retention

Easy growth is dead

nickellinger, , Leave a comment

ef-hutton-commercial2There are some people that, like the old EF Hutton commercials, when they talk, you listen. Mary Meeker is one of those people as one of the lead analysts on online and high-tech issues.  

To give you some perspective, she was lead manager of the Netscape Communications IPO in 1995; usually when someone says they have over 20 years of online business experience, you assume they are padding their resume.

On June 1, Meeker put out her Internet Trends report, highlighting the evolution of the sector.  You can see the full report here.  Among the over 200 slides are some key takeaways for us nonprofit folks, so I wanted to highlight a few of them this week.

I’m on the record as opposing any article that proclaims The Death of X — that’s even what I called a NonProfit Pro article on the topic.  

So here I am violating my own rule.

In the report, on slides 37 and 38, Meeker articulates the five epic economic growth drivers of the past two decades and how they are all waning:

losing mojo
What do these drivers look like for the nonprofit sector?

  • Nonprofit giving remains at two percent of GDP.  Has been for 60+ years and looks unlikely to break out anytime soon.
  • As Meeker says, overall GDP growth is slowing across the board because of these demographic factors.
  • The number of nonprofits is increasing.
  • The number of donors is waning, with 103 donors lost for every 100 donors gained.  This is offset by average gifts going up, but getting more and more from fewer and fewer is the buggy whip model for success.
  • Anecdotally, nonprofits are increasing their quantity of communications in an attempt to cut through the noise.
  • With giving increasing by less than the amount communication quantity is increasing, costs are up and response rates per communication are down.
  • Meaning that response rates per donor are down.

We need, as an industry, to find a way out of this.  Other than the nonprofits that are working to decrease death, we can’t solve for the N and increase overall population.  Nor is there anything I think we can do at the nonprofit level to prevent other nonprofits from forming.  And we’re unlikely to budge GDP.

So, easy growth is dead.

Thus, there are but a few choices:

  1. Increase the percentage of people who give.
  2. Increase the amount that people who give give.
  3. Decrease the costs of getting people give.
  4. Die off.

All of these will come into play at some point.  We keep overfishing the same donor waters; we will have to find new donors.  In order to break 2% of GDP, we need to change our value proposition to those who donate to us.  And we need to be smarter about how we solicit and receive gifts.  Those who don’t do at least one of these three things will do the fourth.

Tomorrow, we’ll talk about a Meeker-inspired way to help potentially increase both your retention rates and your donors’ experiences (that is, working on #1 and #2).

If you’d like to get these types of tips on a weekly basis, please sign up for my weekly email here.  You’ll get digests of this information, plus additional subscriber-only content like 30 days to firmer thighs.

OK, I’m lying about that last part.

Easy growth is dead

Including loyalty in your beyond-RFM segmentation

nickellinger, , , , , , Leave a comment

Since Sandy first donated to your organization in 1992, she’s given over 100 gifts.  Nothing exorbitant – she’s now giving $30 every three or four months – but she also has volunteered, come to three walks, signed up for emails, and taken almost every advocacy action you offer.

On the other hand, you acquired Miriam from an outside list in 2012.  She gave $25, but nothing since then.  You don’t have her email or phone number, but a last chance lapsed package piqued her interest four months ago and she gave another $25.

What do these two have in common?

They look the same on a traditional RFM analysis: they are both 4-6 month $25-49.99 multis.

And if you use only a traditional RFM analysis, you will treat them the same.

That’s silly.  If you were looking only at these paragraphs to judge, Sandy would seem to be a good candidate for monthly giving, upgrade strategies, and/or planned giving.  Miriam probably has a 50-50 chance (or worse, given industry averages of lapsed reactivated retention rates) of never giving you another gift.

It’s easy to criticize this, but harder to do this analysis writ large, when you are doing five-to-seven-figure list selects.  So how do you draw these lines?  Here are a few ideas:

Lifecycle analysis.  Way back when (November 2015 – ah, those were the days), we talked about how there isn’t just one retention rate – there are several, based on where a person is in their donor journey.

This lifecycle analysis can layer on to your segmentation analysis and on to your messaging.  Some sample categories:

  • New.  What it says on the tin.
  • 1st year.  They have given a second gift, but it’s been less than 12 months since their first gift.
  • 2nd year.  Gifts in their first two years.
  • Core: Donors who have given in each of the past three 12-month periods
  • Lapsed: A gift 13-24 months ago.
  • Deep lapsed: A gift 25+ months ago.
  • Lapsed reactivated: Someone who has given a gift in the past 12 months after a gap of at least a 12-month period

Your mileage and organization may vary – it’s more important to look at this analysis than it is to have the same precise categories.

So you may not have a separate piece for Sandy, but you might want to make sure there is language like “As one of our most loyal donors” or “You’ve stood with us for more than 20 years.” or the like in the existing piece.

