Fundraising’s biggest smokescreen

By Jonathon Grapsas
On April 12, 2016 At 2:40 pm

Category : Best posts Q2 2016, Latest posts

Responses : 5 Comments

Warning: this post may offend some readers.

When was the last time you read a blog that waxed lyrical about retention and how if you really look after your donors it’ll be the equivalent of fundraising and donor nirvana?

Probably earlier today.

How often in the last 12 months has your board and perhaps your boss banged on about how your organisation has a “big strategic focus” on providing the very best donor care in the sector?

I suspect quite a lot.

Throw in a plethora of articles, conference rants (sorry, presentations), and the odd debate in the pub and it’s fair to say your fundraising brain is awash with retention overload. <Insert here any other retention or donor care synonym that’s trending today>

So what’s the problem here?

Nothing, if you plan to make small improvements to your program.

Focusing primarily on retaining supporters is a smokescreen for what really drives long-term growth: the quality of supporters you’re recruiting in the first place.

A case in point

See the table below.

This organisation had been undertaking face-to-face recruitment, but like most other charities hadn’t been looking after their supporters particularly well.

They were treating their F2F (younger) donors like direct mail (older) donors. Mail packs, newsletters, etc.

So a test was set up to look at the improvement generated by treating them as younger, transient, mobile confident supporters. The test contained lots of really good, rich content (mostly video) shared via SMS and email early on to reinforce why they supported. We were in touch at least weekly.

The control was far less frequent, just 2 touch-points in the first three months, both delivered via the post.

Jonathon

GIGOThe result is clear cut (statistically significant). The test group out performed the control: donors were much more likely to stay on board by the 3-month point post sign up if they were provided updates and love via email and SMS (and done much more frequently).

Doesn’t this fly in the face of a retention smokescreen?

Not really.

This organisation stopped recruiting on the street within a year.

Not because their approach to retention wasn’t proven, it was.

Because it wasn’t enough to offset the poor quality of recruits coming in the door in the first place. Too many donors under 30 years of age giving at levels they can’t afford, not enough in the latter stages of life who can afford to give.

Yes, the focus on retention improved the overall result, but not enough. It simply wasn’t making them money.

Hindsight provides a much clearer view of what would have been better to invest more time in. Specifically:

  • better understanding their data as to who was being recruited (and influence this with their agency and fundraising teams on the street)
  • managing fundraiser performance on a more granular level (not rewarding success based on sign ups but long term retention)
  • implementing a scale of payment for donors that remunerated the agency based on quality, not volume in isolation
  • focusing on the retention that really matters: keeping their street fundraisers for as long as possible

In addition to the above we’ve run several other tests around the value of looking after supporters. Both in a controlled (head-to-head) and a less controlled environment (before-after scenario).

In most instances there is no doubt that a focus on great donor experiences wins. Sometimes clearly, often by very little. One recent example pitted two very different approaches head to head.

Lots of love, beautiful and inspiring content, full of surprise and delight. Versus nothing. That’s right, nothing. Other than an annual tax receipt.

The difference? Very little, around a 1% reduction in attrition in the first year (not a brilliant outcome for 18 months worth of work on this project).

The takeaway here is that the organisation was absolutely brilliant at the items listed above. They understood how their recruitment was working, what the keys driver of attrition were (age, gift level, recruitment agency, etc), had their backend systems working a treat. They really knew the sweet spots.

All far more likely to positively impact their net return than a profoundly different supporter experience.

Because they recruited the right people and spent more time on the things that mattered most. Pleasingly their retention of street recruited supporters is one of the very best in the country.

The lovely retention program helped, but the balance of effort was out of whack.

So what does all of this mean?

It’s fashionable to talk about retention.

It also feels like a quick fix. As I hope I’ve highlighted above that’s usually not the case.

But conscious of not simply focusing on what not to do, here are some suggestions on how to improve both the recruitment (most important) and retention aspects of your program.

Recruitment 

  • Don’t believe all of the hype. Channel and technique bashing is easy. “Premium mail” doesn’t work. “Face to face” is done.

Most of this is BS.

The premium one is easy to kill off. In fact earlier today we analysed some data from a clients acquisition program that proved that a test 3 years ago of premium versus non premium mailings not only the worth of premiums in the initial test (2.5 times the response), but over 3 years had delivered a 47% greater net contribution.

  • Live and breathe your data. As explained earlier, understand what drives retention and long-term value – and most importantly, know how to use those insights. You can’t simply stop recruiting younger people on the street, but you can influence the value you sign them up for. 
  • Manage expectations (including your own). Do you know what you’re in for? Yes, street recruits re harder to keep. Signing up regular givers via an acquisition mailing generates small numbers but can be worth it. Monthly donors signed up via SMS prospecting give at low values.

 Know this in advance and it helps your forecasting, your sanity, and your relationship with your boss and your board.

indexRetention

  • Please revisit the previous 1,000 words above on recruitment. Fix that and your fix the retention problems.
  • Understand really quickly what a supporter’s initial experience was like and whether they intend to stick around. Respond quickly (and appropriately) if it was poor in an effort to keep them. 
  • Bust myths. We’ve recently tried and proved that asking in a thank you letter (post first gift) does work. It generates more multi donors much quicker, and generates more net than not asking, including the affect on subsequent appeals.

