Fundraising 101: 10 Things You Need to Know About Reactivating Lapsed Donors
The more you know about your lapsed donors — their characteristics, interests and relationships to your organization — the better prepared you are to recapture these donors or, more importantly, prevent them from lapsing in the first place. Prevention is perhaps the strongest strategy in addressing lapsed-donor issues. Consider the following when developing your donor-retention strategy:
1. Proactive research
Acquisition for the sole purpose of bringing in new donors, without an eye toward donor retention, might be the major factor in high attrition or lapse rates. Why build an acquisition profile on a group of donors with a 50 percent to 75 percent attrition rate?
The solution is to build acquisition-to-retention model profiles that identify the characteristics of acquired donors who persist in their giving for two to three years. It's a much better strategy because you can identify persistent donors and their common characteristics and focus on acquisition lists that mirror these characteristics. Better yet, use a donor-retention model to score acquisition lists, and only mail prospects with a high likelihood to respond and persist over time.
2. Lifetime potential
Admittedly, it is difficult to quantify lifetime donor value (ultimate giving), but predictive modeling could identify target gift potential as well as major- and planned-giving likelihood, which are great indicators of ultimate giving behavior. Operating under the assumption that all donors are not of equal value to your organization, prospects with high planned- or major-giving potential as well as projected growth in annual giving levels have greater value. Scoring acquired donors annually identifies those individuals with the greatest ultimate gift potential.
If you know the donors most likely to be retained and the donors with greater ultimate giving potential (the first two points here), you can initiate stewardship efforts that increase the likelihood these donors will continue to give to your organization. The best lapsed-donor strategies are proactive and include positive steps to ensure that annual support does not stop in the first place. Call these donors and thank them for their gifts. Do not overwhelm them with repeated efforts to secure additional gifts. Report on the uses of gift money, and whenever possible, find out what they like about your organization and their specific interests so you can build a donor-centered relationship.
4. Solicitation frequency
Target Analytics' research indicates that there often is an inverse relationship between the frequency of solicitation and donor retention or movement to ultimate giving potential. Many people recommend that you solicit for the second gift as you thank for the first, but what effect does that have on your retention rate? If your goal is to maximize the number of donors annually without fearing high attrition rates, that may be one strategy (not mine), but it is unlikely to result in donor growth and success in major and planned giving. Think before you ask over and over — it might not create the best image for your organization and flies in the face of donor- centered fundraising. It is important to fully understand how your organization solicits through all channels — direct mail, telemarketing and e-mail/Internet — and investigate opportunities in order to reduce and simplify solicitation activity.
Try new ideas and strategies for renewing donors. Here is one: Collect e-mail addresses from your new direct-mail donors, ideally at the time they send in the response card (self-reported e-mail addresses are best). Avoid the temptation to begin mass e-mail solicitations, and use the information to thank and inform. Good stewardship breeds loyalty. When the time comes to renew these donors via direct mail, send an e-mail in advance alerting them to the upcoming direct-mail piece. Experience demonstrates that this approach lifts renewal rates.
Even if you employ these proactive strategies and reduce your attrition rate, you'll still experience lapsed-giving behavior. Following are some ideas and strategies for reactivating those donors.
6. Better prospects
Lapsed donors are better prospects and are more likely to respond than individuals with no prior relationship with your organization. In other words, renewing lapsed donors should be a high priority and is likely to be more effective than new-donor acquisition. Is that how your organization positions its lapsed-donor efforts? If not, it's time for new thinking.
7. Predictive modeling
Use statistical modeling and segmentation methodologies to identify the characteristics of lapsed donors who reactivate their support. Segment the lapsed-donor files using scoring trends, and test reactivation strategies across the scoring spectrum. Although lower-scoring reactivation prospects are less likely to be responsive, you might find that different messages or packages do well in mid- or lower-level scoring cells. If tests reveal that higher scores truly reflect the best prospects for recapture, then reduce or eliminate the solicitation efforts in the lower-scoring segments.
8. Not all lapsing is bad
For example, it is not unusual for older donors in their retirement years to reduce or eliminate their cash contributions after years or decades of support. It might be more effective to employ a less aggressive recapture strategy (less frequent attempts) with these individuals, focusing on continuing support at any level rather than specific gift amounts. Continue to thank and steward these individuals, and market planned-giving opportunities as well. Reduction or elimination of their cash giving indicates a fiscally conservative mind-set that bodes well for planned-giving options to be considered. Seize this additional giving opportunity!
9. Memorial giving
It's important to know which lapsed donors are memorial or honorary contributors, as these individuals typically demonstrate less affinity to your organization. For these types of lapsed donors, consider a three-tiered strategy. First, as you seek to renew their giving support, offer the opportunity to repeat the gift designation used in the initial gift. Second, share data on the positive impact of all gifts of this type on your organization to establish a "team giving" concept and to highlight the importance of these gifts to the mission of your nonprofit. Third, unless donor modeling suggests a high likelihood of reactivation, eliminate these lapsed donors from ongoing recapture efforts sooner than donors with clearer affinity ties to your organization. Use the cost "savings" for more effective annual-giving solicitation strategies.
10. Data hygiene
The more deeply lapsed donor pools often suffer a breakdown in data hygiene as they become more distant from active status. Many organizations decrease National Change of Address and address-standardization updates on deeply lapsed donors, and that negatively affects recapture rate. If your organization's fundraising plan dictates that you will attempt to recapture lapsed donors for three years after their last gifts, maintain and update these donor records accordingly. Don't reduce your likelihood of success with poor contact information.
Lawrence Henze is managing director at Target Analytics, a Blackbaud company. Reach him at firstname.lastname@example.org
Target Analytics' Matt Cobbett, Carol Rhine, Katherine Swank and Laura Worcester also contributed to this article.