As for Miriam, as a lapsed reactivated donor, you are still worried that you might lose her again.  Perhaps you want to stay close to the tactics that recruited her (or won her back or both).  She might also be worth an e-append or phone append to see if you can find a channel that further engages her.  Or maybe you want to use a less aggressive ask string – your goal for a lapsed reactivated donor is to make donating a habit again, rather than to increase their giving just yet.

Gift density.  Take a look at the number of gifts someone has made, then divide by the number of years since a person’s first gift.  This is how many gifts you will get from them in an average year (or at least what you have received).

Sandy’s number is above four.  Four is a bit of a magic number (some would say three or even two– again, having a number is more important than what the number actually is) to indicate strong likelihood of monthly giving.  When someone has a pattern of giving frequently, this ask isn’t nearly the heavy lift it is trying to get someone to go from one gift per year to twelve.

Miriam is below one.  One is a separate magic number, as below one indicates a likelihood to lapse (by definition, they’ve done it at least once)  That should trigger some of the anti-lapse efforts discussed above.

One is also a magic number in that if someone gives you exactly one gift per year (and they’ve been with you a few years), that’s the bucket they see you in.  So, if they look unlikely to upgrade and they look unlikely to increase the frequency of gifts, the only other way to increase their lifetime value (other than increasing their retention rate) is to decrease costs.  Let’s say you send an average of 14 mail pieces per year and do two telemarketing cycles.  This person probably can decrease this substantially and save costs.

Longevity.  Length of donation is something that should be honored.  Not only are milestone anniversary notes and certificates and the like a good thing to do from a moral and ethos perspective, but they will also make sure that your most loyal donors know that you know they are important to you.

Channel responsiveness.  Change your tactics to suit the terrain.

All of these are even more important when looking at borderline segments.  Should you mail the 13-18 $15-$19.99 multis?  Maybe just those that have been with you five years or more?  Or with previous high gift densities?  Or just mail responsive?

But there’s more to it than even that; tomorrow, we’ll talking about using other interactions with your organization to define and customize.

Including loyalty in your beyond-RFM segmentation

Using your real estate better: post-donation interaction

nickellinger, , , , , Leave a comment

Online and telemarketing donations have a unique feature that few other direct marketing interactions have: you are still communicating with them once they have made their donation.

Obviously, a large part of this post-donation interaction should be aimed at confirming that the donation was made and sincerely thanking the person for contributing to the cause.

But there is a unique opportunity in these interactions to get additional value from and give additional value to your donors; it’s the time between donation and processing.  A person has selected an amount, given their credit card (or EFT) information, and decided to make the donation (whether online or by phone).  But the person or the series of tubes has not yet processed the credit card.

You may not even have known there was a time in between donation and processing; I know it took me years before realizing this.  But you can put a shadowbox on your donation page immediately after someone hits “Submit” (or hopefully a more creative button like “Save Lives Now!”).  For telemarketers, it’s just a part of the script.

Since the donor is unlikely to turn back at this point, it’s an ideal time to explore an additional option with them (and I do mean “an” in the sense of “one and only one” – we do not want to turn off the donor).  There are two goals you can have for this: upgrade in amount or upgrade in kind.

If you are looking to upgrade in amount, I would suggest:

  • Selecting a small amount – something that is 10% or less of your normal donation in the medium.
  • Tying it directly to a tangible and immediate win for the donor – e.g., “if you add $3 to your donation right now, you’ll be feeding a child three healthy, lifesaving meals in war-torn Freedonia tomorrow.”
  • Making it very easy to say no and move on with the original donation.  This is not a circumstance to let the better be the enemy of the good.

Because of the limited upside of this tactic, I would suggest the second option: aiming for an upgrade in kind.  This will almost always be trying to upgrade to a monthly gift.  Some tips on this upgrade:

Don’t get greedy.  One of the more frequent upgrade strategies attempted online is a check box that says “repeat this gift on a monthly basis” as part of the donation form.  There are three problems with this:

  1. It explains none of the reasons why you would want to do such a thing
  2. It’s stilted, non-donor-friendly language
  3. It’s before the donation is attempted.  In this case, if the donor is turned off by this half-asked ask, there is no donation.

You want to make the donation ask small enough that it seems like a similar amount of money to what they have already pledged to give.  While you will want to test what this amount is for your organization, I’d advocate a rule of thumb that you’d want to start at about a quarter, plus or minus, of what a person has pledged to give.  Thus, if someone wanted to make a $100 gift, ask them if they would like to make a $25 monthly donation instead.

It doesn’t take a rocket surgeon or a brain scientist to see that this will take at least four months to pay off.  But the average monthly donor is far more loyal than the average one-time donor and will likely extend out past this four-month mark.  And, since we humans value present money more than future money (witness the exchange rate we are taught between birds-in-hand and birds-in-bush), this seems reasonable-ish to the prospective donor.

