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Donor retention is a topic that has been getting an increasing amount of attention by nonprofits but is still greatly misunderstood. With a heavy focus by boards and executives on revenue intake, the nuances of keeping donors engaged can sometimes get lost when reviewing a P&L Statement at the end of the year. Neon One is part of the Fundraising Effectiveness Project, which is the largest dataset of individual giving data in the world. That project looks at hundreds of data points relating to giving information, but there is a particular focus on donor retention. Donor retention is simply ensuring that you keep a donor giving to your organization year over year. The data doesn’t lie on why this is important – when Adrian Sargeant researched lapsed donor behavior, he demonstrated that increasing the level of retention by 10% would improve the net growth in giving for a “typical” charity database by 50% net growth.Yet how can we get to this point? In an environment where we are being asked to deliver results immediately, how can we not only convince our stakeholders that retention is not only important but the key to long term success? The cost to acquire $1 from a new donor averages $1.25, yet retaining a donor comes at a significantly lower cost.Let’s unpack a few strategies to help us become a retention-centered organization.
Understand your current retention rates
In order to know where to go, you need to understand where you are starting from and getting a grasp on your retention rates as they stand will be the first step. Luckily the Fundraising Effectiveness Project has developed free resources to analyze your own data and you will need three simple fields to get a full audit of your situation.When you run through the Fitness Test that they provide, understand that industry-wide retention is very poor. At best, the average retention rate for a nonprofit is 46%, yet it is important to unpack what the reality of this number even is. First-time donor retention rates are drastically lower, typically in the 25% range and a healthy amount of donor retention rates overall are being driven up by increasing amounts of donors giving online.
Establish a data-driven culture
Organizations that are driven (but not constrained) by data are the most creative and high-functioning nonprofits. Having information at your disposal that can accurately tell you about your organization’s performance is empowering. These organizations are able to use their time more effectively — not worrying about “where they are” or “how they’re doing.” They know, because they’ve used the data at their disposal to find out. Certainly, a data-driven culture has an effect on the fundraising side of the nonprofit.The ability for your organization to make decisions based on data and not “gut instinct” or because “we’ve always done things this way” will be the difference between increasing retention and growth in giving rates for your organization or scrambling to make up gaps in your end of the year giving hoping things get better next year. Review where your current retention rates are and make a realistic goal to increase them over the course of the year. Being optimistic yet realistic is the key here and this is why understanding your current standing with your donors will allow you to address retention properly.
Segment your donors
Grouping your donors into easily targeted segments will ensure you can message them properly. The most common reason a donor stops giving to a nonprofit is poor communication and the last type of communication a donor wants to receive is one where your organization makes it clear you have no clue who they are. Data suggests that regardless of the age of the donor, an omnichannel approach to donor engagement will be the most effective way to increase your retention rates. Segmenting your donors to create targeted messages in an omnichannel way will ensure that you are speaking to where the donor is, not where you personally want them to be. If you are donor-centered in your communications then your ability to upgrade a small donor into a major donor becomes much easier. Segmentation is also vital when doing prospect research on your donors, since you will be able to craft a pipeline management strategy that your major gift officers will be able to put into practice much quicker.
Utilize strategy and tactics
Once you have segmented your donors, start to scope out the strategy for engagement and the tactics you will use to achieve your objectives. Many organizations start with the tactical first and try to lead with the flashiest ways to engage donors, such as costly events. Instead, your organization should take a step back and calculate the return on investment it will take to retain the largest segment of your donors. A solid example of this is around how we speak to donors. A strategy your organization would employ is donor stewardship, or the ability to make donors feel welcome. The tactical application of this strategy could come in the form of well-written gift acknowledgement letters
Your donors are the backbone of your organization: without their ongoing support, your nonprofit wouldn’t be able to complete any of the projects that are vital for achieving your goals. Every donor is unique, with different passions and motivations. They give at different levels, for different reasons, at different times of the year. And that can be a lot to keep track of, especially when you want to maintain strong relationships with all of them! So what’s a nonprofit team to do? Invest in donor management software! With a strong centralized database to keep track of your donors’ personal information and engagement history, you can strengthen your fundraising strategy, moves management, event planning, and marketing tactics, all within one software platform.
=&0=&Our favorite donor management software features are:
Software customization and flexibility.
Major gifts stewardship tools.
Reporting and analysis capabilities.
Event planning and management.
Subledger capacities for contribution income.
With these five features, you’ll be able to improve your relationships with existing donors, cultivate new ones, and strengthen your nonprofit’s strategies across the board. If you’re ready to learn, let’s get started!
