DM201: Retention and Lapsed Strategies
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1 DM201: Retention and Lapsed Strategies Presented by: Megan Contakes, Principal at Integrated Direct Marketing Marie Kosanovich, Account Director at The Lukens Company
2 What s Happening in the Donor Market? Source: Blackbaud, donorcentrics Index of Direct Marketing Fundraising Q
3 What s Happening to Retention? Every 100 Donors Gained in 2012 was Offset by 105 Lost Donors Through Attrition Source: Fundraising Effectiveness Project 3
4 Why is Retention so Important? 40% Annual Retention Donors Avg. Gift Income Year 1 1,900,000 $20.00 $38,000,000 Year 2 760,000 $22.00 $16,720,000 Year 3 304,000 $24.00 $7,296,000 Client A: Increasing annual retention of existing donors from 40% to 50% generates an additional $8,285,000 over three years. Total 2,964,000 $62,016,000 50% Annual Retention Donors Avg. Gift Income Year 1 1,900,000 $20.00 $38,000,000 Year 2 950,000 $22.00 $20,900,000 Year 3 475,000 $24.00 $11,400,000 Total 3,325,000 $70,300,000 4
5 Retention Basics Focus on Highest Value Donors First Align Acquisition Strategy with Retention Goals Make First-year Donor Retention a Priority Maximize Performance to Renewal Series (Renewals are the Key Driver of Retention) Leverage Appeals to Reinstate High Value Donors Invest Heavily in Monthly Giving Recruitment Spend at Least as Much to Reinstate an Existing Donor as You Would to Acquire a New Donor And 5
6 Mail Often Frequency Matters! Under-soliciting donors is a major contributor to poor retention. The typical donor gives to at least 6 charities per year if you aren t asking, someone else is! November 2013: 120 Solicitations 6
7 Focus on Highest Value Donors 100% 80% Donors by Gift Range 100% 80% Income by Gift Range 60% 60% 40% 40% 20% 20% 0% 0% <$10 $10-14 $15-19 $20-24 $25-34 $35-49 $50-99 $ $ $ $ Client A: $100+ Donors 1/3 of Donors, but Produce 2/3 of Income 7
8 Cultivation Opportunities Tele-Townhall/Web Chat Copy of Special Report/Annual Report Recognition of Donor Anniversary Special Communications Stream 8
9 Retention Starts with Acquisition First Gift Amount is One of the Strongest Predictors of Retention The Higher the Join Gift, the Higher the Retention Rate Join Gift Retention Rate $1 - $24 12% $25 - $49 30% $50 - $99 38% $ % 9
10 Align Acquisition Strategy with Retention Goals Life-Time-Value (LTV) Driven Acquisition List Strategy Year # Donors First Gift Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 FY09 21,196 $20.38 $13.63 $37.76 $62.93 $86.14 FY10 33,111 $19.79 $14.66 $37.48 $57.87 FY11 69,216 $19.14 $8.23 $19.63 FY12 74,432 $19.93 $8.37 FY13 101,430 $ Year LTV is the Sweet Spot Leverage Testing and Modeling to Increase Ask String for High-Value Prospects (e.g., Target Analytics VEAM) Use Incentives to Improve Performance to Lists with the Highest LTV 10
11 Focus on First-Year Donor Retention Long-term performance is determined by first-year donor retention $250,000 $200,000 $150,000 $100,000 $50,000 $
12 Focus on New Donor Conversion The sooner a new donor makes a second gift, the more likely she will be retained and the higher her LTV Source: Debbie Barber, Grizzard The likelihood a donor will become a monthly giver drops exponentially four months after her join date. 12
13 New Donor Welcome Series Gift Acknowledgement Cultivation Solicitation 13
14 Online New Donor Welcome Series Psst Optimizing for different screens will make a big difference! 14
15 Maximizing Renewal Performance Overarching strategy is determined by two basic types of nonprofit organizations Donor-based Giving to make a difference Environmental Health & Human Services Animal Welfare International Relief Societal Benefit Membership-based Giving to receive tangible benefits Museums Zoos Aquariums Arts & Culture 15
16 Maximizing Renewal Performance When should I mail my renewals? donor member Calendar Date For example: R1: January R2: February R3: March R4: April R5: May Expire Date For example: R1: 2 months prior to expire R2: 1 month prior to expire R3: month of expire R4: 1 month after expire R5: 2 months after expire Only one notice is mailed at a time. (Everyone receives R1 in January.) All notices are mailed each month. (Multiple expire groups at different points in the cycle at one time.) 16
