Churn is the enemy. We’ve all seen the grim donor retention stats from AFP’s 2013 report.
Working hard to acquire donors and then losing them a year later is frustrating – and costly.
At a previous stop on my fundraising journey, I worked for a small school that had a churn problem, particularly with alumni giving. We were at 60% retention. And we knew that, as a private liberal arts college, we should be doing better. All our peers were.
When it comes to alumni giving at U.S. colleges and universities, the stakes are a little higher than just dollars gained or lost. The metric is part of influential annual rankings. Publications like U.S. News and World Report include “alumni participation,” the percentage of giving alumni each year, in their evaluation formula. It’s viewed as a customer satisfaction metric.
Churn was costing us money and hurting us in the national rankings.
We needed a simple, elegant solution. And we didn’t want to spend a fortune because ROI would be much higher elsewhere, namely major gifts. Most of the few thousand alumni giving to us weren’t large donors.
Well, the solution actually predated my arrival. It was a donor loyalty recognition program called “Faithful Friends,” which was a fun little pun on the organization’s Quaker roots.
So, we had the answer, we just needed to put more juice behind it. Here’s what we did.
How did our alumni get to be Faithful Friends? They had to give two years in a row. That was it.
Not an impressive streak, but we knew we had to incentivize the behavior we wanted at its most fundamental level.
Sure, we hoped alumni would give 10, 25, 50 years in a row. But, you can’t hit ten years without first stringing together two. We had great programs that inspired first gifts, but we needed those people to come back. And that’s where Faithful Friends came in.
The program takes advantage of the psychological principal of loss aversion. Simply put, the fear of loss is a stronger motivator than the possibility of gain. It’s just how we’re wired.
For example, we could have created a program that recognized donors giving for five or more consecutive years. It’s a more meaningful streak. But five years is also a long time! Giving donors something small they can lose if they don’t renew is more motivating than offering something larger they can work toward over a long period of time.
So, our alumni became Faithful Friends after giving in back-to-back years. But they had to give again each following year, or they’d lose their status!
Stewardship and Welcoming
Simple and systematic. Those two words guided all decisions about recognition of Faithful Friends. By and large, these weren’t major donors; we couldn’t afford to spend a lot of time or money on stewardship. So, we focused on simple, systematic touches.
New donors were welcomed with a packet that included a “thank you and welcome” letter along with a branded token of appreciation. The letter reinforced the importance of giving every year and provided the URL for the online Faithful Friends honor role.
Here’s a quick overview of everything they received throughout the year:
- Acknowledgement letter
- Gift receipt
- Annual branded token of appreciation (keychain, luggage tag, flower seeds, magnet, etc.)
- Website listing (in descending order with most faithful – 50+ years – on top)
- Thank you postcard from the president (only to 2nd, 3rd-year donors and every multiple of 5 afterward)
- Special gift if they attended homecoming (umbrella, water bottle, etc.)
- Special “Faithful Friends” nametag ribbon at events
Occasionally Faithful Friends would get special ad hoc opportunities like early event notifications or discounts. But, only if they were easy to deliver!
The program was all about getting the right systems in place so stewardship and welcoming didn’t become too burdensome.
Segmentation was important here. In any given year, we knew we had to treat last year’s first time and recaptured donors in a special way. They were the ones with the opportunity to become Faithful Friends! We needed to message them accordingly.
We made sure our internal systems were set up so we could track these folks and segment them out for appeals.
When asking, we called attention to the number of years a person had given consecutively. Variable data allowed us to do this in direct mail. In our telemarketing program, callers had access to each prospect’s “consecutive years giving” number and used it when asking for renewals.
They were also reminded of the special perks like the annual token of appreciation and other special opportunities.
One of the most powerful direct mail appeals we added to our monthly calendar was a mailing to all prospective and current Faithful Friends who had given in the same month the previous year. The copy read something along the lines of, “We remain grateful for your gift of $X made in [month] of last year. Renew your support again this [month] to add another year to your legacy as a Faithful Friend!”
The phrase “culture of philanthropy” is a little worn out, but we saw this program as an opportunity to take some concrete, tactical steps toward furthering our giving culture.
Here’s how we wove Faithful Friends into the fabric of the organization:
- During event speeches, the President thanked Faithful Friends in attendance
- Members had special ribbons attached to their nametags at events
- Even major donor honor rolls include a special indicator next to the names of Faithful Friends
- We set up a special booth at marquee events (like homecoming) to bring visibility, provide information, receive gifts, and hand out tokens of appreciation to members
- Faithful Friends “ads” were placed in the organization’s major publications
Big picture, alumni donor retention went up 11 percentage points over three years. We had reduced churn.
This will always be a slow growth game. New programs and cultural change take time. And we need to put ourselves in our donors’ shoes. If we’re tempted to think we’re over-communicating about a given program, we need to remember it’s probably just a tiny blip on their radar screens.
After three years, we knew Faithful Friends was gaining traction because alumni were talking back to us about the program. In fact, many said that it was the only reason they made sure to give. They didn’t want to break their streak!
- In general, small donors like being recognized for consistency. They know they’re not making a transformational impact. And many of them know they never will – they simply don’t have the capacity. But they like being recognized for something the can do.
- Fear of the loss of status in the short term (i.e. membership in a giving society) is a more powerful motivator than the possibility of gaining status over the long term. Make the goal easily attainable. Consider recognizing anybody who has given for just two years!
- Simplify and systematize. Don’t forget the 80/20 principle. This can be a fun and beneficial program for your organization, but never forget that it will never impact the bottom line as much as a strong major gifts operation.
- Be committed to the long game. Make sure your leadership knows this is a slow growth proposition and will take 3-5 years to deliver significant results.