1. Software customization and flexibility.
In order to effectively use a donor management software as the central database around which to build your fundraising strategy, you have to be able to customize the software solution to fit your organization’s unique needs.There are many ways that software needs to be flexible—appearance, user permissions, and the ability to integrate with other programs are all important ways that your donor management software needs to be able to adapt. But those aren’t the only things to keep in mind! As a nonprofit, your organization has unique needs that your donor management software should address. With your new software, your nonprofit’s team should be able to:
Create custom donor profiles. A robust donor management software should provide you with comprehensive donor profiles, but you should also be able to add custom fields based on your organization’s unique relationship with its donor population. These additional fields also improve understanding of a donor and strengthen your database management strategy.
Build custom reports. Your organization needs to be able to make data-driven decisions in order to strengthen all facets of your strategy. To do that, you’re going to have to analyze and understand your data. With custom reporting abilities, you can create reports based on any criteria your organization needs.
Design custom dashboards. Every member of your organization’s team has a slightly different job and will need to see different things. With customizable dashboards, each team member can design their homepage to include the information most crucial to their position and daily tasks.
Customizability and flexibility of your software solution is important for an organization that wants to increase efficiency and strengthen donor relationships in a consistent and predictable manner.
2. Major gift stewardship tools.
Major gifts are a nonprofit organization’s crowning fundraising achievement. These gifts represent months of careful cultivation and personalized solicitations, and your donor management software should be able to help your team gain more of these donations.
But what does this look like in practice?
Use your donor management software to identify donor prospects with an integrated wealth screening tool, and analyze existing donors for opportunities for cultivation with a comprehensive search tool.
Create a personalized dashboard for major gift solicitation opportunities that includes donors, active proposals, and other important information for your major giving strategy.
Strengthen your moves management strategy with the ability to track meetings, phone calls, event attendance, and other interactions, as well as schedule follow-ups automatically.
Create specific cultivation timelines for each major gift prospect, and monitor the status of their cultivation process on an individual basis.
Using software to manage your major giving strategy allows your major gift officers to set standards and create a predictable, consistent process for your cultivation and solicitation strategies.
Your nonprofit’s CRM is a goldmine for important information regarding your nonprofit’s constituents. Without this important software solution, it would be incredibly difficult to keep up with fundraising outreach or to establish an effective engagement strategy for supporters. Despite having access to this important tech solution, have you ever looked at your nonprofit annual report and seen holes in your own fundraising strategies? =&0=&
The best way to improve your data management for more strategic fundraising efforts is making the best use of your donor database measurements. You’ll need to know what measurements to keep track of, how to best track them, and how to read this important data.We’ve compiled a list of frequently asked questions regarding data management, all of which can be answered by making better use of your CRM.
How do I streamline data collection?
Too many nonprofits manually transfer data from one software solution to another. Doing this takes time and energy that could be better spent on efforts more related to that nonprofit’s mission. Throughout this process, they have to choose which pieces of data are important to transfer and which are irrelevant for future efforts.
Look at the functionality of your CRM to see if you also have access to fundraising and data collection software such as donation pages, surveys, and other tools. Don’t forget that even the best CRM software might not offer these functions, but may integrate with other software solutions that do. Some of the important information you can collect from your CRM or integrated software includes:
Online giving information. Your CRM should store details about the gift information when someone donates to your nonprofit. Your CRM should automatically pull and store information from your donation page software about each donor’s gift amount. Then, you’ll have access to the average amounts plus a historical timeline of giving for each of your donors.
Matching gift eligibility. Ask donors about their employment on donation or survey forms. When this information is added to your CRM, it’s easy to check matching gift eligibility from a matching gift database.
Donor communication metrics. When you can connect to your donors through an email service within your CRM, it’s easy to streamline the flow of important metrics such as open and click-through rate. Plus, you can auto-populate the names and contact information of donors into templates with this feature.
There are so many opportunities for engagement offered to your donors through your nonprofit. They can come to events, donate, post to social media, read your newsletters, visit your website, and more.While you could go through and check each of these metrics individually in your CRM, wouldn’t it be easier if there was a single engagement score that measures all of these things? That’s exactly what Dr. Adrian Sargeant asked himself and why he came up with an algorithm to measure overarching donor engagement for individual donors.
=&5=&In Bloomerang’s CRM profiles, this engagement level presents itself as a meter measuring an individual’s level of engagement as “cold,” “warm,” “hot,” and “on fire!”When you have access to the engagement metrics for individual donors, you can more easily:
=&6=&major giving=&8=& The donors who are heavily engaged (or “on fire!”) and also have good wealth indicators are likely to be good candidates for major giving in the future.