The Rest Of The Retention Story
I’m just about finished with my book — Retention Fundraising — that will be headed to the publisher at the end of this week. But some of the key stuff in the book just shouldn’t wait.
Hopefully you can put some of the research and findings to work immediately.
Of course, I’ll flog the book to you when the publishing date is set. Right now it’s more important to share some advance information on what I’ve learned.
Most fundraisers continue to believe that ‘retention’ is some fuzzy, nice-nice concept where prompt ‘thank you’ notes on nice pink or expensive ivory stock will plug the leaky bucket of retention. NOT!
Why should you bother wrapping your mind around another set of at-first-difficult-to-understand concepts?
Money. Pure and simple. Lots of money. As much as $250,000 for every 1,000 donors on your file.
Having spent the last year digging into all this I firmly believe that most nonprofits — especially the big, highly sophisticated direct response driven breed — are leaving literally hundreds of millions on the table.
It’s not that they’re incompetent or lack resources. They simply don’t have the whole picture in their retention and loyalty lens. No wonder they’re missing out.
Let me explain by illustrating current ‘best practices’ and why they’re not even ‘good’, let alone ‘best’.
“Best Current Practices” … Ask most fundraisers and their consultants how to improve retention and the best of these will give you one or more of the following answers:
- Double down on the spending for acquisition;
- Purchase a transactional predictive model to flag/score donors at-risk or good candidates for a 2nd gift;
- Create different messages for different segments;
- Make fewer ‘asks’ or more ‘asks’ (depends on the consultant or fundraiser) and provide more — or less — visual marketing.
While this advice isn’t awful, it’s also not very helpful, and sometimes even very expensive. In short, it provides a very incomplete answer to the issue of retention.
The fact is that research clearly shows that when it comes to improving Lifetime Value — the only true metric that matters — the tactics/techniques/frequency of activity from the fundraising department accounts for less than 20% of the ultimate value on a donor file.
Lest I be hauled before the AFP/DMA Inquisition of Heretical Fundraisers, let me further add that I’m about to shake you up even more.
It’s not that what you’ve been doing (believing the universe rotates around the Earth) is wrong. It’s just that it’s incomplete.
You have only a half bucket of retention at best.
To put it even more bluntly, fundraisers and fundraising departments count very little where donor retention is concerned.
And secondly, here’s the deal going forward.
I’m going to do four more posts and then a Retention Webinar to help all of us get our brains around the current research and what I hope will become best practices.
Over the next 90 days we’ll explore:
- The importance of ‘attribution’ — How and why to assign costs/income to actions the nonprofit organization takes regarding donor experience.
- Why you can and should assign financial value to specific messages, communications, donor services and various engagement activities. And how you do that.
- Why the current segmentation or targeting process based on transactions – selected for ‘efficiency’ – is so foolish. And why ‘’effectiveness’ should become your new, most important metric.
- How you can change all your ‘bad/best practices’ to bring big money to your bottom line.
To prepare for your epiphany, what’s your thinking today on the current limits of retention ‘best practices’?
P.S. I was struck by the research I’ve seen that fundraising appeals and all the usual stuff that fundraising departments produce is worth only about 20% of the total retention value. Are you?