Explain the benefits of the upgrade to the organization. Your donor has already made the tough decision: to donate to you in order to help people.  If there is a way that they can be more effective in their giving, they are more receptive to it at this point than almost any other (and, at the very least, are not that likely to be turned off by it).  So let them know that giving a smaller amount per month helps even more, because it’s predictable revenue that helps you get through lean times together.  You’ll also likely want to have some strong social math here (what does their $10/month do in terms of tangible benefit) as well as positioning against a hedonic good (“that’s the price of a cup of coffee each day”) to help you win the upgrade.

Explain the benefits of the upgrade to the donor.  Of course, to some extent, being able to help more people is a benefit to the donor – that was their goal going in and they are able to do more of it.  However, there are also tangible benefits as well:

  • Ease.  No more forgetting a donation the donor might want to make.
  • Budgeting.  The donor would be able to budget for donations on a monthly basis, which is how our mental accounting systems usually work.
  • The donor will be able to cancel at any time.  This is critical in the pitch.  You want people to know that you want only 100% satisfied* donors and thus want them to have freedom in their donation.  This is also because one of the primary mental objections to setting a monthly donation is “what if I change my mind?” (and its close cousin, “what if the organization does something I don’t like?”).

You can also put in whatever benefits your organization has for monthly donors (e.g., special member card, donor newsletter, etc.), but I would test it both with and without.  You might find your donors are more drawn in by the mission and the impact they are having and don’t want that special relationship cheapened.

Speaking of special relationships, I’d like to have one with you through our weekly newsletter.  You can sign up here and get the week’s updates in digest form, along with late-breaking thoughts and information.  Thanks for reading!

* Perhaps even donors who are 110% satisfied, for those direct marketers who are bad at math.

Using your real estate better: post-donation interaction

Using your real estate better: reply devices

nickellinger, , , , , , , Leave a comment

When people in your organization review a mail piece, people expend sound, fury, and energy on the teaser copy, the word choice in the letter, and the photographs used.  

But I bet you could send around a reply envelope with the wrong return address on it and have no one notice it.  I’ve actually done this test, albeit unintentionally; I am not immune.  I caught the error in the final proof process, meaning I missed it twice before.

This is where you, as the direct marketing expert, justify your salary.  Anyone can go through a letter with a red pen and choose their own favorite words.  You get to do the unsexy things that will get results.

And the reply device is probably the unsexiest thing in mail, which is saying something.  If your mail piece were the crack spy team, the reply device would the guy in the van.

573-20091

“You know what? I’m sick of being in the van. You guys are going to be in the van next time. I’ve been in the van for 15 years, Harry.”

— Gib,  True Lies

It’s also where a mail piece is one and lost.  And it’s a place where you can implement your priorities where no one will yell boo.

So, some ideas:

  • Anchoring.  We’ve talked a bit about this here and the science of ask strings here.  However, there’s a wonderful SOFII article about the making of a mail piece here  that explains the below the reply device.

    art_51_reply

    Did you notice the $6518 option?  Not only is that a nice high anchor that people are giving toward, but they find that some people actually give that.  From the SOFII piece:

    There is, however, one twist: there is an option to donate a sum of $6,518. We put that figure in because it is the actual average cost of granting a wish. Every now and then, when I’ve done that before, you find a donor who is willing to donate at that level. We did this once for a hospital when the price point for a piece of equipment was $6,942.73. Thirteen people “bought” this device. These donors upgraded from an average of $65 to nearly $7,000. It never hurts to ask.

    Good for you, Make-A-Wish!

  • Ask for more information about a donor.  Your mind must always be in two places about a donor or prospect: where they are now and where there are the possibilities of them going. One opportunity is for this donor to become a multichannel donor; to do that, you need an email address or phone number.  And, while you can append these data, this has costs both in money and in not learning what method(s) by which your donor wants to be contacted.

  • Ask about other opportunities.  Would this donor be interested in more information about becoming a monthly donor, leaving your organization in their will, or donating a used car?  You will never know unless you ask.

  • Customize based on what you already know.  Usually, reply devices are mass printed, which seems to be a missed opportunity.  If you already have the person’s email address or phone number, you shouldn’t ask again.  Likewise, if someone has ignored your checkbox for planned giving five times in a row, perhaps a monthly giving offer is more her/his speed.

There’s also the reply envelope; if the reply device is the guy in the van, the envelope is the guy in the van’s intern.  Usually these are blank.  However, messaging on the envelope can:

  • Reinforce the person’s decision to donate with trust indicators like the BBB seal.
  • Build urgency with messages like “Rush this envelope to save lives.”
  • Spread program awareness (e.g., “If you or a loved one has been affected by X, please call our hot line at 800-XXX-XXXX”)
  • Help with the program allocation of your mail piece in joint cost allocation.  (For those not familiar with this procedure, you should be looking at each of your pieces and determining what percentage of this content is for each of your programs and what is fundraising for the purposes of your tax returns.  Additional program messaging on the envelope gives a slight boost to the programmatic content.)

Just because the reply mechanisms don’t have as much messaging doesn’t mean that you still can’t make them work for you.  Hopefully, these tips have helped you customize your reply so that you can get more replies.

