Essentials of donor loyalty
There are a trillion fundraising topics to choose from, but today I’ve chosen one I consider the most important: donor loyalty.
When I started to use Twitter I decided to tweet only about fundraising. To boost my followers I thought I'd summarize the best Tiny book in the series: Essentials of Donor Loyalty from professor Adrian Sargeant. In the end I tweeted the tiniest summary of the book ever done... in 71 tweets.
This little book is an easy and quick read and it will give you the best return on your investment ever. To be honest, it's a must read for everyone involved with fundraising! (Buy the book!) I wanted to do a top 5, but my heart broke with every tweet I had to delete, because each contains a valuable lesson. So here is my top 9 donor loyalty tweets!
According to Sargeant “building donor loyalty is the single biggest challenge facing the sector today”. “By failing to address the issue of attrition we waste potentially enormous sums of money”. Each of the points made by Sargeant has been substantiated through 20 years of prior research. Even more interesting: “almost all loyalty suggestions offered could be implemented at almost zero incremental cost!” He says “there is no longer any reason to accept the appallingly high levels of attrition in our sector...”
1. Typically a 10% improvement in the level of loyalty increases the LTV of your database by 50%.
This is basically what it’s all about. If you can improve your loyalty only a small bit, the long term effect is much and much greater. Sargeant explains: “This happens because the effect compounds over time. If you have 10 per cent more donors still giving at the end of the current year you have 10 per cent more people giving to the organization through year two. In the second year you’ll lose 10 per cent fewer of these and lose fewer of the balance in each subsequent year. Over time the effect mounts up.”
2. Charities need to think about remunerating their fundraisers for the loyalty improvements they deliver.
Long term performance based remuneration is perhaps the solution. What if we would increase salaries from fundraisers with 10% if they improved donor loyalty with 10%? That sounds like something you might want to invest in...
3. Donors have little way to assess your charity's work; they use the service you provide to them as a surrogate.
This one is among my personal favorites. Think about it. A large part of your donors often have no clue what you’re really doing, how you’re doing it and what challenges you need to overcome to reach your goals. So, there is no way the majority of donors can truly assess the great things your nonprofit is doing. Apart from trying to explain your work much better to these great people, it makes sense to at least provide them the best service, which they fully understand. Donors will use the service that you provide to them as a surrogate to assess your campaign work. It might sound strange that they will form an opinion on the valuable humanitarian life-saving work you do based on how you answer the phone, or how swift you send out your thank you letters, or whether you give supporters genuine personal attention when you communicate with them, but apparently it works like this, so you better have an impeccable donor service.
4. Contact with donors about satisfaction is key in fostering retention and offends no one.
When was the last time you asked your donors if they are satisfied? Most of us are sending one-way communication. There is no dialogue with our supporters. It’s mostly a monologue from your side, while is makes sense to communicate in a relationship.
5. Know why people terminate their support so recurring themes can be tackled.
Your database is capturing all available data, including cancellation reasons. It’s a good way to see trends or procedural errors of your newest campaign, but also very necessary for future segmentations in your reactivation campaign. By the way, currently we all try to “save” our supporters and prevent them from cancelling. You can only do this when you set up a process that captures this data.
6. Active donor commitment is the enduring passion for your nonprofit. Inspiring donors is key for loyalty.
As fundraisers it is our job to inspire supporters. We need to make them understand that with our help change is possible. Explain what we want to change, how we will do that and what the impact will be. We’re not only inviting them to be part of our vision and mission. We actually provide them a journey which they’ve been looking for to express their charitable feelings (yes, donors have feelings too). It’s a life changing experience and they can be part of that journey.
7. Donors who feel the cause takes them on a coordinated learning journey will be significantly more loyal.
Talking about a journey: the supporter journey. Nowadays, hopefully, everybody is working hard on their supporter journeys. Supporters who are just recruited should get entirely different communication than the supporter who has been contributing for more than 10 years with a much higher value. Find out what are the most useful angles to look at donor communication: relationship stage, donor segment, recruitment or communication channel…
8. To summarize: the big three drivers of donor loyalty are satisfaction, commitment and trust.
This is actually the summarizing tweet within the summary of the summary. The so called nutshell tweet.
9. [Fundraisers] taking decisions with an eye to the longer term would have a profound effect on donor loyalty.
Fundraising is not about short term successes. The ultimate goal is to set up a lasting relationship, which will result in more funding over time with less cost. There are not a lot of fundraisers who would disagree with this. However, if you take a closer look at your fundraising programs, you’ll see that in most programs the long term angle is missing in many places… It’s annoying, so I’ll come back to this topic in a next blog post!
Thank you Professor Sargeant for this incredible valuable work.
So, are YOU convinced of the power of loyalty?
[This post is slightly adapted from a post that first appeared on 101fundraising.]