17 Maximizing Renewal Performance What should my creative look like? donor member Utilize Different Techniques Think to yourself: Emphasize Consistency Think to yourself: If the creative for the first notice hasn t prompted your donors to give, why would it work the second time? When members are in danger of losing something they care about most people don t need to be oversold with an elaborate package. 17
18 Maximizing Renewal Performance donor 18
19 Maximizing Renewal Performance member 19
20 Maximizing Renewal Performance First Year: What s the message? We re so thrilled you were able to join us last year. Because of you, we were able to accomplish Multi Year: You ve been with us for 5 years now and we re so grateful for your continued support Cause-oriented: Without your support, many lives will be lost donor member Value-proposition: You won t want to miss our members-only preview. Renew today so you don t lose your benefits! 20
21 Maximizing Renewal Performance What other channels should I use? There are fewer strategic differences between donor-based and membership-based programs when it comes to multi-channel marketing. When & why should you use each channel? Telemarketing 3. Facebook 21
22 Maximizing Renewal Performance E-Renewals: Easiest and most cost-effective multichannel option Used to supplement direct mail, rather than to replace E-Renewal in advance of R1 is often used as a green message regardless of the organization s mission Utilize as few clicks as possible 22
23 Maximizing Renewal Performance Telemarketing: Higher Costs but an Effective Channel Can be Used to Replace a Notice or as a Quarterly Clean-up Facebook: Facebook s Custom Audiences feature gives us the ability to target individuals in an file Best used to reinforce overall messaging rather than as an income channel 23
24 Maximizing Renewal Performance Problem: Renewal Rates Leveling Off Case Study: LA Philharmonic Original Renewal Series: 4 Notice Direct Mail Series With Oversized 4C Carrier New Renewal Series: Added 5 th Direct Mail Notice Added E-Renewals: E1: Prior to R1 E3: Week Before Expire Date E5: After Last Mail Notice Streamlined Art Result: Revenue Nearly Doubled From The Prior Year!
25 Maximizing Renewal Performance How many notices should I send? donor As many as it takes until you break even! member As many as it takes until you break even! 25
26 Maximizing Renewal Performance Other Renewal Opportunities Renewal at Birth Soliciting a Renewal 2-3 Months Into the Initial Membership Paired with an Exclusive Offer (Dollars Off, Additional Free Months) Response Rates are Typically Between 2-5% Early Renewal Based on an Upcoming Membership Rate Increase Targeted Towards New Members and Multi-Year Members Alike Last Chance to Renew at Old Rates 26
27 Leveraging Special Appeals for Retention Segmentation: Increase Recency for High Value Segments to Break Even (e.g., $500+ donors with a recency of months) Increase Recency for Lower Value Segments in Anchor Appeals (e.g., Matching Gift, Calendar, Year-End) Leverage Premiums to Retain Mid- to High-Value Prospects Spend at least as much to retain an existing donor as you would to acquire a new donor. 27
28 Monthly Giving Conversion Creating a Successful Multi-Channel Conversion Program Telemarketing: New Donors, Modeling for Existing Donors Direct Mail: Incorporate Offer into Existing Solicitations Incorporate into Thank You Series, Stand-Alone Campaigns Leverage Online Opportunities 28
29 Monthly Giving Conversion Remarketing Sustainer Intercept Presumptive Ask 29
30 Reinstating Lapsed Donors Reinstated Donors are Typically Worth Twice as Much as New Donors You Can Spend Up to Twice as Much to Reinstate a Donor as You Do to Acquire a Donor Modeling is Necessary (Target TAGS, Wiland) to Surface Strongest Reinstate Prospects Multi-Channel Communications Mail Telemarketing Targeted Offer Based on Prior Giving Behavior: Acquisition, Appeals, Renewals 30
31 Don t Forget the Little Things Prompt Acknowledgement of Gifts Effective and Efficient Donor Services Quality Member Experience Simplify Online Donation Path 31
32 Questions? Megan Contakes Marie Kosanovich
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