Using your real estate better: reply devices

Welcome step three: Ask again

nickellinger, , , , , , Leave a comment

Now you have thanked someone for their gift, you’ve used both asking and revealed preferences to learn about your donor, and you have given your donor opportunities to learn about you.  Once all of this is established, you should ask again.

I’ve said earlier that the welcome series time doesn’t matter too much to me, as long as you are accomplishing all of these objectives.  I’m going to give lie to that here to say that you should be trying to get to this point fairly soon (within 15-30 days online; within 30-60 days offline).  Contrary to your intuition and the indignant cries of your board members that they would never give again so soon after making a first gift, this window is actually your best opportunity for getting that second gift.

And it is critical to get that second gift, for a couple of reasons:

  • Your likelihood of retaining a donor goes up significantly after a second gift.  This is why I advocate not looking at a monolithic retention rate.  Instead, it’s best to break down into retention among new, first-year, lapsed reinstated, and multiyear donors; the retention rates among these are really that different.  Indeed, that’s why on Monday I said that a one-time giver is not really a donor.  Retention rates after first gift are really that low.

  • The second gift sets the tone for the rest of their relationship with you.  Looking at one of the studies we’ve discussed on ask strings, you can see that first-time donors are fluid in terms of their giving. They are in a place where it is literally better to ask them for anything but what they gave previously.  Multidonors, on the other hand, need to be asked for what they were asked for previously.  Ask them for too little and they will downgrade; too much and they will not give.

1280px-Blacksmith_workingImage source here.
It’s a metaphor for a reason: cool metal hardens — only when it is hot is it pliable.

If you have done your welcome series/letter/email/whatever well, this ask should be natural.  You’ve learned about them, you’ve customized your ask to specifically what they want to hear about and who they are, and you know that what you are asking them for is something they will support.

Because of this, and because of the fluidity of first-time donors, I strongly advocate that this second ask be an upgrade in amount or degree.

After all, your ask now should be improved from your semi-blind graspings in acquisition, where your goal was to cast your net far and wide.

And you can drastically increase the value of your donor (to you and hopefully to them) by upgrading them to a monthly giver.

There are some who advocate for acquiring with a monthly giving ask (and, in fact, acquiring with only a monthly giving ask).  As I’ve mentioned, I don’t have the guts to try this yet, other than in means like DRTV where the medium is too expensive to try anything else.  (If you’ve done this, please write in the comments or to nick@directtodonor.com.  I would love to share your experiences with the readers of this blog and/or to read them myself).

But post-acquisition, you may have the perfect storm of factors to lead someone to become a monthly giver:

  • They are still in the glow of their first gift
  • You’ve created a customized experience for them
  • They have not yet become set in their ways of how they give to you.  We’ll talk more about mental accounting at some point, but suffice it to say that people have different boxes of finances in their heads.  Once you are in a box, it is difficult to break out of it unless the person’s finances or perceptions of you change.

We’ll dedicate a week to monthly giving, but you’ve already seen some of the tactics you can bring to bear in this upgrade ask:

It’s definitely worth testing against a more traditional upgrade strategy that would ask for a larger one-time gift.  So test away, but make sure both versions incorporate what you know about the donor.

Welcome step three: Ask again

Welcome step two: Learn more about your donors and engage them

nickellinger, , , , , , Leave a comment

You’ve now created a gap between now and your normal communication stream for your new donor.  What do you do next?  As any Londoner can tell you, you now need to

bakerloo_line_-_waterloo_-_mind_the_gap

We know in case after case that personalization increases the effectiveness of direct marketing.  And not just making sure the person’s name is spelled correctly: it’s about making sure you know why they are giving and are thanking and soliciting them under those auspices.

With a new donor, you will have a single data point with which to start.  They responded to theme A through medium B.  You can leg your way into donor knowledge as we recommend by changing one thing at a time, but that won’t help you get that second gift.  And even if you are doing well, 60-70% of the time, you won’t get that gift.

Previously, I’d talked about the two ways of getting information about your supporters: watching their behavior and asking them.  It turns out those are the two things you should be doing in your welcome communications as well.

The critical step, and the one most often missed, is setting up opportunities for behavior watching and for feedback.  Or sometimes we go to the opposite extreme and send an email for every little bit of our mission we can think of, drowning the donor or prospect with a deluge of did-you-knows.

The way to maintain that balance with your supporters is to give them three major opportunities:

  • To use you as a resource.  People are more likely to support organizations that solve their problem.  This can range from “I want to eat more sustainably but I’m drowning in a sea of cage-free, organic, cruelty-free, etc. labels and don’t know how” to “I donated to suicide prevention because a friend committed suicide, but now I’m having these thoughts…”.  We nonprofits are (or should be) experts in our area and we can help in these areas.  And, as a much secondary effect, it allows us to see our supporter as a person. 
  • To use you as means to accomplish their goal.  If they donated to a particular issue, they may also want to write their legislator about it — that may give them the same (or similar) warm feeling that donating did.  Or they may want to volunteer in a very specific way that helps them achieve the same end their donation did.

