A tale of two donors

By Charlie Hulme
On March 9, 2015 At 2:00 pm

Category : Best posts Q1 2015, communication, database, donor service, Latest posts, retention

Responses : 10 Comments

or The ENORMOUS difference in value between ‘what’ and ‘why’

Charlotte and Emily have never met. They are the same age, live in the same area, have the same income, the same outgoings and the same number of children. two old ladies

Three years ago today both were out shopping when, independently, they stopped and spoke to one of your fundraisers. Both were moved by what they heard as it chimed with their own values, so each made a text donation of £3. A few weeks later, when they got a call from another of your fundraisers asking if they could support on a monthly basis, they both agreed to a regular gift of £5 a month.

So far they are identical on your CRM system; all that differentiates them is their Donor ID. Over the next few months both were sent on the same ‘journey’, receiving the same set of pre-ordained touchpoints; mail, calls, magazine etc.

Today, three years on, only two things have changed. The first is they’re three years older. The second is that Charlotte’s lifetime value is £207, whereas Emily’s is £33. Charlotte now sits in your ‘loyal’ file, achieving average lifetime value. Emily has been moved to your lapsed file and is costing you a lot of money in your vain attempts to win her back.

If nothing’s changed what’s the variable in their value?

The answer is ‘what we choose to care about’.

We’ve been using phrases like ‘donor centric’ and ‘supporter relationship’ for decades. But if pushed to define them, or give evidence of actually being or doing them, what could we say? The best we could do would be to point to creative technique; always use ‘you’ never ‘us’, or show where we’d been ‘emotional’ and told ‘stories’ etc. Or we’d point to our selection criteria, how we’ve sliced our house file based on giving history; recency, frequency, value and so on. Maybe some of us would point to the money we’d spent appending lifestyle demographics.

All well and good. But these things tell us absolutely nothing about why Charlotte’s lifetime value is so very different from Emily’s.

‘Why?’ is the only question that matters, but it’s one CRM fundraising can never answer. All it records is what happened. And because that’s all we’re recording that’s all we focus on. So we decide Charlotte is loyal and Emily isn’t. Where can we go from there? We don’t know why Charlotte is, so there’s nothing we can do to further forge that link. And we don’t know why Emily isn’t, so we throw good money after bad forever guessing at what’ll get her back.

And yet all the while there’s an incredibly simple answer to why Emily left. computer says no 1

Six months into her ‘relationship’ with you she had a bad experience that went unrecorded because your CRM couldn’t record it. It could have happened during one of any number of interactions you exposed her to, but in this case it was the second upgrade call she got. She had a couple of questions your agent couldn’t answer. Nothing major, but her frustration led to mistrust which led to her decision to leave you and support an identical looking organization. And just that simply she was gone, along with all the money you invested (a.k.a. wasted) trying to get her back.

Now imagine a world where being ‘donor centric’ meant you were, well, actually donor centric. What would that look like?

After Emily’s call she received a short automated email asking how the call went; was the agent knowledgeable, was she able to answer your questions and so on. You included an open end text box for Emily to let you know how she felt. When you heard about that bad experience you acted immediately with a follow up call to smooth everything out. So instead of her last impression of you being frustration it’s now appreciation. She not only stays but she upgrades and keeps her value identical with Charlotte’s.

The cost of that donor service interaction was £3.51. And Emily’s lifetime value rocketed from £33 to £207.

Simple. Powerful. Cost effective. So why don’t we do it?

The idea this isn’t scalable is simply ludicrous. If you can afford to lose that many ‘Emily’s’ in their first year, and lose still more money vainly chasing them, surely you could assign some of that spend to where it will actually have an impact?

Let’s face it, our sector has way more ‘Emily’s’ than ‘Charlottes’. How many more years are we going to spend throwing money at poor ‘Emily’ (who believes in what you believe in, but no longer believes in you) before we admit we are working with an incomplete set of tools?

P.S. you can get into the donor experience business for free (seriously) courtesy of the Agitator.

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Charlie Hulme (28 blogs on 101fundraising)

Charlie is MD of Donor Voice. He helps charities uncover what, of all the things they do, cause relationship strength and what is harmful. Partners see a massive improvement in performance, value and retention. Voted top speaker at the Institute of Fundraising's National Convention in 2013, he writes frequently for SOFII, 101 Fundraising, the Institute of Fundraising and many others.


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Comments

  1. Brilliant, Charlie. In many respects, this is all so simple. Why aren’t we doing it?

     — Reply
    • Kudos to you! I hadn’t thought of that!

       — Reply
  2. Charlie, while I support your point about donor experience being the significant factor (as they see it, not as we dream it up) in loyalty, your definition of ‘CRM fundraising’ as numbers-based segmentation (old-school RFM really) is quite outdated.

