Anatomy of a Committed Donor
Everyone acknowledges the significant issues with acquisition — namely costs going up, yields going down. There also are significant issues with retention — namely not enough of it. This really is two sides of the same coin: (1) the increasingly expensive-to-acquire donor coming in (2) has little motivation to stay.
The financial argument for trying to keep donors is well-known — it can cost up to 10 times as much to bring in a new donor as hold on to an existing one, and it takes, on average, 18 months for a new donor to cover the cost of acquisition.
If the problems of acquisition and retention are related and severe, and the financial imperative to fix them so clear, then why are the trend lines getting worse, not better? Why aren't more donors giving a second gift?
The answer lies in the reasons people donate. First, let's posit that no donor on the planet engages in altruistic acts. They all want something. That something may be very abstract and ephemeral (e.g., to simply feel good, to know they are making a difference), but nevertheless real. You ignore the "something" at your peril.
Your organization has, in all likelihood, delivered part of this "something" in order to get the first gift. It has even succeeded in establishing the tiniest modicum of trust since most donors never know if the money was well used. However, in most cases, as the retention data reflects, this first step is also the last. The nascent relationship is over.
That's right — the "R" word
No, not every donor wants a relationship; some simply make that first gift on a never-to-be repeated whim thanks to creative that struck a chord, lighting in a bottle or some other non-repeatable event. But many more donors do want that relationship. And as long as the cost to establish the relationship is less than the gain and it costs less than acquiring a new donor, why wouldn't you make it an organizational imperative to do so?
The data is overwhelmingly in favor of retention, with every donor retained increasing his or her lifetime value by 100 percent or more and often 150 percent to 200 percent when we include the cost of acquiring a replacement on your file.
There is a large body of academic work dedicated to understanding and explaining what contributes to good and bad interpersonal relationships. In the for-profit marketing world, these basic relationship principles have become the framework for determining how to maximize profitability.
The journey starts with the need to establish a functional connection to the brand, often expressed as being "reliable." The donor knows what to expect from your organization; the experience is consistent. Fail to do this and you fail, period.
Achieve this basic level of functional or satisfaction-based connection, and you have the opportunity to build the personal connection, which is a more emotional one.
Trust — not the often deceptive pattern of repeat behavior via RFM analysisis — is the linchpin to true loyalty. It's the kind of relationship that moves the donor to overlook shortcomings, give greater share of wallet, promote the organization and go out of his or her way to engage with it.
This is not abstraction. The Committed Donor, based on a national study of recent, frequent cause donors, can be expected to give 131 percent more over a three year period. In financial terms this means, on average, $200,000 more for every 1,000 committed donors.
But what happens?
If the first gift represents some level of progress toward a relationship; what is it that is not happening between the first and second gifts to undo what might have been a long-lasting relationship? How about the often cited, almost trite, "thank you" or acknowledgment? If there was ever a specific, concrete action to build the bridge from functional to personal, this is it.
Another likely breakdown in transitioning from first to second gift is when the donor's second contact with the organization is a largely or entirely unrelated experience from the initial one. How likely is it the donor will feel as though he or she knows what to expect when interacting with you? And how can the seed of trust planted with the first gift be grown if there is no reference to how it was used to help the cause in the second donor "touch"?
All this occurs in the microcosm of the first-to-second-gift scenario. When you extend this thinking to all the other "touches" (e.g., call center, e-mail marketing, website, social media, traditional media) your organization has with the donor, it is almost impossible to imagine a relationship being established unless the organization is actively, consistently and strategically pursuing one.
Commitment is an attitudinal framework. We are measuring how the donor thinks and feels. This is in direct contrast to what many nonprofits focus on, which is more typically a behavior-only view.
The great strength and weakness of direct marketing is this singular reliance on past behavior (most notably, the financial metrics of recency, frequency and monetary amount) to presume future behavior. Donors get put into buckets based on their past RFM behavior. This proven process still requires living in the world that was and assuming it always will be — good behavior begets good behavior and vice versa. The big problem is this belief creates a self-fulfilling prophecy for poor retention because the formerly "good" donor with, for example, two "missed" contributions quickly becomes tomorrow's "bad" donor — the dreaded shift from 12 to 13 months recent.
The even bigger problem is that nonprofits wind up implicitly accepting the premise that there is no real way (other than brute force of more solicitations) to impact future behavior — an almost fatalistic view that good donors are born, not created.
But if commitment to an organization is created, not born, and if commitment — how the donor feels and thinks about you — causes the key behaviors we covet, doesn't it stand to reason we can impact those behaviors? That we can turn an otherwise "bad" donor into a good one and perhaps more importantly stave off defection of the "good" donor?
When it comes to retention, it is essential for every nonprofit to understand it is in the "creation business." That is, it needs to create more good, committed donors by focusing on the donor experiences delivered by the organization — the experiences that truly impact commitment. This is a "build it and they will come" process. Measure and manage the pieces you actually control — those that affect donor commitment — and the donor behavior you only indirectly impacted by your actions will follow.
This is not to suggest you can convert everybody. The majority of your donors are not committed to your organization, and while in theory many could be, in practice you have to make choices based on limited resources and the likely return. Therefore, pick a relatively small handful to target. There are "good" donors going off your file every single day. They, by definition, are either highly committed to your organization, uncommitted or somewhere in between. The good behavior/high commitment segment is an obvious place to start.
A few key takeaways
- Commitment can be found in every demographic, old or young, male or female.
- Committed donors see competitor solicitations and find reasons to dislike them. The uncommitted look for points of comparison to foster switching.
- Never mistake correlation for causation. There is a correlation between time spent online and commitment. But these are both outcomes — one does not cause the other. This is similar to the correlation between number of gifts and likelihood of making a planned gift — both outcomes. The name of the game is to understand what caused the frequency of giving and planned-gift intent. The answer is donor commitment. Understand what drives the relationship, and navigate the levers under your control to impact it. The rest will follow.
(To end on a fun note, we created an Infographic of the Committed Donor. You can see it at fundraisingsuccessmag.com/committed_donor_infographic. For an Executive Summary of the study on which this article is based, click here.) FS