Yesterday, in light of declining donor retention rates, we raised the question of whether nonprofits were doing an adequate job of inspiring their donors.
Here’s a response from Jay Love, CEO of software solutions provider eTapestry. His firm is participating in the Fundraising Effectiveness Project, an initiative sponsored by the Urban Institute, Association of Fundraising Professionals and others to produce benchmarking fundraising data analysis for the community.
Says Jay:
"When one views the results of the FEP data sharing among the various database vendors, quite a neat happening in and of itself, the vast amount of lapsed donors jumps out like a huge sore thumb.
Lack of inspiration, in fact, just plain lack of contact, perhaps could be key in reversing the sad fact that over 50% of donors either lapsed or downgraded in the report.
I so agree that inspiration is key!"
And from the report:
"Reducing losses by 10 percentage points—from 55% to 45%—would also double the net from 10% to 20%. And a reduction of losses by 20 percentage points—to 35%—would triple the net to 30%.
Further, it usually costs less to retain and motivate an existing donor than to attract a new one. Consequently, for most organizations—and especially those that are sustaining losses or achieving only modest net gains in gifts and donors—taking positive steps to reduce gift and donor losses is the least expensive strategy for increasing net fundraising gains."
{Note: "Losses" here refers to both gift downgrades and loss of contributions from lapsed donors.]
Good benchmarking data in this report. But keep in mind Roger Craver’s rule: Don’t simply benchmark your program against others … maybe their programs aren’t so hot, after all!
Set your own gold standard — realistic but ambitious year-over-year improvement in your own program’s performance.
Tom
P.S. And if donor retention is your concern, check out our DonorTrend white papers on donor loyalty.
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Inspiration is certainly a key to donor retention; but our research shows that there is much more to “moving the needle” on donor retention than just inspiring them.
Donor retention doesn’t just ride on a single factor. We believe the success of donor retention rides on the overall donor experience. Inspiration is a component of donor experience. And, it may not even be the most important component.
Donor experience is the sum total of all the “interactions” that donors have with an organization. The donor experience pendulum swings from “I love you and will bring my friends to you” to “never again.”
Great experience is at the heart of donor retention. The biggest mistake that nonprofits make with donor experience is focusing donors on the uneventful, the unmemorable. When nonprofits focus only on the giving transaction, it approaches “uneventful” and “unmemorable.” There is so much more to delivering great experience to donors than going after wallet-share.
The fastest growing Fortune 100 companies realize this. They are all about delivering a better customer experience that will capture their customer’s imagination and wallet.
It’s about time we in the nonprofit world follow the lead of companies like Apple and Starbucks. How else could a company like Starbucks make money on a commodity like coffee beans that sells for about $1 per pound on the futures market? (By the way, this translates to roughly 3 cents per cup of coffee.) The other $4 that we are paying for coffee at Starbucks is all about the richness of the customer experience!
Kn Moy
Senior Vice President of Insight and Innovation
Masterworks
Donors do want to be inspired. Everyone needs to know that their support will make a real difference.
We’ve seen organizations utilize social networking as part of a successful strategy for engaging existing donors. There’s not much of a better way for help supporters inspire future supporters than through an active community of people sharing causes and how they are lending their support.
I think it’s very true that you need to inspire your donors, but I also thinkt that there are alot of excuses being made by the fundraisers. Alot are blaming the economy instead of finding out what inspires and putting in that extra work that’s needed in these times.
I’m doing a golf outing that everyone around me was saying was not going to do well this year (especially since I’m in Michigan). Golf outing is two weeks away and I am at 80% of goal for being sold out and sponsorships are going very well and I intend to meet goal and have a successful event – bottom line may even be best ever. Other area outings are at 50-60% attendance from last year and everyone is saying that sponsorships are down – again not so in our case. Is my organization so phenomonally different from the others that it isn’t falling to the same fate? Not especially, I’m just working harder and smarter at it.
The economy shouldn’t be a reason to let yourself be lazy – you are doing a disservice to your donors who you are serving if you do that!
I agree with the author that by retaining donors it is much less costly than trying to constantly bring in new donors. It would not take much more of a percentage retained to bring in the revenues he mentions.
I don’t believe the donors come in just for the gifts or the altruistic feeling they get. I believe they keep coming back because of how the donor center staff made them feel during the experience. Was it a great experience or just a mediocre one? Is it one I will remember in how I was treated or was I one more body/arm/unit for the staff? Did you look through the lens of the donor and identify those things that would make me feel special and want to come back?
In today’s world the customer experience is the last frontier, the differentiator between you and your competition. To blood donors, the competition is any place I could go during that time available vs. the blood center. You’ve got to make me feel so great that I can’t wait till I CAN come back!
Blood centers are competing for the donor’s discretionary time and unless they feel the experience they received was worth the effort and time lost, they may or may not go back again.
Since I responded to this blog over 2 1/2 years ago, I have been very disappointed in the level of service and the experience that I have been given each time I have gone to donate. Why do I go back? Because I believe in blood donation as my citizen duty to my community and one day may need blood for myself or family members. But that may not be what drives others to donate and that is why it is important to establish an “emotional connection” with donors.
What makes a loyal customer? Feeling valued, familiarity or called by name, cared for, trusted, sense of competence, knowledgeable employees, clean and safe environment, courtesy, respectful…. all these elements also create loyal donors. It is these emotional aspects, the feelings and soft touch moments, that help ensure a memorable and positive experience to keep donors coming back.