Five tips to successfully engage and retain ‘at risk’ regular givers
Tim Paris – 18 November 2020
Regular giving attrition can have an enormous impact on a charity’s revenue. And at a time when the COVID-19 pandemic has made donor acquisition even more difficult, this lost revenue can be almost impossible to replace in the short term.
Dataro has this year worked with over half a dozen forward-thinking charities across health, research and environmental causes to tackle this challenge. The outcome is a new type of fundraising program called “Engage & Retain”. The program, which aims to predict which regular givers are at the highest risk of attrition and then take steps to build better connections with them, is proving to be a very effective way to reduce attrition.
Here’s a few critical lessons we’ve learned pioneering this new strategy.
1. Figure out how much regular giving churn actually costs your charity.
This seems like an obvious starting point, but it is surprising how many organisations don’t know the answer. Whilst everyone is aware that attrition costs money, the impact is often masked by new acquisitions. So our first suggestion is to actually calculate the cost of attrition on a regular basis (e.g. monthly). The benefit from retention programs then becomes clear.
To get a quick idea of this cost, take a look at how many of your active regular givers ‘churn’ in a given month (ignoring new acquisitions). This gives you your ‘Number Lost’. If you multiply this number by your average monthly gift (e.g. $25) and project out over several months, you can obtain a back-of-the-envelope estimate of lost revenue. Here’s an example:
Monthly Number Lost = 100
Average Gift = $25
Estimate of future payments missed = 9
100 x 25 x 9 = $22,500 projected lost revenue per month
2. Don’t ask donors with a high churn risk for more money
Again this might sound obvious, but it’s an error almost every organisation with a regular giving program makes. If you’re aware of the churn risk for your donors, chances are that you are already asking donors who are about to cancel their gift for upgrades, appeal donations, etc.
The first part of the ‘engage and retain’ strategy is around positive engagement. And we’ve found the most successful strategy is a non-financial contact like a thank you phone call. This allows you to acknowledge the donor’s support, remind them of their connection to the cause and update them on recent wins and important projects. It’s amazing how this sort of non-financial communication can have an enormous financial impact.
3. Machine learning is the only way to reliably predict which donors are most likely to churn and to plan the campaign
Fundraisers often have an idea about churn risk based on simple rules like ‘new donors are more likely to churn’. These observations may be correct in general, but we’ve found they are not very helpful when actually building a program to target the most ‘at risk’ donors. Predicting churn is just too complex.
In a typical RG churn model, for example, Dataro normally calculates between 20 and 200 factors that are relevant to predicting churn. That includes things like gift amount, signup date, card declines, age, gender, and activity in other programs (such as appeals or events). Unlike simple rules, we’ve found that with machine learning we can reliably predict which donors are the most at risk of churn month in month out. This allows you to tailor communications to those individuals at the appropriate time, giving you a chance to ‘save’ the donor and improve the relationship rather than simply forfeiting the income.
4. Invest appropriately and measure your returns. You could be losing more money than you think
Here’s a question: if it costs $250 – $350 to acquire a new regular giver, how much would you be willing to spend to keep an existing regular giver that you knew was likely to leave?
As we highlighted above, churn could be costing your organisation much more than you think. But we’ve found that strategies like engagement telephone calls to the highest risk donors have a very good chance of convincing people to keep on giving in the long term. When you consider that a ‘thank you’ call costs from about $7-10, it’s easy to see why this program makes sense. Here’s a case study from Greenpeace where a single month’s calling program returned over $23,000 with an ROI of 2.13. The old adage is true: it’s cheaper to retain an existing donor than it is to replace them!
We’ve seen strategies ranging from low cost methods like emails through to higher cost methods like ‘thank you’ calling programs. Of these, calls have worked the best. However, a range of options can be tested and the key thing is to measure your results. The real question is: can organisations with large RG programs afford not to deploy these strategies?
5. Make sure you have a regular program in place to manage churn
Engage and retain is not a one-off program. Just like regular giving reactivations and upgrades, the best results are seen when the program is run on a rolling basis. Here’s a case study from our friends at Victor Chang Cardiac Research Institute, who ran a rolling telemarketing program.
There are a number of reasons for this. But critically, it allows charities to proactively contact individuals before they churn, rather than waiting until after the event. With a rolling program you can ensure that donors are contacted at the right time and don’t fall through the cracks.