In a recent article titled, Marketers Reach out to Loyal Customers, the Wall Street Journal reports what nonprofit fundraisers (at least the direct marketers) have known for decades … retention and repeat sales (gifts) are the foundation of profitability.

Here’s how the article begins …

"With the critical holiday-sales season at hand, there’s a new character joining Santa and his elves on the advertising circuit: the analytics geek.

It’s number-crunching time. Marketers, their ad budgets under increased scrutiny amid the economic downturn, are mining their customer databases and reaching out to loyal consumers with targeted ads, instead of relying on the traditional yuletide blitz.

Rather than create one TV commercial or send out a single, shotgun email promotion, uneasy retailers such as Sears Holdings, J.C. Penney, Target and Gap are tapping statistical models and other technologies to send specific consumers promotions based on what is potentially on their shopping lists.

It’s an adage of the business: Persuading a satisfied customer to return is cheaper than attracting a new one. Now, in the struggle to do more with less, that concept is becoming even more important.

Acquiring a new customer costs about five to seven times as much as maintaining a profitable relationship with an existing customer, says Marc Fleishhacker, managing director at Ogilvy Consulting."

DUH!

If you want to fill your bucket to over-flowing, the first thing you need to do is plug the leaks. Growth in donor numbers and total revenue is virtually impossible without strong retention. Once you’ve licked retention, then you can move on to leveraging what you know about each donor’s previous giving, indicated interests, and channel preferences to optimize and upgrade their repeat giving.

But in case any fundraisers need a refresher on this point, here’s the article.

Tom

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This article was posted in: Donor retention / loyalty / commitment, Fundraising analytics / data, Nonprofit management.
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