Is donor retention really where you should focus your time and money?

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Greg Warner is CEO and Founder of MarketSmart, a revolutionary marketing software and services firm that helps nonprofits raise more for less. In 2012 Greg coined the phrase “Engagement Fundraising” to encapsulate his breakthrough fundraising formula for achieving extraordinary results. Using their own innovative strategies and technologies, MarketSmart helps fundraisers around the world zero in on the donors most ready to support their organizations and institutions with major and legacy gifts.

The market/sector has been ‘flooded’ with people talking about donor retention for many years now.
Many of them make money selling software and services that supposedly help fundraisers improve their donor retention. Yet after all their talk, the statistics say that donor retention just keeps going down. The number of donors giving to charity keeps declining while total charitable dollars keep increasing. In other words, there’s been a narrowing of the funnel. And, I believe this trend will only continue.
Hmmm. 
Perhaps their software and consulting recommendations aren’t working? Perhaps the tide is too strong?
Maybe. But I believe there’s more to it than that.
I think your focus needs to NOT ONLY be on donor retention (although that’s not a bad thing to work on). I think your focus should be on donor qualification and donor prioritization. Here’s why:

  • According to Giving USA, the number of donors is decreasing yet more money has been raised than ever. So, fewer people are giving more!
  • Therefore, trying to retain all of your donors is not necessarily a good plan. Especially because donor retention tactics are expensive and time-intensive. But trying to retain the most qualified donors (the ones with the most passion and most money) IS a good plan.

Of course, my products qualify and prioritize donors for outreach and communications. So I guess I’m biased. But remember, I changed my successful marketing company to help this sector because I’m a pissed off donor, not because I found a market in which I could make money. Heck! If I wanted to make a lot of money I could have done that a lot faster and with less aggravation by staying OUT of this sector.
Bottom line: All the talk about donor retention drives me a little crazy sometimes. It’s not really good for the sector to keep telling the staff to go into a fist-fight while at the same time they have both hands tied behind their backs (since they can’t really afford to do donor retention tactics the right way). Focus on qualification and prioritization first. Then work your ass off to retain those hi-value donors with meaningful, personalized, relevant engagements. Give them the experiences they deserve and let your competition spend time and money on the rest with weak, watered-down, one-size-fits-all donor retention approaches.
 

Related Posts:

>>Donor retention and donor qualification go together like peas in a pod
>>Why QUALIFYING donors might be the silver bullet you’ve been looking for
 

2 responses to “Is donor retention really where you should focus your time and money?”

  1. Christopher Doyle says:

    Good idea. But, do these highly qualified donors retain any better than the low quality ones? I keep hearing agencies say they will help you find quality instead of quantity. However, no one has that magic list.

    • Greg Warner says:

      Hi Christopher. According to our data, Yes! The do.
      Go to my free product: The Fundraising Report Card Benchmarking
      https://fundraisingreportcard.com/benchmarks/
      On the right, toggle: Giving Levels
      You’ll see that Under $100 donors retain at 40.55% vs. 44.74% for Over $5,000 donors.
      But here’s the kicker!… The lifetime value for the Under $100 crowd is just $42.98 while the lifetime value of the Over $5,000 donors is $81,685.34 thanks to the average donation amount of $30,939.04.
      NOTE: The benchmarks are ‘real-time’ so by the time you look at the app, the numbers could change.
      Interesting, you’ll also see that mid-level donor retention is just terrible. Nonprofits are really missing the boat because they fail to qualify their mid-level donors and give them the love they deserve.

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