 

  • To learn what they think.  You want to know how you can serve them better.  This can be through a survey or an open-ended question.  Or this can be an opportunity to bring in a different medium by having a human call them, thank them, and ask for why they gave and why to you.

The larger point here is that these should be framed in how they help the donor or cause, not how they help you.  It’s amazing how much of a difference there is between “We are also on social media, so like us on Facebook and follow us on Twitter!” and “Our Facebook community helps parents of children with autism support each other, so please join in if you’d like to hear from others who have been where you are.”

It goes without saying that you should track these activities.  If someone sends back the petition in their mail package, advocacy is something that appeals to them.  Thus, the way to get them to be a higher value donor may not be to get a second gift through the mail (although you should try); it may be to get them to be a frequent online advocate, then ask them after an online petition to become a monthly giver to support the specific advocacy activities they enjoy.

It’s even easier online.  If someone clicks on your link for more information for parents of kids with autism, you know they almost certain fall into this category themselves.  This is a programmatic opportunity as well as a fundraising one, but all boats will lift if you have this information and use it to help the person in question.  Links that you send should be trackable and appended to each supporter’s record so you can customize your messaging.  

The alternative is to become the cable company that asks you for your phone number with their automated system, then has a person ask you for it, even though caller ID is a thing that has existed for a while in this universe.  If someone tells you something, they will expect that you know it.  And clicks are, believe it or not, communication.

There is a lot of ink and virtual ink used on how many emails or mail pieces you should have in a welcome series, how long it should last, etc.  You’ll notice that I don’t cover any of that here, because I don’t find it to be all that important.  If you can accomplish the thank you, learning, and engagement all in one communication, go for it.  On the flip side, as long as a welcome series is about supporters’ interests, it’s difficult to say that it is going on too long.

Welcome step two: Learn more about your donors and engage them

Step one in welcoming: the thank you

nickellinger, , , , , Leave a comment

I’ve already done a week on thanking your donors.  Somehow, I managed to talk about why to thank people, rules for thanking donors, 50 ways to thank donors, and ways to thank people multichannel-ly.

And I didn’t talk about what should be in a thank you.

It’s a wonder you even read this blog — thank you for that.

One source to which I’m indebted for this week and many others is Roger Craver’s Retention Fundraising. It is a classic about how to retain donors that I can’t recommend highly enough.  He posits that there are seven drivers of retention:

  • Are you effective at your mission?
  • Does the donor know what to expect from interactions with you?
  • Are your thank yous timely?
  • Do you listen?
  • Does the donor feel s/he is a part of something important?
  • Does the donor feel appreciated?
  • Does the donor receive information about who is being helped?

These are the things you are trying to accomplish with your thank you, and with your welcome series.  Most of these apply to any acknowledgment, but they are most important for a first gift.

Remember emotion.  So many acknowledgments aren’t thank you notes.  They sound like they were written by someone trying to tell Sgt. Friday about your donation.

jack_webb_joe_friday_dragnet_1957

At 1430 hours, the suspect made a donation.
It was tax deductible pursuant to 26 US Code 170.

They are long on amount and date and making sure your name right and short on capturing anything related to the donor’s experience in making the gift.  As we’ve discussed, the vast majority of gifts are made not because of what someone thought, but what they felt.  The thank you know should respond to this in kind.

Specify to why.  Along the same lines, the thank you should not just replicate the emotion of the original, but also tie into the story and the reason for giving.  If someone gave with a petition attached, the thank you should reference the petition and how it is helping make a difference.  If they gave you their email address on the reply device, they should be thanked in both medium.  Ideally, the signatory of the thank you should be the same signer of the appeal letter.

Especially with a first gift, it’s important to establish trust.  Relating the thank you to the gift is a good way of establishing that trust.

Remember their past giving.  If they’ve been giving for 10 years, let them know you know that.  While not strictly related to welcome packages, it’s important not to forget this.

Prove the impact.  This also helps build trust.  If you said the donor’s gift would help build a well, the story and pictures, and emotional impact from the thank you should be related to the impact from the well.  Especially if you are not a name-brand charity, the donor is taking a chance on you doing what you say you are going to do with the donation.  Letting them know that you did helps build a relationship and ties them to the impact (not the output) they were hoping to have.

Remember, the donor wants to know who they helped and why that’s important.  Help them.

Differentiate.  A first donation is more predictive than any other donation.  If someone donates an abnormally high amount to your first solicitation of them, they are uniquely dedicated to your cause and/or of substantially greater means than the average donor.  Chances are good that you have a special procedure for anyone who gives over a certain amount (let’s say $1000) to your organization, whether it’s a phone call or handwritten note.  I would advocate you extend this to people whose first gift is abnormally high.  It may seem odd to extend the same treatment to someone who gives $1000 and someone who gives $100, but chances are good that that $100 donor is your $1000 donor of the future.

