Donor retention by the numbers: Demystifying the leaky bucket

Donor Retention by the Numbers:Demystifying the Leaky Bucket

Present

&

Our Agenda

1. The leaky bucket – what is it?

2. Donor retention by the numbers

3. Is poor data quality hiding fundraising risk?

4. Case study and action plan

5. Next steps and takeaways

Please participate in our online poll while we get organized for today’s event.

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Our Experts

Gary CarrPresident, Co-founder

Third Sector Labs is a data services company helping nonprofits to re-think their data management practices and

solve data problems.

ThirdSectorLabs.com [email protected]

linkedin.com/in/gpfcarr

DonorTrends is a data analytics firm providing affordable and easy to use

donor segmentation tools to nonprofits of all sizes.

DonorTrends.com [email protected]

linkedin.com/in/caitycraver

Caity CraverCEO

3

4

InsightReporting

• Masterfile Audit (MAAP)

• Fund Forecast™ Budget tool

Exclusively Serving Nonprofits

Built by fundraisers for fundraisers, DonorTrends is on a mission to provide affordable and actionable tools that increase revenue, retention, and improve efficiencies.

www.DonorTrends.com

ActionStrategy

• Action Plan (MAAP)

• Audience Audit™

• Mailplan Check™

• Actionable Analysis:

• Ex: Upgrade Analysis

ExecuteScoring

DonorScores™ Predictive Models

• Net Revenue Optimization

• 2nd Gift Conversion

• Monthly Donor (sustainer) Conversion

• Lapsed Donor Reactivation

• Mid-Level Upgrade

• Major Donor Upgrade

• Planned Giving Identification

LEVEL 1:ASSESSMENTS AND

CLEANING

LEVEL 2:DATA MANAGEMENT,

ENRICHMENT, MIGRATION

LEVEL 3:WAREHOUSING,

MINING, VISUALIZATION

Also Exclusively Serving Nonprofits ---- Data Services ----

Founded in 2013 by professionals with 20+ years of technology and data experience with Fortune 500 companies, the federal government, and nonprofits

Offices in Washington, DC and Seattle, WA metro areas

www.thirdsectorlabs.com

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Let’s get started

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Question: how will you raise more money?

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Fundraising planning Potential tasks

A Retain existing donors Build relationships

Capture more data

B “Lift” existing donors Launch matching gift plan

C Reactivate lapsed donors Targeted communications

D Find new donors Ask donors for referrals

Buy list

Next question: which is the easiest?

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Capture more data




Buy list

Final question: which is the most expensive?

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Capture more data




Buy list

and

difficu

lt?

Donor retention is everything

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“What if there were no new donors?” - Roger Craver, Fundraising Expert

What do we know about donor retention?

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Source: AFP / Urban Institute 2013 Fundraising Effectiveness Survey ReportInfographic: Bloomerang Nonprofit Donor Retention Primer

And?

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And, and?

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Which brings us to the Leaky Bucket

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For every 100 donors gained

There are 105 donors lost

Retention Math 101

15

Donors who gave in 2012 and 2013 whose first gift was in 2012.

New Donor Retention

Donors who gave in 2012 and 2013

Overall Donor Retention

Donors who gave in 2012 and 2013 whose first gift was pre-2012.

Existing Donor Retention

But before we “do the math”, remember …

garbage in, garbage out

What do we know about data quality?

“If your data isn’t getter better, it’s getting worse” -- TSL data scientist

“What! Why?”

-- audience

Data degrades

What does that mean?

Data degradation – [DAY-tuh deg-ruh-DAY-shun], nounRefers to the worsening of data quality over time. With assets like a donor database, degradation is inevitable. Why? Because of the many, sometimes unavoidable, negative influences acting on your data quality. These include: consumer data naturally changes as people change jobs, relocate, have families, and go through the normal cycles of life; data inputs are often flawed and/or manual, and the manual labor can be poorly trained; related data is changed, purged or updated; data migration to new systems such as CRM software.

Data degradationCause #1: your organization

– Lack of data entry standards

– Unskilled data entry workers

– Common mistakes

– Record fragmentation

Cause #2: the technology– Multiple, disparate systems

– System upgrades

– Integration, processing errors

– Sheer volume of data

Cause #3: those darned donors … life!– Change in address … every 5 to 7 years

– Change in jobs … 9 to 11 jobs in a lifetime

– Family / life event … divorce rate, birth of children, death … what else?

