Apparently retention is the new acquisition. All I can say is it’s about time too!
The 2013 Fundraising Effectiveness Report (download here) found that for every 100 donors gained by the sector in 2012, we lost 105. In any commercial setting a company that was losing more customers than it was winning would be shut down.
OK, that’s a US figure, but it’s not going to be very different in the UK.
Perhaps the worst thing is that we’ve come to think that the high cost of acquisition, low retention rates and long payback periods are acceptable. As long as it pays in the end, all is OK.
Our answer to fixing retention is to think about the mechanics. “If only we can get them onto Direct Debit” we cry, so we send them more and more DD asks. Or a strategy of, “Surely they’ll give more often if we send them more appeals” leads to more and more appeals, regardless of the quality.
Of course both these strategies work. A donor paying by Direct Debit will give more and for longer than one that isn’t. And by sending out more appeals you’ll generate more donations. For all I’m about to say, don’t forget the basics.
But there is something missing from this. Research shows that even satisfied donors lapse. They simply decide that they will support another organisation without you ever having done anything wrong.
The issue is loyalty. Loyalty not defined as whether someone gives again, but defined as how they feel about you. My favourite definition is ‘a strong feeling of support or allegiance.’
Read that again. Strong feeling… support… allegiance!
We need to change the way we think about donors. We concentrate too much on how much money they will give us before the financial year ends and not enough on how we are making the donor feel. We are excellent at measuring the effectiveness of our campaigns but we don’t measure the long term impact.
From the comments I had after my talk with Nick Mason at this year’s IOF Convention, I struck a chord with many people. All I did was exhort people to measure the donor not the activity. To really understand not just the response rate to a campaign, but the impact that the campaign will have on the donor and their long-term giving. On their loyalty!
Understanding the drivers of loyalty is key to creating a communications programme that grows loyalty and therefore value to the charity. I’ve been looking at this a lot recently. No-one has done more about this in our sector than Adrian Sargeant, and there is some fascinating and valuable research from the commercial sector too.
Personal connection is vital, as is what Adrian Sargeant calls identification (whether the charity shares my goals or values). Research we ran at Cascaid showed the increasing importance of giving a donor a sense of belonging and there is the growing issue of offering a donor social capital or status.
The list goes on. What’s important for one donor will be different for another. What’s important for one charity will be different for another.
Retention of our donors is the most important issue that we face as a sector and building donor loyalty is the most important aspect of that. Over the next few weeks I am going to share my findings of what the drivers of loyalty are and show some of the best examples of how charities are tapping into this knowledge to build their donors’ loyalty. There are some brilliant examples.
Watch this space. And if you haven’t signed up then please do to make sure you get them all.