1. What Fundraisers Can Do to Stop
Falling Donor Retention Rates
Amy Sermersheim
January 16, 2015

2. Agenda
• Why Does Loyalty Matter?
• Why People Lapse
• Transaction vs. Relationship Approaches
• Retention Begins with the Thank You!
• Building Commitment
• Monthly Giving
• Managing Service Quality
• Conclusion: Donor Engagement

3. Why Does Loyalty Matter?

4. Why Does Loyalty Matter?
Do you know your retention rate?
What does a 10% increase in donor retention mean in terms
of LIFETIME dollars raised?
• 50%
• 100%
• 150-200%

5. Why Does Loyalty Matter?
Improving donor retention rates by 10%
can improve LIFETIME dollars raised by?
150-200%!

6. Why Does Loyalty Matter?
To calculate your donor retention rate, simply take the number of donors
who gave to your organization in one calendar year, and divide it by the
number of donors from that same pool who made a donation in year two.
https://bloomerang.co/retention

7. Fundraising Effectiveness Project (FEP)
A project to help nonprofit organizations
measure and compare
.

8. Participating Donor Software Firms:
• Donor2/Campus Management Corporation
• PhilanthrAppeal (FundTrack Software)
• DonorPerfect Fundraising Software
• The Raiser’s Edge ® (Blackbaud)
• eTapestry
• Avectra
• Bloomerang
• Sage Software
• MatchMaker FundRaising Software
• Telosa Software (Exceed!)
• Metafile
Why does loyalty matter?

9. Nearly 6 out of every 10 donors do not give again!
Why does loyalty matter?

10. Gift retention isn’t much better.
Why does loyalty matter?

11. New donor retention is even worse.
Why does loyalty matter?

12. But
retention is
improving
slightly.
Why does loyalty matter?

13. Donor Attrition Over Five Years
# of
Donors
Attrition
Rate
Donors
Remaining
After 1
Year
Donors
Remaining
After 2
Years
Donors
Remaining
After 3
Years
Donors
Remaining
After 4
Years
Donors
Remaining
After 5
Years
1,000 20% 800 640 512 410 328
1,000 40% 600 360 216 130 78
1,000 60% 400 160 64 26 10
Why does loyalty matter?

14. CUE THE EXPERT:
Dr. Adrian Sargeant
Bloomerang Chief Scientist
• Professor of Fundraising at Indiana University
• Professor at the Australian Centre for Philanthropy
• World's Foremost Authority on Donor Retention
• Nonprofit Times' Top 50 Power and Influence List
• Managing Editor of the International Journal of
Nonprofit and Voluntary Sector Marketing
• Renowned Author of Numerous NPO Books
• Voted 3rd Most Influential Person in Fundraising
by Fundraising Magazine
Why Does Loyalty Matter?

15. Dr. Adrian Sargeant:
“A 5-10% upward change in Donor Retention can
DOUBLE the Lifetime Value of your donor database!”
Why Does Loyalty Matter?

16. Defining Lifetime Value:
"The total net contribution that a donor generates during
his/her lifetime in your database."
Why Does Loyalty Matter?

17. Dr. Adrian Sargeant:
“A 5-10% upward change in Donor Retention can
DOUBLE the Lifetime Value of your donor database!”
Why Does Loyalty Matter?

18. Why Does Loyalty Matter?

19. Donors Who Remain Loyal are Much More Likely to Engage
with the Organization in Other Ways:
• Additional gifts in response to emergency appeals
• Volunteer
• Upgrade gifts
• Lobby for the organization
• Seek out other donors on the organization's behalf
• Buy from gift catalogue
• Promote the organization to friends and acquaintances
Why Does Loyalty Matter?

20. The cost to acquire a new donor is 6-7
times that to retain existing donors
“Taking positive steps to reduce gift and donor
losses is the least expensive strategy for increasing
fundraising Income”
Roger Craver
Why Does Loyalty Matter?

21. Why People Lapse

22. Why People Lapse
Reason % of Respondents
Can no longer afford to support 54%
Other causes more deserving 36%
Death/relocation 16%
Organization did not acknowledge my support 13%
No memory of having supported 11%
Organization did not inform me how my money had been used 8%
Organization no longer needs my support 6%
Quality of support provided by organization was poor 5%
Organization asked for inappropriate sums 4%
I found organization's communication inappropriate 4%
Am still supporting by other means 3%
Organization did not take account of my wishes 3%
Staff at organization were unhelpful 2%

23. Transaction Vs. Relationship Approach

24. Imagine yourself at a party....
Transaction Vs. Relationship Approach

25. Would it not be better to?
• Recognize donors by name
• Acknowledge their prior giving
• Tailor the communication to reflect their known interests
• Let me choose the type of communications they receive
and how and when they'd like to give
Transaction Vs. Relationship Approach

26. Comparison of Transaction and Relationship Fundraising
Approaches
Transaction Vs. Relationship Approach
Differences Transaction
Fundraising
Relationship Fundraising
Focus Soliciting single
donations
Retaining donors
Key measures Immediate ROI,
amount of donation,
response rate
Lifetime value
Orientation Urgency of cause Donor relationship
Time scale Short Long
Customer service Little emphasis Major emphasis