And of course, be really, really nice to those wonderful supporters who have shared their love. And their generosity.

Surprise the hell out of them. Take them on a roller-coaster ride, flooded with tears and contentment in equal measure. Invite them to stuff. Send them personalised videos from your CEO. Never forget how much donors value handwriting. Close the loop regularly so they are assured their $50 changed someone’s life.

But always remember how important it is to find the right people to support you.

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Jonathon Grapsas (8 blogs on 101fundraising)

Jonathon is the founder and director at flat earth direct, an agency dedicated to fundraising and campaigning for good causes. Jonathon has spent the last decade working with charities all around the world. Initially in the UK, and more recently in Canada and his native Australia. An influential blogger, writer and speaker, Jonathon's spends most of time now helping charities reach out to people online.


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Comments

  1. Surprised there are no comments here as there are some pretty vital fundraising truths here. Has Jono really offended us all that much?

    For my part, I could not agree more and have found exactly the same with F2F across multiple agencies and several years worth of data. Also DM tends to be $ value/list specific, and lead conversion RG telemarketing shows the same across different lead sources and agencies.

    How though to get a handle on quality early enough, particularly in RG programs is a tricky one. I reckon attrition in some form or another is a reasonable proxy for quality, but it’s a lagging indicator, and the agency horse is often halfway out of the stable before the fundraising director has signed off on the bolt.

    After a few years struggling to get this as right as I wanted, I resorted to Google and found a book called “Data Mining Techniques: For Marketing, Sales, and Customer Relationship Management” and copied the telco’s (just about the closest subscription based businesses to regular giving I could find – ever been asked to upgrade your plan? more data sir?)

    This means I now use a purely transactional measure for top level attrition (or churn as the telco’s put it), which essentially boils down to did a donor give when they said they would or didn’t they.

    Once you have this info as real data you can do cohort analysis, plot survival curves, define hazard probabilities and estimate LTV (read the book), all from the comfort of your very own Excel spreadsheet.

    It means attrition figures are higher than one based on recording cancellations or measuring a donor’s ‘status’, since what are usually termed as declines are by definition included as attrition – and that can be tough if you have hard targets which need to be explained and updated.

    However, the real advantage of using transaction data is you get to see really quickly how a real cohort of new RG’s actually behave. You can easily compare performance against current and historical norms without business processes getting in the way, and so make a better decision how to manage the agency/lead source/script/audience etc.

    There’s obviously a bit more to it than that, but Jono’s basically right – there is no substitute for quality.

     — Reply
  2. I would like to know if the continued retention touch points led with additional asks for more money or more programs or if it was primarily information and touch points on their original gift.

     — Reply
  3. Jonathon, you’ve made a number of interesting points. However, there some missing data or or areas of deeper explanation that should be explored.

    For example, did the organization(s) you mention test different content with its cultivation touches? Perhaps the cultivation could have been more effective, yielding an even stronger retention rate and higher giving. The key is not just the quantity of touches but the quality of them, as judged by the DONOR. Also, it was unclear whether or not the cultivation touches you mentioned involved an ask or not.

    Another point you mentioned was the idea of asking for another donation in a thank-you letter. As a direct-mail/telephone fundraising pioneer, I agree with the notion that the sooner an organization receives a second gift from a donor, the better. You’re quite correct that, often though not always, the sooner you can get a new donor to give again, the stronger the relationship will be. I’m just not convinced that putting the next ask in a thank-you letter versus a stand-alone direct mail appeal is the way to go. Also, while an ask in a thank-you letter MIGHT be acceptable for a first-time, lower-level donor, it might not be appropriate for larger donors and repeat donors. In other words, we should be careful not to generalize. My post on the subject can be found here: https://michaelrosensays.wordpress.com/2011/07/15/can-a-thank-you-letter-contain-an-ask/

     — Reply
    • No, there were no asks in either the control or test groups. Asking did not influence the outcomes in any of the tests I’ve shared above.

      Remembering, as I’ve outlined above, we’ve seen mixed results. Sometimes brilliant donor care makes a difference, other times it doesn’t.

      The salient point here is we ignore how important recruiting the right donors are in the first place. It’s all well and good to talk about retention but it pales into insignificance if you’re getting the recruitment wrong.

      To the point about asking in thank you’s, we’ve got enough data to show that in can actually inprove second gift rates for new donors (im excluding high value here), which in turns resulted in more income over a supporters lifetime. Recently we saw donors who gave to a thank you straight after acquisition then respond at 55% to the next appeal – and the overall second gift rate higher than ever before for that organization. I’m not generalizing, just sharing what’s worked for my clients.

       — Reply
  4. Jonathon,
    Years ago, I learned working for a large child sponsorship agency, to invest acquisition expenditures on the basis of LTV tied to the source of donor acquisition. At that time, DM had the highest LTV, TV the lowest, even though TV was the least expensive cost per new donor.

    I’m also reminded how hard it was to dramatically move the needle on retention, other than moving our monthly check payers to EFTs, which had a HUGE impact on their retention.

    It’s great to have recommendations based on actual test data. Wondering if any of this data comes from US clients?

     — Reply