Merkle Response Management Group (www.merkleresponse.com) shares its expertise in nonprofit fundraising by offering proactive approaches to donor retention. See below to read the full article, or click here to download a PDF.
Published in the Fall 2013 issue of Advancing Philantrophy.
On average, by the end of the first year of engagement, three out of four new donors stop donating according to Chuck Longfield, Senior Vice President and Chief Scientist at Blackbaud in Charleston, SC. As a result, many nonprofits suffer from a poor return on investment from their donor recruitment and retention efforts. While the reasons behind low retention rates may vary across organizations, there are several universal factors that prompt donors to discontinue their support.
Quite often, failure to express gratitude to the donors for their gift in a timely manner, neglecting to communicate how the funds are being used, and ignoring their needs and desires render donor retention efforts ineffective. In fact, according to the book, Donor-Centered Fundraising by Penelope Burk, calling and thanking new donors will improve first-year revenue retention by roughly 40 percent.
By applying a hands-on, proactive approach that incorporates: 1) acknowledging donors promptly; 2) capturing and using data on donor preferences and; 3) communicating regularly and proactively, organizations can more effectively retain current donors and maximize lifetime value.
1. Appreciate Donors’ Contributions. Saying “thank you” for a gift is an expectation to which donors hold charities accountable. It conveys a sense of gratitude and appreciation that is critical for long-term engagement and building loyalty. This practice also acknowledges the gift was received and is a way to provide the necessary documentation for tax deduction purposes where applicable. Yet, research shows that acknowledging gifts in a timely fashion can be difficult, especially when nonprofit staff is focused on the day-to-day work of the organization.
To meet growing donor expectations, nonprofits need to recognize contributions within two to three business days after depositing the funds. Organizations can apply standard merge technology to ensure they have the capability to acknowledge all donations including smaller contributions. Standard merge tools allow nonprofits to print and mail personalized thank-you letters and receipts to donors that include the individual’s name, amount donated, and where the gift will be applied.
Nonprofits should also send hand-written thank-you letters to high-end benefactors while also taking the time to make individualized phone calls to mid-level donors as part of the donor cultivation process. Recently, the Thistle Foundation performed an experiment that examined the preferences of 2,000 monthly donors. Half of the participants received thank-you calls and the remaining half did not. Results showed the amount of revenue from the first group was 41 percent higher than the second.
2. Understand Donor Characteristics. Over the past half-century, donors’ perceptions of nonprofits have changed dramatically. Prior to the Second World War and during the Great Depression, donors contributed to charities with the confidence and trust that funds were being used appropriately for a cause. Fundraising program goals were geared more around the charities’ wishes than that of the donor.
Today, donors demand greater transparency and accountability from charities and want to know where and how their contribution is being used. Driven primarily by political and cultural shifts in society, this transition affects the way nonprofits need to think about attracting and retaining their donors.
Often, many donors will stop contributing to an organization because they sense their voice is not being heard. When organizations are not actively listening, they miss valuable insights into their donors’ preferences. Nonprofits should capture relevant data in effort to provide improved perceptions into what motivates their donors. If nonprofits ignore this data, they miss an opportunity to identify with and understand their donors on a personal level.
Typically organizations will collect data such as email addresses and phone numbers. But a truly data-driven donor engagement strategy goes beyond collecting baseline information. In many cases, this includes gathering unconventional and uncommon data points.
For example, organizations should understand how strongly donors are connected to a cause. For instance, when sending in a donation, many donors will apply a stamp to a Business Reply Envelope to cover the mailing costs. Although not regularly practiced or recognized, understanding this may provide valuable insight into the donor’s commitment to the organization and impact the way that they should be cultivated. Similar to how nonprofits examine data and analytics to refine their marketing strategies, they should also study donor behaviors to uncover new ways to build loyalty.
3. Engage in Donor Listening. Like most organizations, nonprofits are often challenged to maintain responsive and agile operations while meeting their missions. Now, more than ever with the rise of social media, crowdsourcing, and mobile communications, the pressure to keep an open communications ecosystem has never been greater.
To compound this challenge, the hustle and bustle of the nonprofit environment can be overwhelming. From planning fundraisers to managing everyday administrative duties, nonprofit professionals frequently find themselves hearing phones ringing off the hook, having voicemail boxes full, or experiencing emails lost in the inbox. In this demanding work environment, returning donor calls in a timely manner and being responsive to their needs can be a challenge.
When looking at donor interactions, nonprofits need to find creative ways to balance day-to-day execution with big picture strategic planning. In some cases, they have to make a decision to outsource some of their operational functions. In this case, engaging a third party vendor can help nonprofits nurture their donors through timely donation processing and acknowledgment fulfillment that also reduces costs. Calls from donors can also be fielded through a third party organization to ease any bottlenecks a nonprofit could be facing when it comes to providing personal and timely engagement with donors, providing further savings in time and money.
For example, when Operation Smile realized they weren’t fully delivering on their “Donor First” service pledge, they partnered with a third party vendor to reduce the deposit and acknowledgement cycle time. As a result, they saw the time required to respond to donor questions go from two weeks to 24 hours and same day deposits on donations.
Every point of communication is critical and it is increasingly important for nonprofits to take a proactive approach in implementing donor-retention strategies. By connecting across multiple touch points and using tactics that include prompt donor acknowledgment, active listening, and data-rich communications, nonprofits can cultivate successful long-term relationship with their donors.
About Merkle’s Response Management Group
Founded in 1983, Merkle’s Response Management Group is dedicated to providing complete response processing and fulfillment solutions, including lockbox/caging, scanning, data capture and integration, imaging, inbound call center, email management, acknowledgment printing and mailing, and premium/product fulfillment services. RMG serves more than 200 clients in the nonprofit, government, healthcare, and retail markets. For more information about Merkle RMG, please visit www.merkleresponse.com, or follow us on Twitter @MerkleRMG.
Merkle RMG: http://www.merkleresponse.com
Sage Communications (for Merkle RMG)