    Any relationship manager, including the ones out there who work with phones, email and Access databases, understand all too well how important it is to listen and respond to any question, frustration or suggestion. I’m not convinced a modern CRM-solution does not support a representation of the contact’s appreciation,; survey results, satisfaction (NPS or other) or would not be customizable to do so. Of course, the tool is only as strong as the process running on it, and it important to include such less-quantitative measures in relationship management.

    Less quantitative? Perhaps I’m phrasing this wrong. Satisfaction frameworks like NPS have been around a while, and provide a good measure of how a contact feel about you — but the knack is to follow up on these signals and engage with them, acknowledging their pain and solving the issue if possible. If you arm your contact points (web, email, phone) with a decent way to record signals like these, in addition to NPS scores, and implement a good workflow to address issues correctly, you’re well on the way to augment the segment-by-numbers approach you describe.

    Besides, between the total donated and the satisfaction score, let’s not forget modern engagement level monitoring from other channels. That’s an area where a LOT of nonprofits have a hard time integrating social media data with the CRM view.

     — Reply
    • Thanks Pam. ‘Why aren’t we doing it’ comes down to mind set.

      However sophisticated our programmes may seem we’re still only rattling a tin (not that I knock the good people who actually go out there and rattle!) What I mean is we only measure and monitor what’s landing in the tin – there’s no attention paid to why it landed in the tin, or as importantly why so much else didn’t.

      It’s common knowledge (although clearly not in our sector) that 50% of the decision to give/do more has nothing to do with mission/brand etc. It’s entirely about the experience in the moment. The only way to optimise that is to accurately capture and act on what’s happening. Charities that do this are seeing extraordinary results:

      50% decrease in attrition
      Treble ‘product re-purchase’
      35%+ in net profitability

      I believe this is the silver bullet to end the stagnant growth our sectors experienced for waaaaaay too long.

       — Reply
    • Hi Paul – thanks for your comment. Maybe I haven’t been clear in my post. It is not a criticism of CRM systems but rather of the mind set with which most (almost all) in the sector operate them. What gets measured is what gets managed. In the case of our sector pretty much all that gets measured is the ‘who’, ‘what’, and ‘how’; who gave, what did they give and by what channel. What doesn’t get measured is ‘why’. Without it we go round and round in circles second guessing our audience.

      In terms of measurement frameworks we use commitment scoring as it’s been proven to be the best predictor of behaviour, whether giving or doing. In fact we authored a report a little while ago with Adrian Sargeant showing the enormous difference in value to be gained using commitment over NPS.

       — Reply
  3. Charlie, as always you get right to the heart of the matter. In my for-profit experience, we were fanatics about customer feedback. So why not in our sector? In November we implemented this simple donor feedback process and it has been so revealing in just a few short months. Donors have told us about confusing language on auto-responders, e-receipts printing on multiple pages, difficulty understanding our leverage offer and more. It has been described as if we have suddenly taken our donors off “mute!” We are digging into the issues and also working through how to provide the 1:1 responses so that our donors know we have heard them. The process isn’t perfect…yet. But I know, just the way we increased customer loyalty a decade ago through systematic customer feedback, that we can improve donor retention by applying these processes and principles. Thanks for always bringing us back to what is important!

     — Reply
    • Thanks Jann – thanks most of all for DOING what’s important! : )

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  4. There are countless reasons why a donor starts and stops giving. And the vast majority of them have nothing to do with the charity at all. This hypothetical example isn’t representative, it’s completely made up and contrived. I could conjure up hundreds of other versions of this story, all much more plausible.

    Attrition in fundraising is a fact of life, and there is no such thing as 100% loyalty. Being more “donor-centric” isn’t the answer. Donor centric is a broad and poorly defined term, it means something different to each and every person. It has no theoritical foundation of any kind, it’s a slogan and nothing more.

    One donor ends up being worth $300 and the other is worth $30. So what, move on and go acquire 100,000 of each and you’ll have millions in the bank. Or, you can all sit around beating yourself up over what is actually two profitable outcomes.

     — Reply
  5. Thanks for your opinion Derek. I totally agree with you that for years ‘donor centric’ and such terms have been used in a fairly wooly sense. But, thanks to a multi year, international study of over 250+ charities of all kinds that was conducted by DonorVoice, that is no longer true.

    Any business that lost more customers than it aquired would soon cease trading. Almost without exception charities are following your advice to just ramp up aquisition. But they’re loosing them faster than they can aquire them, at ever increasing cost. The result being no growth or impact on mission.

    The example cited here is entirely representative of my work with countless charities over many years. The simple fact is that our so called ‘best’ practices aren’t making things better

     — Reply
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