November 8, 2024

Structuring a Donor Retention Program

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Connection is the Key to Donor Retention

The explosion of sustainer (monthly giving) programs in the nonprofit industry has had an incredibly positive effect on donor retention. On-going commitments that continue until the donor asks to stop make it unnecessary to renew these contributors.

However, there is a large cohort of donors who do not wish to give automatically or on a permanent on-going basis. That group is often the substantial majority of a nonprofit’s contributors. Securing their next annual gift is crucial to meet or exceed budgetary goals, and recent retention trends across all nonprofits have not been great. 

According to The Curtis Group, donor retention has been below 50% the past few years. So what is a Director of Development to do? Well, we have a few suggestions.

The Key Word In Donor Loyalty Is Connection

If your contributors feel connected to your mission and your organization, they are most likely to be consistent donors. Offering opportunities for their involvement is huge, along with keeping them informed about your organization’s news.

The single biggest hurdle to retaining donors is a lack of consistency in asking for follow-up gifts. The reality is that many people need to be given multiple opportunities to support your organization. Some people respond to the first request for funding, but many do not. It is a competitive marketplace for not only nonprofits but for marketers in general. Your message and your requests for money need to be in front of people repeatedly.

Cost/Benefit of Donor Retention Programs

It is a well-known marketing and fundraising rule of thumb that the cost of getting a new donor is five times higher than retaining an existing giver. As they say, “results may vary,” but anyone who has proven by their actions that they know your organization and were willing to support it at least once is an excellent candidate for giving another gift.

The cost of acquiring new donors by mail is steep, but charities still do it because of the multi-year cost/benefit of these new donors. Newly acquired donors via direct mail tend to renew the first year at a rate of 60%, with 80% of those renewing year two, and 80% of those renewing year three. That is what makes acquisition mailings a worthwhile investment.

Donor retention efforts are the same. It may cost a lot to bring some donors back into the “active” file, but once they are there, they are a particularly good bet to give again and again.

How to Segment Donor Retention Targets

Segmentation allows you to identify the people who are most and least likely to renew their support for your organization. Here is an example of what your most to least likely list might be:

  1. Current sustaining donors
  2. Multi-year donors
  3. First year donors
  4. Former donors who gave multiple gifts
  5. Former donors who gave one time
  6. Former donors who gave to a memorial
  7. Event participants
  8. One-time text donors

Each of these groups has a different likelihood of success in getting renewal gifts. 

Numbers 6, 7, and 8 may not be worth a lot of money and effort to renew. They should be solicited once or twice per year by mail and email.

Sustainers and multi-year donors are most important and require the most investment. Most sustainers renew automatically, but each month some “fall-off” the list due to expiration or changes in payment method. These people must be contacted – preferably by email and telephone – to reaffirm their desire to be monthly donors. These donors have a high inclination to continue contributing.

Multi-year donors are second only to sustainers in their importance. Email, direct mail, and telemarketing are all cost-justified to keep these people active.

First year donors, former donors who gave multiple gifts and one-time donors are less likely to respond with contributions but with persistence they can be a cost-effective group given their lifetime value.

One Approach to Structuring a Donor Retention Plan

A successful nonprofit will probably use a strategy that resembles the following donor retention model. The “Months” column denotes the number of months since the contributor’s last annual gift.

Month 9: Renewal email

Month 10: Renewal email and direct mail letter

Month 11: Renewal email and direct mail letter

Month 12: Renewal email and telemarketing call

Month 13: Renewal email and direct mail letter

Month 14: Renewal email and direct mail letter

Month 16: Renewal email and telemarketing call

For the top tier of donors Month 11’s mailing should be a hand-addressed “AriaCard” package. These important donors are worth the extra cost and bring higher response rates.

Summary

Telemarketing continues to be used by most successful nonprofits. An often-overlooked benefit of phone-based solicitation is that it can be an effective public relations and donor cultivation vehicle. Well-trained phone representatives field complaints, address donor concerns and overcome objections to supporting the client’s cause. It is also an effective way to learn of donor status changes (dead/moved/new last name).

A good donor retention program targets the most committed donors in a cost-effective way and allows for financial growth for the organization.

About QCSS

QCSS, Inc. provides nonprofit telemarketing with 40 years of service in the industry making live, personal, courteous calls for our clients.

QCSS, Inc. also offers AriaCard handwritten mail for many nonprofits. Pioneered in the 1980s, these handwritten and hand-addressed mail pieces boost response rates and average gifts.

A few years ago, Aria became part of QCSS, further adding to the marketing and fundraising tools available. The many years of experience and the stellar reputation of Aria’s handwritten direct mail is now available through QCSS.

Reach out the QCSS to learn more about the many ways you can increase donor acquisition and retention.