Todays guest blog comes from Kevin Schulman, our U.S based friend and the founding partner of Donor Voice.
Kevin is already leading the global sector in strengthening donor relationships, increasing retention rates and driving truly donor-centric fundraising approaches. Kevin shares with us a belief in the fundamental truth that retention is ‘the problem and solution to your fundraising challenge.’
The good news is he shares the solution as well …..
“Today we are faced with the preeminent fact that, if the non-profit sector is to thrive, we must cultivate the science of human relationships…” (FDR, May 27th 1933)
Truer (modified) words were never spoken.
Relationship is the key to retention and by extension, sustainable growth. The math is clear – it can cost up to 10 times as much to bring in a new donor as keep an existing one.
So what to do about it? The ‘relationship’ word is thrown around at non-profit conferences and by consultants by the truckload. It has been a “soft”, just-believe concept. And yet, as FDR noted, there is a science to it, which can be summed up as follows:
1) The underlying elements constituting a healthy relationship between non-profit and supporter are known
2) These elements can be measured using a proven model and formula
3) This same proven model and formula are used to determine the organizational touchpoints (e.g. message, communications, events, donor service) that actually matter and by extension, those that don’t
This last point bears further discussion. This is a model and framework to identify the touchpoints across functional areas that cause loyalty and in turn, the decision to stay or go.
This gets charities into the cause and effect business. No statistical model using transactional or engagement data is doing this. Those models and purveyors are focused on efficiency of selection. They want great predictions of certain, often singular, behavior (e.g. reactivate, upgrade, etc.) This is all well and good BUT greater efficiency, while worthwhile, is not going to yield meaningful growth.
Meaningful growth requires real, empirical relationship building that focuses on identifying what you do that truly matters to your donors, then optimizing the hell out of it (to the exclusion of everything else).
This is about building a 6 to 12 month test that is different from the “control” not by virtue of who is in or out (i.e. selection) and not simply by virtue of marketing message, but by a radically different set of touchpoints and experiences over a period of time.
Defining this different set of touchpoints is not guesswork, nor concocted from thin air. By applying the right model…one that adheres to basic laws of cause and effect AND combines attitudinal data (by measuring commitment and performance of your touchpoints ) with transactional data…well then the blueprint becomes very specific and empirical, as illustrated below;
And perhaps the greatest kept secret to better retention is revealed!
It is not about spending more money, nor about “creating” new experiences (at least initially). The answer to greatly improved retention is about getting a handle on the current world of communications, messages, publications and human interactions. Doing so means we can empirically identify those that cause loyalty, those that matter but are currently hurting loyalty and those experiences with organizational time, effort and spend against them that don’t cause loyalty.
With this framework the implementation plan is quite simple (albeit not easy since change is never easy). If you send this communication, loyalty goes up. If you send another it goes down. If you don’t fix this in-person experience by delivering a different message and training staff to be more knowledgeable about issue X and Y (but not Z because now you know it doesn’t matter), you will lose 5% of the expected lifetime value.
This is radically different from the world today that is hyper obsessed with segmenting and slicing like crazy to identify who to target. What gets served up to these people is an afterthought. Perhaps there is some attempt to differentiate marketing message by segment. Perhaps. But then what?
Too often this is the end of the segmentation mindset and these donors get put into the general flow of appeals, communications etc.
If you’re coming to IoF London next month you’ll hear me and Charlie talking in more depth about this, but in the meantime here are your top 10 things to remember:
- You need a retention plan.
- It has nothing to do with segmentation or targeting.
- It has nothing to do with frequency of contact or ask amount.
- A retention plan is not a marketing message test.
- This is far more than saying “thank you” differently (though that typically is required).
- A retention plan comes from getting a handle on the CURRENT world you serve and modifying it in significant ways based on empirical guidance. Fix key experiences/touchpoints that matter but are broken, scale up key touchpoints/experiences that matter. Get good performance scores and reallocate time, effort and spend away from those touchpoints that don’t matter.
- If you build a new donor journey that is not significantly different from your “current” one then don’t expect a different outcome.
- If you build a new donor journey that is significantly different that you concocted internally then you should expect a different outcome – a worse one.
- You cannot A/B test your way to this answer
- You cannot build a predictive/selection model. You must get into CAUSE and EFFECT mode.
- Bonus: Don’t look at innovation as “risk” unless you are willing to assign a risk level to the status quo. Too often the status quo is seen as 0% risk and innovation is seen as 100% risk. ’Failure’ is acceptable if you do it quickly and cheaply – but there is far too much slow, expensive failure with status quo that gets overlooked.