donor retention by the numbers: demystifying the leaky bucket
DESCRIPTION
Donor retention by the numbers: Demystifying the leaky bucket. A webinar presented by Third Sector Labs and Donor Trends. Presented live on June 12, 2014TRANSCRIPT
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
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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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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
Final question: which is the most expensive?
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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
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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Source: AFP / Urban Institute 2013 Fundraising Effectiveness Survey ReportInfographic: Bloomerang Nonprofit Donor Retention Primer
And, and?
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Source: AFP / Urban Institute 2013 Fundraising Effectiveness Survey ReportInfographic: Bloomerang Nonprofit Donor Retention Primer
Which brings us to the Leaky Bucket
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For every 100 donors gained
There are 105 donors lost
Retention Math 101
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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
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.
% of budget to allocate:
Reduce contact
frequency by 15 – 20%
Lower cost packaging
and channels.
% of budget to allocate:
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
Campaig
n 7
Campaig
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
% of budget to allocate:
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
% of budget to allocate:
Contact as frequently as
budget allows.
High perceived
channels and packaging.
% of budget to allocate:
Reduce contact
frequency. Only best
campaigns.
Lower value channels and packaging.
% of budget to allocate:
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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