Your view

You try to keep track of contact updates.

Our view (once we export and analyze)Salutation

Last Name First Name

M.I. Address 1 City State Zip Phone Email DOB Gender

MR Setters m

MS SIMMS Laurie 1313 Danger Ln

Appleton CA 73111 310.555.5555 Laurie@mail 04/29/81 F

Mr. singletary Mike T 310.555.1234 [email protected]

Singletary Michael 310.555.1234 [email protected] M

Solvington Allen 5201 Marshall Lane

Cupertino CA 91001 323.555.5990 [email protected] 05/30/75

Mr. soprano Cindy P. 222 Main St. Cupertino CA 91002 [email protected] f

Dr. Standish Bradford 1141 Duke Ave Los Angeles

CA 91010

Stevens Allison 8726 Elm Ave Appleton CA 90009 310.555.5551 01/01/01 f

STEVENS ROBERT 2 2101 Data Ave Los Angeles

CA 91010 [email protected] 12/14/60 m

Sr Tahoma Juan 20B Eldora Mexico City

+52-55-5222-2222

[email protected]

01/14/59 M

Incomplete record

Salut./gender mismatch

Incomplete email

CA ≠ 73111

Multiple normalization

issues

M.I. = 2 ?

Moved last year (NCOA)

Foreign address ?

DOB is bad

Potential dupe (ph #)

Think about your data quality

1. Is your data clean and rich enough to:– Target lapsed donors with the right message?– Build profiles of donor groups … segment?– Lifting average donations depends on targeted

messaging … which depends on segmentation

2. Do you have the right data capture tools in place to grow prospects?

3. Do you know how your donors want to communicate?

4. Do you capture the right data and evaluate before returning to re-cultivate, re-engage?– Reducing attrition rates depends on this

5. Are you using service data and data visualization to tell a better story?

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Back to the numbers

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Data needed to calculate retention

1. Donor ID2. Date of gift3. Amount of gift

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Retention Math 101

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52,000 / 99,000

53%

Existing Donor Retention

3,000 / 10,000

30%

New Donor Retention

2012 existing donors 99,000

2013 repeat donors 52,000

2012 first-time donors 10,000

2012 first-time donors who gave again in 2013

3,000

(52,000 + 3,000) / (99,000 + 10,000)55,000 / 109,000

50%

Overall Donor Retention

Donor Dashboard™

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30%.97 53%

36%

File Growth

File Decline

GROWTH SCORE

Retention and the Leaky Bucket

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Existing Donors

Retained 55,000

Donors Gained

New DonorsReactivated

10,000 4,300

Lapsing Donors14,750

Lapsed Donors75,000

2

.5

1.97

Move the metric

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$196,448

Additional Annual Gross Revenue

50%

52%

Real World Fundraising ExampleDeveloping a Retention Action Plan

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X XX

X

Increase response → Increase retention. Define the objectives for your existing, single-gift, and lapsed donors.

Increase Retention

Increase ResponseIncrease Second Gift ConversionTarget single gift

donors to increase retention from 18% to

20%.

Increase Existing Donor ResponseTarget existing donors to increase

retention from 61% to 63%.

Increase Lapsed Donor Reactivation

Target lapsed donors to increase reactivation from 2% to 4%.

Retention Action Plan

Use Scores to Raise More.

Monthl

y Giver Committed

Likely to

reactivate

Using science, predict who’s most likely to respond.

Develop campaign / contact strategy to target most likely donors.

2 3

Committed Donors

Lifetime Value$707

1

24,781EpisodicDonors

Lifetime Value$64

25,447Casual Donors

Lifetime Value$369

Retention Action Plan: Target Existing Donors*

34,273

*Donors who have given 2+ gifts in the last 0-24 months.

Expen

se

Budget

Freq

uency

of C

onta

ct

Chan

nels

$$$

$$$

$$$

Committed donors

Casual donors

Episodic donors

% of budget to allocate:

Contact as frequently as

budget allows.

High perceived

channels and packaging.


Reduce contact

frequency by 15 – 20%

Lower cost packaging

and channels.


Reduce contact

frequency by 50% or more.

Minimize risk. Low package

costs and channels.

