquisition “ask” to the highest $$ level feasible;
  • try everything I possibly can to move new donors into monthly giving programs;
  • mail no “special” appeal that I wouldn't donate to myself;
  • line up enough major donors to make every special appeal a “matching gift” appeal;
  • educate donors about the true cost of doing business (to support higher dollar asks and gifts — $10, $15, $20, $30, $50 … where does the wheat begin these days, particularly in direct mail and phone solicitation?);
  • beg — absolutely beg! — donors to move their giving online;
  • build my direct marketing program to recover the acquisition cost of each new donor within one year (organizations and consultants have been stretching this “break-even” period longer and longer … just kidding themselves).

The best posture to be in today is to be candid with the donor. Sure, push every button you can with integrity to get that next or additional gift, but do it in a context like this (not necessarily this phraseology) …

Let's not kid each other … saving the world costs more than a cup of coffee. We need donors who will make the deepest commitment they can. Join us if you can make that kind of commitment. We'll use your gift wisely. Here's how.

If I were talking face-to-face with each prospect, I'd be tempted to say:

“We'd love to have your support, but realistically, if you can't commit at least $?? over the coming year, we're not really going to get the job done. I'll spend more effort begging you to give than I will saving the world … and neither of us will feel good about it.”

Will some donors complain in a focus group about over-solicitation and then still make multiple gifts? Sure. Is that healthy? No.

The consumer environment is changing to the point where “customers” expect their preferences to be respected … and abandon ship with alacrity when they are not. They have plenty of options. They occasionally run into satisfying customer experiences, and the bar gets raised for everyone else, including nonprofit marketers.

So you can continue to “slash and burn” your way through your house file if you like. Show them no mercy. Your “net” might look good for awhile longer. But IMHO, you are doing your organization a disservice, and soon the “data” will turn sour.

Tom

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Credit Cards Are Your Friends

June 20, 2007

Here's a pithy post on continuity giving from consultant Jim Killion, courtesy of DMA's The Integrator.

Talking about the $$ power of monthly giving, Jim notes that credit card giving is the key to success, and suggests three tactics for maximizing your fundraising return:

  • Tailored reporting — no auto-responder thank you's for these folks
  • Targeted requests — again, be careful about including monthly givers in “asks” designed for irregular donors
  • Monitor card expiration dates — a simple process trigger can retain big bucks

Apart from the “lock-in” value of credit card use, data we've seen indicates over and over that credit card gifts are larger in average size. With lower processing costs.

Triple dividends from getting your donors to use the plastic.

Roger & Tom

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Raining Cats & Dogs For ASPCA

May 24, 2007

Responding to our post, Give Your Donors A Voice, Ayumi Stubbs shares with The Agitator the success of the ASPCA with inviting supporters to submit their own content for ASPCA's website:

“Last year we started a simple cat photo contest that we promoted to our weekly newsletter subscribers (ASPCA News Alert). Our expectations were low - we just wanted something fun to offer our readers to participate in, to celebrate Adopt-a-Shelter Cat month. The response was overwhelming - we received thousands of photos.

Then we picked ten winners and announced them in our newsletter, linking back to our website. The response to the winning photos also surprised us - the open rate shot up 25% - and the winning photos instantly became one of the most popular sections of the website - and remained so for quite awhile because our readers forwarded it on to so many of their friends. We were also able to take advantage of the high traffic and promote donation opportunities to our readers and new visitors.

We learned a great lesson from this contest about how much our newsletter subscribers love to submit their own content. We had a dog photo contest later that year, and we plan to continue the photo contests this year. It's so simple, no fancy shmancy web 2.0 stuff involved - just a good old-fashioned contest for our newsletter subscribers!”

Ayumi Stubbs
Manager of Internet Communications, ASPCA

Ayumi, you and the ASPCA team deserve a raise!

Admittedly, it's hard to imagine a deeper vein to tap than people's affection for their cats and dogs! But the point stands … the ease of sharing digital content opens terrific opportunities to engage your supporters. Here's another example …

Over at Environmental Defense, the internet team has invited e-activists to help compose a Declaration of New Patriotism, prompted by the group's effort to cast stopping global warming as a patriotic challenge.

Arguably, this is a bit more cerebral than inviting supporters to send a photo of Fluffy or Fido, and perhaps not as likely to take off virally. But still, Environmental Defense has received over 1,000 responses after a few days.

In both cases, we'll bet the content creators donate more, renew more than the non-responders. We can't claim causality here (i.e., arguably the supporters already most committed are the ones who participate by submitting content). But smart test design would permit the proposition to be examined.

Meantime, don't wait … there's no downside to offering digital participation to your members, donors and activists.

Roger & Tom

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