Do not delay for differentiation.  That said, you hear horror stories of processes for larger donors that delay their thank yous.  You may think I’m exaggerating here, but at the summer camp for future non-profit direct marketers, the counselors would shine a flashlight on their face from under their chin and say things like “And then the letters sat on the executive director’s desk.  And they sat.  And they sat.  And they sat.  For over. Three.  Weeks.”  We campers would not be able to go to sleep, knowing that our best donors were getting the worst treatment.

Perhaps I went to the wrong type of summer camp.

Anyway, there are four solutions to this dilemma:

  1. Light a fire under whoever is supposed to be writing or calling
  2. Pick someone else to do the writing or calling (or have a team of people to share the load)
  3. Use a quasi-high-touch solution like outbound voice mail or pseudo-handwritten cards
  4. Send a regular thank-you note immediately, then follow-up with a phone call or handwritten note

All of these have their merits, but I strongly recommend solution four.  Not only will this thank the donor twice, which is rarely a bad thing, but it will make your process independent of personalities.  I am a big fan of processes that work regardless of the people who are in them.  You may say your ED or board member is extremely punctual with their calls and letters, but this may not always be the case.

Test high-touch pieces below where you currently are doing them.  If you aren’t differentiating at all, well, now’s a great time to start.  If you are, I recommend a test of doing handwritten notes, phone calls, or other high-touch solutions to at least a segment of whatever half of your current threshold value is (so, if you do $1000+, try it with $500+ donors).  Track their giving over the next year and see if it pans out.

My guess is that, if your organization is like almost every other organization I’ve seen, three things are true:

  • Your current threshold was set by someone in the mists of time because it was a good round number that didn’t sound like an overwhelming amount of work for the person/people involved.
  • It has gone through little to no scientific inquiry in the interim.
  • There are touchpoints you can do that will raise the value of the next tier of donors that will justify the amount of work necessary.

There is a who-is-going-to-tie-the-bell-around-the-cat’s-neck problem with this solution.  I would recommend you, the reader of this blog.  Talking to contributors and thanking them for making important work possible is beneath no one.  You will likely not only get a lift in your response rates, but you will also gain vital donor intelligence that few others in your organization will get by having actual conversations with actual donors.

Turn off regular communications with new donors for a certain amount of time.  In the mail, this is easy.  Chances are you have already pulled the list of people you are going to be mailing 30-60 days from now.  Thus, a suppression emerges naturally (although you may wish to lengthen it).  For online initiates, there is a temptation to drop them into regular communications immediately.  

Don’t.

Remember yesterday’s post — you are looking to thank this person, learn about them, have them learn about (and perhaps interact in a non-donor context with) you, and make a strategic ask for a second gift.

If they are dropped into regular communications, there is a near-100% certainty that they will get asked with no learning, which is not strategic.

The amount of time is not really the important part; accomplishing your communications goals is, so you can test what the right amount of time is for you.  And, as Roger told you at the top, be sure to let them know what they can expect from you (and I would add “and allow them to change that default”).

What do you put in the interim?  Well, that’s what I’ll talk about for the rest of the week.

If you would like to get these weeks in digest form, please sign up for my weekly newsletter, where you’ll get not only context for these posts, but also my random neural firings and previews of upcoming posts.  You won’t want to miss it.

Unless you do and that’s fine too — I just appreciate that you are reading.

Step one in welcoming: the thank you

Learn about your donors by changing one thing

nickellinger, , , , , , Leave a comment

Congratulations!  A constituent joined your organization!  Now what?  

Welcome series!  Then what?

Well, of course, you drop them into the communication channel of their origin right?

As our Direct Marketing Master Yoda* would say:

6a90683cc161c525f9fbc01036b2c5b6

No. No. No.  Quicker, easier, more seductive.

But in this case, not ideal.  It’s not ideal for the constituent and it’s not ideal for learning more about what this person actually wants — you may be freezing what this person “is” before you’ve had a chance to find out.

The person has already told you that they are responsive to three things:

  • Medium: If they respond to a mail piece, for example, they do not hate mail pieces. It may not be their only, or even their favorite means of communication, but it is one to which they respond.
  • Message: Your mission probably entails multiple things.  Your goal may be wetlands preservation and you work to accomplish this through education, research, and direct conservation.  If someone downloaded your white paper on the current state of wetlands research and your additional research goals, you know that they are responsive to that research message.  It may not be their only or favorite message, but they respond.
  • Action: If someone donates, they are willing to donate.  If they sign a petition, they are willing to petition.  You can guess the rest of this about them perhaps being willing to do other things.

Other than welcome series, which I’ll talk about at another time, you are trying to sail between the Scylla of sending the same thing over and over again and the Charybdis of bombarding people with different, alien messages, media, and asks.

Thus, I would recommend what I’d call the bowling alley approach in honor of Geoffrey Moore, who advocated for a similar approach to entering new markets in his for-profit entrepreneurial classic Crossing the Chasm. 

The idea in the for-profit world is that you enter with one market with one product.  Once you have a foothold, you try to see that same market a different product and a different market your original product, in the same way that hitting a front bowling pin works to knock down the two behind it.