72%

20%

8%

Retention Action Plan: Existing Donor Clusters

34,273

25,447

24,781

ACTION PLAN | 34

<< Best Performing Worst Performing >> New

Campaig

n 1

Campaig

n 2

Campaig

n 3

Campaig

n 4

Campaig

n 5

Campaig

n 6

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n 7

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n 8

Campaig

n 9

Campaig

n 10

Campaig

n 11

Campaig

n 12

New C

ampaig

n 1

New C

ampaig

n 2

New C

ampaig

n 3

Committed465

donorsCasual

350donors

Episodic348

donors

RETENTION ACTION PLAN: EXISTING DONOR CONTACT STRATEGY

Increase contact frequency to improve retention and generate additional revenue.

Decrease contact frequency to reduce costs . Reallocate savings to increase retention and donor value.

Increase revenue and decrease cost by developing an annual contact strategy by donor cluster.

Step 1: Rank your campaigns from best performing to worst performing.

Step 2: Map out the contacts for each donor cluster.

34,273donors

25,447donors

24,781donors

RETENTION ACTION PLAN: TARGET SINGLE GIFT DONORS*M

ore

lik

ely

to R

esp

on

d

12.554Unlikely but

Valuable

More Valuable

12,641Potential Partners

17,898Likely

Loyalists

Lifetime Value$214

Lifetime Value$72

Lifetime Value$36

*Donors who have given 1 gift in the last 0-24 months.

Expense Budget

Frequency of Contact

Channels

Likely

Loyalists

Potential

Partners


Unlikely but

Valuable

% of budget to allocate: % of budget to allocate:

53% 34% 13%

Retention Action Plan: Target Single Gift Donors

17,898 12,641 12,554

ACTION PLAN | 37

REACTIVATION ACTION PLAN: TARGET LAPSED DONORS

25-60 MonthsLapsed

41,241Risky

45,886Renewabl

e

62,995Reliable

Lifetime Value$847

Lifetime Value$802

Lifetime Value$378

REACTIVATION ACTION PLAN: LAPSED DONOR CLUSTERS

Expen

se

Budget

Freq

uency

of C

onta

ct

Chan

nels

$$$

$$$

$$$

Reliable donors

Renewable donors

Risky donors


Contact as frequently as

budget allows.

High perceived

channels and packaging.


Reduce contact

frequency. Only best

campaigns.

Lower value channels and packaging.


Be cautious. Possible

‘Super Dupe’ with

acquisition.

Minimize risk. Low package

costs and channels.

61%

27%

12%

62,995

45,886

41,241

Increase Retention

Increase ResponseIncrease Second Gift ConversionTarget single gift

donors to increase retention from 18%

to 20%.

Increase Existing Donor ResponseTarget existing donors to increase retention from 61%

to 63%.

Increase Lapsed Donor Reactivation

Target lapsed donors to increase reactivation from 2% to 4%.

Retention Action Plan Results

Goal

Actual 23% 63% 5%

Overall Retention Best Practices

1. Thank yous! 2. Welcome series for new donors.3. Superior donor services. 4. Show the donor how her dollar is put to work.5. Know your donor – data hygiene is key!

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In conclusion

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3 Takeaways

1. Retention is the best way to improve your fundraising results year over year.

– And least costly!

2. Data quality matters.

– And know your numbers!

3. Develop an action plan to meet your fundraising goals.

– Hope is NOT a plan!

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How we can help

• DonorTrends offers … a Masterfile Audit and Action Plan. Ready for your review in less than a week, the MAAP is a GPS to exceeding fundraising goals.

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• Third Sector Labs offers nonprofit data services, such as hygiene. We can start with a data quality assessment.

• Digital fundraising experts

• Retention-focused technology

• Donor Commitment / Satisfaction experts

• Full Service Agencies / Consultants

• Acknowledgment / Data Specialists

Need fundraising help?

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We’d like to hear from you!

Please submit your questions…

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Q & A

Thank you!

Gary CarrPresident, Co-founder

ThirdSectorLabs.com [email protected]

linkedin.com/in/gpfcarr

DonorTrends.com [email protected]

linkedin.com/in/caitycraver

Caity CraverCEO

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Date post:	08-Sep-2014
Category:	Government & Nonprofit
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Donor retention by the numbers: Demystifying the leaky bucket

Government & Nonprofit