27. From a donor's perspective, relationship fundraising addresses
how an organization...
• Finds you
• Gets to know you
• Keeps in touch with you
• Tries to ensure that you get what you want from it in every
aspect of its dealings with you
• Checks that you are getting what it promised you
• Seeks your advice and input
• Shows it values you
Think about how a good friendship develops...
Transaction Vs. Relationship Approach

28. Transaction Vs. Relationship Approach
A donor "timeline" of
relationship building
History of every event with
the constituent.
Important retention
information

29. Retention Begins with the Thank You!

30. Retention Begins With The Thank You!

31. Retention Begins With The Thank You!

32. Retention Begins With The Thank You!

33. Retention Begins With The Thank You!

34. Retention Begins With The Thank You!
Acknowledgment Principles
• Acknowledge offline gift within 48 hours
• First-time donors who get a personal thank you within
48 hours are 4x more likely to give a second gift.
• Acknowledge online gifts within 1 hour
• Be different than the rest (Handwritten!)
• State exactly what the monies will fund
• Call ALL new donors
• A three-minute thank-you call will boost first-year
retention by 30%
• Call or see in person as often as possible

35. Retention Begins With The Thank You!
Who can do the thanking?
• Board members
• Volunteers
• Director of Development
• Executive Director

36. Retention Begins With The Thank You!

37. Building Commitment

38. • Committed donors are likely to remain loyal even when
the quality of service is not optimal or when there is
negative publicity about some aspect of the organization's
work
• With commitment a donor's support continues through
good times and bad
Building Commitment

39. • Commitment Drivers...
o Concern - Donors are likely to be committed if they
believe they are valued and that the organization has
their welfare at heart
o Exercise of choice in frequency and content of
communications
o Provision of benefits - social, emotional, or tangible
rewards (access to information, premiums)
Building Commitment

40. Commitment Drivers…
• Respect - up to date data (entered correctly), regard for
privacy and professionalism in data management and
manipulation
• Involvement - the greater the number of ways an
individual engages with a nonprofit, the greater the
commitment he/she will feel
Building Commitment

42. • Commitment Indicators
o Recency and pattern of giving
o Individual donations vs. sustaining donations
o Number of years of giving
o Upgrades/downgrades
o Event attendance
o Volunteer activities
o Opens your emails
o Clicks links in your emails
o Unsubscribes from emails
o Has stated communication preferences
o Initiates interactions
Building Commitment

43. What You Need to Know About Your Donors
• Why did they start giving to your organization?
• What are their expectations of your organization?
• What communications do they want to receive?
• How do they want to give?
• How else might they give?
• Are they interested in supporting your organization in other
(non-monetary) ways?
• What particular aspect of your organization's work interest
them?
Building Commitment

44. • Action Plan for Building Donor Commitment
o Match fundraising program to donor needs
o Constantly reinforce the value to the donor
o Develop new-donor communications and ask for
feedback
o Explain full-range of services
o Develop donor recognition programs
o Measure satisfaction and retention
o Analyze complaint data
o Identify relationship issues and failures
Building Commitment

45. Monthly Giving

46. Monthly Giving

47. “Monthly giving appeals not only to younger donors
who find it convenient and easy, but also to older
donors, who are more likely to live on a budget. But,
regardless of their age, monthly donors will often
give for decades, are more loyal than even the most
consistent annual donors, and are far more likely to
leave bequests”
- Harvey McKinnon
Monthly Giving

48. Monthly Giving
45%
26%
56%
91%
85%
91%
83%
68%
84%
All 2008 Donors First-Year Donors in 2008 Multi-Year Donors in 2008
2009 Median Retention Rate of 2008 Donors
Single Gifts Only in 2008 Both Single and Recurring Gifts in 2008 Recurring Gifts Only in 2008
Source: Target Analytics, 2009 DonorCentrics TM US Recurring Giving Benchmarking Analysis

49. • Impact on Donor Loyalty
• Tend to give for four to seven years
• Communication balance improved - no need to ask for
donation in each communication
Monthly Giving

50. • Getting Started
• At the minimum, offer the opportunity online
• Who to target
• Show the price points: $10 a month can do X, $20 a month can do
Y…
• Ask as soon as possible after the 1st gift
• Appeals
• Newsletters
• Incoming calls
• Thanks
• Keep in touch
Monthly Giving

51. “Two words: Monthly giving. Regular/monthly or
sustained gift programs are currently revolutionizing
the economics of fundraising. If your nonprofit
doesn’t have one – it should get one. Lifetime values
are 600-800% higher than would be the case in
traditional annual fund giving. It’s also more
resilient in the face of changes in the economy.”
-Adrian Sargeant
Monthly Giving

52. Managing Service Quality

53. It is important to recognize that donors' perceptions of how
good the organization is at program delivery and
administration are driven to a great extent by completely
unrelated variables.
Managing Service Quality

54. Managing Service Quality

55. • The better an organization is at solving complaints, the
higher its retention rate
• Donors who complain are more loyal than those who do
not even though they are not able to obtain any
satisfaction!
• Think of complaints as opportunities....opportunities to
keep donors loyal!
Managing Service Quality

56. So....

57. • Try to understand and record why a donor is giving to you
• Focus on a relationship approach rather than a
transactional one
• Work to build commitment
• Pay attention to service quality
Remember:
“A 5-10% upward change in Donor Retention can
DOUBLE the Lifetime Value of your donor database!”
So....

58. Questions?
Amy Sermersheim
amy.sermersheim@bloomerang.co