Here, we play three-dimensional bowling**. The idea behind the non-profit bowling alley, or change one, approach is that you should change only one aspect at a time of your medium, message, and action.

Let’s take our wetlands organization as an example — they work to educate, research, and conserve.  They have people who download white papers and informational packets, people who take advocacy actions, and donors.  And their means of communication are mail, phone, and online.

Let’s further take a person who downloads a white paper on research online and provides her mail and email address.  The usual temptation would be to drop her into the regular email newsletter and into the warm lead acquisition mail stream (and maybe to even do a phone append to call her).

But this would not be the best approach: you would be taking someone who, for all you know, is interested only in one medium, message, and action and asking them for something completely different.

Rather, it would be better if at first you probe other areas of interest.  Ideally, you would ask her:

  • Online for downloading additional information about research (same medium, message, and action)
  • Online for advocacy actions and donations related to research (same medium and message; different action)
  • Online for downloading information about education and conservation (same medium and action; different message)
  • In the mail and on the phone for getting additional information about research (same message and action; different medium)

Obviously, this last part is not practical; mail and phone are too expensive to not have a donation ask involved. However, you could make the mail and phone asks specific to “we need your help to help make our research resources available not just to you, but to policymakers across the country” — tying it as directly as possible to where their known area of interest.

Over time, you should get a strong picture of this person.  Maybe they are willing to do anything for your organization by any means as long as it is focus on your research initiatives.  Maybe they are willing to engage with you about anything, as long as it is only online.  And maybe they like research and conservation, but not education; online and mail, but not phone; and getting information and donating, but not engaging their representatives.

Taking it one step at a time not only helps you learn this over time, but also helps you learn it without culture shock.  If someone downloads a white paper and you ask them to take an advocacy action on that same issue online, they may not be interested, but they likely see the throughline to the action they took.  If they download a white paper and get a phone call for an unrelated action, they likely will not.

It’s the difference between a donor response of “I can see why you’d think that, but no thanks” and “what the hell?” (followed by the constituent equivalent of getting a drink thrown in your face).

It’s also why I recommend going back to the original communication mechanism for lapsed donors in the lapsed donor reactivation post.  In that case, it may be literally the one and only thing you know that works.

You may say that you don’t have the resources to do five different versions of each mail piece or telephone script.  But you can do this inexpensively if you are varying your mail messages throughout the year.  For a warm lead acquisition strategy, simply make sure the advocacy people get the advocacy mail piece and not the others for now.  If you find out some of them are responsive to a mail donation ask, you can ramp up cadence later, but for now, your slower cultivation and learning strategy can pay dividends.

This also helps prevent a common mistake: creating groups like “online advocates,” “white paper downloaders,” etc. and then mailing them without cross-suppression.  If you send each of three groups a monthly mail piece and someone is in all three groups, they may end up getting 36 mail pieces if you don’t cross-suppression (so that these groups are prioritized into like packages instead of everyone in a group getting everything).

Tomorrow, we’ll talk about how to get this type of intelligence from what you’ve already done.

* Don’t believe me?  Check Yoda’s outstanding donor newsletter here. 

** Science fiction always has people playing three-dimensional chess, but not three-dimensional bowling.  Why or why not?  Discuss.

Learn about your donors by changing one thing

Why know about your donors?

nickellinger, , , Leave a comment

Winter is coming to nonprofits. Unnamed, faceless, cold, sparse, biting, relentless, gnawing winter. And not all of us will survive.

sean-bean

There are more nonprofits than ever before and that number is increasing.

The pie of charitable giving is expanding, but not as a percentage of GDP and not as a much as the number of nonprofits are expanding. Thus, the average nonprofit’s funding will be going down.

Retention rates (when controlling for lifecycle as advocated here) are at best flat and often down. Online donor retention rates are particularly alarming.

And it is becoming more expensive to retain donors. In order to hit net revenue budgets, nonprofits increase the number of communications sent. Communications increase in quantity and decrease in quality of results for each piece.

As retention drops, the need for additional acquisition increases, further increasing donor-by-donor pressure to give broadly and shallowly.

Nonprofits flee to what they believe is quality, recapitulating what has worked for others. Donors see the playbook, whether it is address labels or a compelling story.

Everyone has a story and most can be told compellingly. So we do. But it’s enough less and less of the time.

Most nonprofits do most of their acquisition from lists of people who give to other nonprofits. Few bring in new people to the idea of philanthropy, considering it is easier to get the philanthropic to give more.

The tragedy of the commons plays out in a million different households. Maybe ten million. To give to one is to be solicited by that one and by the many.

The donor pool is now an apt analogy, as we are polluting and overfishing these same waters without restocking.

Winter is coming. So what needs to be done first?

One might say let’s prevent winter. One would be correct. It is necessary for our long-term survival. We will talk about converting people into the idea of giving at another time — it would be called stimulating primary demand in the for-profit world.

