How to Reduce Donor Attrition by a Third in 3 Minutes

As we discussed in last week’s blog a 10% increase in donor loyalty today would enhance the lifetime value of your fundraising database by up to 200%!

At Pell & Bales we’re doing exactly that – helping our charity clients increase loyalty by at least 10% in one 3 minute conversation.

In the last 18 months we have developed a solid approach to loyalty calls that’s reducing attrition savings by a 3rd in the immediate few months after the call, delivering a year 1 ROI of 3:1 and breaking even by month 3.

In fact, for every £100 spent c. £1,000 is generated in year one income!

And that’s just measuring the savings in attrition. Beyond that there are other rewards to reap from enhanced loyalty & engagement. One client has reported a 50% increase in response to a subsequent event ask and another reports a 30% increase in response to an upgrade ask.

How it works

  • Design a call that is about the donor – not about the charity and definitely not about fundraising or the charity needs. The aim is to make giving feel good, rewarding, involving and impactful
  • Allow yourself a budget, time and resource to have a real conversation with supporters
  • It’s not so much about what you say, more about how you make donors feel: listen to what they have to say, let them visualize and contextualize the impact of their gift, inspire them. Make them feel part of the bigger picture, the solution, and reinforce that their vision is your vision; that you will deliver on your promises, on your joint mission
  • Create a check list of known drivers in loyalty and commitment and address them through conversation (we use Sargeant and Woodliffe research, gathered supporter insight and our own research here)
  • Weave anti-attrition messaging into the conversation: be flexible and accommodating – offer payment holidays or even downgrades where appropriate
  • Encourage multiple relationships and a greater involvement and increased interaction in the cause (but don’t ask them for more support)

Why it works

No other channel offers the personal human interaction of the telephone. Loyalty is about relationship building, but how are you going to do that if you can’t hear what the other person’s saying? The phone allows a supporter to tell you what’s important to them, to ask you questions and to build rapport in the way they just can’t do with a piece of paper or video.

Third Sector’s latest ‘Giving Trends’ research says that the telephone is the most effective way to solicit donations. Now we know it’s also the best way to retain and nurture donors.

A conversation like this sets the tone for the relationship between you and your supporter.  Calls work particularly well when placed early on in the donor relationship. With the most significant attrition happening within months 0-4 it is advisable to place a loyalty call before their first Direct Debit payment has been made.

Results by recruit source

Across multiple clients and various data sources we consistently see a reduction in attrition, post call of c.1/3rd

And while the effects of the call do start to taper off a little over time, there is still a lasting impact 16 months after the phone conversation!

Look out for further blogs where I will explore Sargeant and Woodliffe’s  ‘key drivers of commitment’ (Service Quality; Risk; Shared Beliefs; Learning; Personal Link; Multiple Engagements and Trust) and how they can be translated into your donor communications.

 

Donor Loyalty: Raising money without even asking for it

Few can argue with the fact that loyalty is important. In the UK, depending on how they are recruited, up to 40% of new monthly givers will lapse within months of signing up. Attrition rates have never been so high

Couple this with the fact that donor recruitment is ever more challenging and expensive and many charities simply can’t recruit donors as quickly as they are falling off the file. We are facing the very real threat that donor bases and income will start to shrink.

The sector really must move on from talking about ‘driving loyalty’ and start doing it. We must hang on to the donors we work so hard to recruit.

The concept of actively driving loyalty is nothing new, the likes of Sargeant and Burnett have been producing brilliant research and theory on this for years. And you only need to look at the commercial world and witness that they shifted from a focus on single transactions to relationship and loyalty marketing as far back as the 80’s

Increased loyalty will not only reduce attrition but drive commitment, increased response rates, average values, multiple engagements, and legacies. Sargeant calculates that

A 10% increase in donor loyalty today would enhance the lifetime value of your fundraising database by up to 200%!

But how many of us are doing much more than a bit of stewardship: sending the odd thank you letter and an annual newsletter?

Studies show it costs ten times as much to recruit a new donor today as it does to retain an existing one. So why isn’t this reflected in the way we spend our resources and allocate budgets? It would seem the sector is failing to really focus on retention and instead we are just increasing how much we spend on recruiting each new donor. But what else can you do?

We could take some lessons from the commercial world.

Let’s look at the phone for example;

A whopping 38% of all outbound calls made by commercials are either loyalty or customer satisfaction calls. In the NFP sector such calls account for less than 1% of outbound activity!

In the commercial world products are consumer led, driven through customer insight, surveys and research. I’m pretty sure the brainwave that was Direct Debit giving wasn’t born from a huge rush of supporters demonstrating a real desire ’to give regular reliable donations’ or a need to show how ‘committed’ they were. In fact, when we talk to donors about giving in this way many still fall into the trap of talking about why direct debits are so good for the charity.

Another thing the commercial world does very well is the use of Risk and Reward. If I don’t use my Air Miles Sept 2013 I lose them. If I shop with Sainsbury’s again before next Monday I will get £10 off my weekly shop. Where’s the hook to get people donating again? Who really cares and will anyone really notice if I cancel my gift?

Finally, while the rest of the world is already embracing multi-channel integrated communications and interacting with their consumers our fundraising teams are still working in silos, and our donor communications and ‘journeys’ are pre-determined even before they sign the dotted line, regardless of their preferences and interests.

I could go on and on. In summary there is so much more we could do. We need to measure how donors feel about their support; we need to make it easy for them to give (and no that doesn’t just mean Direct Debit); giving needs to be rewarding and fun; we should acknowledge and reward loyalty; we should offer supporters more control and choice in their giving; we need to listen to our supporters, interact with them; we need to build trust and prove impact; and service should be impeccable.

Later this week I will explore this further and share with you our approach to ‘Loyalty Calls’ – something which we are finally starting to see charities invest in. To give you a teaser, these calls produce a year 1 ROI of 3:1 and you don’t even have to ask your donors for a thing! One client is generating £1,000 net income per 100 contacts without asking for a single penny.