Proof that high-dollar donors are more loyal than low-dollar supporters

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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.

Recently I made some new friends at The Fundraising Effectiveness Project and they shared some awesome research findings with me.  You can see the first one below proving that high-dollar donors are actually more loyal (stickier) than low-dollar supporters.
 
I think what this chart implies is this: The fundraising pyramid is dead
The idea that nonprofits should first seek to gain low dollar donors and move them up the pyramid is just not a wise strategy. Low dollar donors are clearly less loyal and don’t repeat at nearly the same rate as high dollar donors $1,000 – $4,999 (at 87%). Plus, low dollar donors are very expensive to acquire yet they are much more fickle. Click to tweet! Therefore, they clearly can’t deliver enough returns for the long haul compared to the other givers.
 
4 things you should do today:
1- Develop a strategy that emphasizes efforts to gain more high-dollar donors instead of low-level supporters.
2- Focus on customer service and retention by providing value everywhere (especially in your engagement offers).
3- Search for ways to move mid-level donors up (again by providing value especially in your engagement offers).
4- Aim for referrals. Encourage your current high-dollar donors to introduce you to other high-dollar donors.Click to tweet! This will be the lowest cost marketing you can implement and it will deliver the greatest return for your investment. The ice bucket challenge did this for low-level donors. But most of them never gave again. What can you do to get referrals from major and mid-level donors? Figure that out and you’ll be a fundraising rockstar!
 

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4 responses to “Proof that high-dollar donors are more loyal than low-dollar supporters”

  1. Kevin D says:

    I think what’s overlooked is that a significant number of $250 + donors started out giving at lower levels and were cultivated over time thereby leading to increased levels of giving and greater loyalty. Strong donor relations (customer service) efforts lead to greater loyalty across all levels of giving and should always be considered as the number 1 initiative day in and day out by all organizations.

    • Greg Warner says:

      Thanks Kevin. Keep in mind that these number reflect a review of each donor over a 3 year time span. Sorry that’s not clear. But that’s how FEP looks at things. What this shows is that the $250+ donors actually didn’t start out that way. They started out giving $250+ and they were retained. Then they repeated for a third year. Most of the low-dollar donors, dropped off early. But, if they were retained, they did repeat later (albeit at a lower rate than the higher-dollar donors). I hope all that makes sense.

  2. Janet says:

    I don’t agree with your assumption Greg. As a ‘low-dollar’ supporter, I am just as committed to the few NPOs that I support on a recurring basis. Due to a lack of funds, there are others that I can support only on an ad hoc basis.
    My interpretation of the high-dollar donor rate, is that overall they have more money to give more frequently, and so provide more recurring high-dollar donations to NPOs.

    • Greg Warner says:

      Hi Janet. Thanks for your insights. I hear ‘ya. But just keep in mind that your individual (personal) case is anecdotal. This data reflects a review of millions of gifts from 3,590 organizations.
      I have no doubt that you might be just as committed and passionate (maybe more). But what we’re trying to determine is whether or not an organization and their supporters get a good enough return on investment by targeting low-dollar supporters. It’s business. The fundraising dollars only go so far.
      Therefore, to be smart about how those dollars are spent, nonprofits should spend more money aimed at getting more high-dollar donors. That will generate more revenue and reduce their fundraising costs because high-dollar donors appear to be less fickle.

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