But one must survive the short term to get to the long term. And thus, there is something we need to do first.

One might say to be donor-centric and to love our donors. One would be correct. The ones who will make it through this winter will be the ones that have stood out from the crowd. Their envelopes will be opened, possibly partly for the free gift, but mostly for the joy they create and reinforce. Their emails will be read possibly partly for a nifty subject line, but mostly for a human connection that they forge. Their calls will be answered because they thanked and thanked well.

But there is a precondition for donor-centric treatment. And thus, there is something we need to do first.

The first thing is to know. We must know who donates. Yes, we need to know their demographics, but also far beyond that. We need to know the world they dream of creating. And we need to tell them about how they are helping to create that world.

These wonderful people are planting seeds. They are planning them so kids have a place to swing, so there is shade, so that people can breathe easier, so we can have apples. We owe it to apple people to know they in it for the apples. We owe it to them to tell them about neither the tire swing nor the shade if they don’t care. Our story to them will be the deep moist flesh that children will pick from their tree and the juices that will stay on their cheeks until banished by a shirt sleeve. We will speak of shade to shade people and breathing to those who value breathing most.

To do this, we need to know.

This week will be focused on how to know. I’ll go into the sausage-making that is gaining donor intelligence. But it’s important we start with the why.

It’s because winter is coming. Only those provisioned with true friends will make it through.

The good news is that we are nonprofits. We face down demons worse than winter.

Why know about your donors?

How to structure your matching gift campaign

nickellinger, , , , , Leave a comment

Matching gift campaigns work. But are they necessary?

Whether it’s a grantor’s challenge fund, a campaign match, a fund set up by a generous donor or donors, matching gifts are a frequently used and frequently successful tactic.  Most of the time, it’s set up as a “double your impact” campaign.

Three researchers — Huck, Rasul, and Shepard — looked at whether a lead donor increased the success of a campaign and how the structure of the match impacted that success.

They did this for the Bavarian State Opera House.  (BTW, if you are a researcher and want to run a test with donors on your dime, email me at nick@directtodonor.com; I’m usually game.)

300px-mc3bcnchen_nationaltheater_interior

The Bavarian State Opera House.
Fundraising motto: hey, these inlays don’t gild themselves.

Here were the six test treatments:

  1. Control: No lead donor, no match commitment
  2. Lead donor: A generous donor has already funded part of the program for 60,000 Euros (remember, Bavarian State Opera House).  We need your help with the other part.
  3. 50% match: A generous donor will match your Euro with .5 Euro.
  4. 100% match: Euro for Euro match
  5. Non-linear matching: A generous donor will match any gift made over and above 50 Euros.  (Which is to say if you donate 120 Euros, the donor gives 70.  If you donate 70, the donor gives 20.  If you donate 40, the donor gives nothing)
  6. Fixed gift matching: A generous donor will match any positive gift made with 20 Euros of his* own.

Got your guesses of what will do what?  Good — here we go with the results**:

Response rate Average gift Revenue per piece
Control 3.7% 74.3 2.79
Lead donor 3.5% 132 4.62
50% match 4.2% 101 4.19
100% match 4.2% 92.3 3.84
Non-linear match 4.3% 97.9 4.18
Fixed gift match 4.7% 69.2 3.27

Yeah, not what I thought either.  I figured, from all of the virtual ink I spilled in social proof and authority last week, that the presence of a lead donor would help. Presumably, there was another mechanism in place — that of anchoring.  I’ll dedicate a full post or five to anchoring effects at some point, but now, suffice it to say that by throwing out the number of 60,000 Euros you can trigger the idea that a person’s gift should be closer to that number.  For some, that may turn them off (although the decline in response rate wasn’t statistically significant).

What surprised me was that the matches didn’t help revenue per piece (unless of course the match is generating marginal revenue).  The matches increase response rates, but the average gift was significantly lower in all of the matches.  The authors’ hypothesis is that the match has a bit of a crowding out effect — that is, the donor feels like their 50 Euros is actually 100 Euros, so they need not make the donation of 100 Euros to have the impact they wanted to have.  This is certainly plausible and consistent with previous research.

What to make of this? Like, I’m guessing, many of you, I’d only tested matching gift language versus control language. However, there is some evidence here that simply stating that a lead gift has been made can increase the anchoring effect and support the idea that a program is worth funding without potential negative byproducts of crowding out donations.

That’s for the general case.  You might also take a look at a fixed gift match depending on your goal.  Generally, I prefer quality of donors to quantity.  However, if you were running a campaign like lapsed reactivation, you might legitimately want to maximize your response rate at the expense of short-term net revenue.

Based on this, I’m going to be looking at testing this against our typical matching gift campaign.  If you do likewise, please let me know at nick@directtodonor.com or in the comments below.  It would be great to see additional evidence on this.

*  The gendering is from the original — not my own.

** The rounding is in the original paper and throws off the revenue per piece variable a bit, but I chose to stick with what they had in the original paper.

How to structure your matching gift campaign