The Leaky Bucket

…the average nonprofit has a 60 to 70% chance of getting an addition contributions from existing donors;

…a 20 to 40% chance of receicing a gift from a lapsed donor;

…but less than a 2% chance of receiving a gift from a prospect.

These are the opening statistics of a recent article from The Agitator, one of our favorite reads at The One to One Group, where Roger Claver addresses the issue of the lack of focus on donor retention within the non-profit community…or what he likes to call, “The Leaky Bucket”. Claver ponders the reasoning behind why thousands of nonprofits concentrate their fundraising dollars, time and effort into the “leaky retention bucket” that is expensive acquisition as opposed to “fixing the leaky bucket and boosting donor retention”.

Briefly pondering the excuses that have been suggested in the past, Claver cuts to the chase with a plain and simple explanation; most nonprofits “really don’t know how to improve retention.” He claims that here is “no mystery to solving The Leaky Bucket Problem” and spends the bulk of the article offering up suggestions of how to prepare for a future difference from the past….Here are some of our favorite recommendations:

Build donor relationships. This is the high level answer to retendtion. How to improve and measure the financial value of improved relationships. See Kevin Schulman’s deck over at DonorVoice
Identify the donor experiences that strengthen the relationship. A relationship is the sum total of those shared (i.e.i delivered, experienced and reciprocated) experiences. In the nonprofit world these include brand, fundraising and donor service experiences.
Collect and act on donor feedback at every touchpoint. This is common place in the commercial sector. Think of your personal experience on websites, with hotels or airlines, car dealers, restaurants. All of these sectors routinely solicit feedback post interaction/visit/event. Why doesn’t the nonprofit sector do this? No perceived need? No perceived upside? If the International House of Pancakes (IHOP) cares enough (and they do) to solicit customer feedback on the receipt with a simple 800 number and IVR system, then shouldn’t we in the nonprofit sector be at least as concerned about our donors?
Experiment more. Fail faster. Think about direct mail testing. It takes way too long to fail. And fail is exactly what occurs the vast majority of the time. Innovation includes risk, risk includes failure. Failure is more than acceptable if it is done and learned from quickly.
Start treating donor service as profit center, not cost center. In the commercial sector and among product companies (versus service), roughly half of the reason a customer will stay or go is tied, not to the product directly, but rather, service level attributes. This means half of your retention battle has nothing to do with your mission features and organizational benefits. A large part of the reason a donor will stay or go is not mission or message or premium offer, it is how she/he is treated when encountering donor services. The opportunity here is not avoiding bad experiences (that is obvious), the real opportunity is recognizing that service can actually improve the relationship and is a critical touchpoint, one that can help to further monetize the relationship with cross-sell and upsell.

Because the work we do here at The One to One Group is centered around speaking to donors as individuals and not a “crowd”, Claver’s forward thinking approach to fundraising and direct marketing really resonated with us. Just like consumers are loyal to particular product brands they can also be loyal to particular nonprofit groups. Dealing with and speaking to your constituents in the appropriate context of their relationship with your organization is essential to making the donor feel more appreciated.

Wisdom Outweighs Any Wealth

Excellent suggestions from The Nonprofit Marketing Wisdom Guide, edited by Nancy Schwartz.

Stir your donor’s imagination first before making any ask. A compelling story is only a few seconds away from a positive response.
If an organization stops acquisition for a year, losing 20 to 40% of its 0 to12 month donors due to attrition with no plan to replace them, it’s tough to come in and turn that ship around. It is a reminder of the art and science of direct mail, knowing that the one-year with no acquisition will take at least three years to recoup. [Note: The best and most logical resource for “acquired” donors will always come from the ranks of historical donors to your organization who have lapsed out. Nothing is easier than reconnecting with past donors and re-energizing them to your mission and message. The One to One Group is currently experiencing recapture rates of >9% for our clients in year one.]
Do create personas representing your target audience. Imagining the characteristics of an individual who is part of your target audience can be such a helpful resource when crafting messages for that audience.
Be consistent. Whatever your message, keep it clear and consistent. Never forget the KISS principle.
What gets measured gets done. Set measurable goals, keep accurate records and celebrate successes.
It’s great to take the time to brainstorm, talk, discuss and even argue why you should or shouldn’t do something. But we’ve learned that sometimes you just need to take a (calculated) risk and jump in to try something new

If you’d like to know more about these successful fundraising techniques and the many ways that The One to One Group deploys them to the benefit of our clients, please contact Kathleen Weiner at (941) 488-4810 x19, or by email at kweiner@the1to1group.com.
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The Importance of Acquiring New Donors

Benjamin Franklin once said that “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”

This statement holds true in many instances, even when used in reference to non-profits. The acquisition of donors, although complicated, expensive, and time consuming (if done wrong), is one of the most essential components of successful fundraising.

There are many misconceptions and mistakes that can be made throughout the process of acquiring donors with direct mail fundraising efforts. Listed below you will find five things that together will help ensure the success of your campaign.

1. Mail an acquisition piece at least once a year…

Because the perfect donor database just doesn’t exist (and we all know this), every year you experience the loss of current donors. Large loss or small loss, a loss nonetheless. When these donors leave your database, they take with them the gifts you would have received on their behalf. Consequently, without an effective acquisition package each year, you will, in addition to your churn in current donors, see declining donor growth.

2. Differentiate yourself from your competitors…

According to the National Center for Charitable Statistics (NCCS), more than 1.5 million nonprofit organizations are registered in the U.S. Therefore, it is an extreme likelihood that one of these organizations does work similar to the work you are doing. Without telling potential donors what sets you apart, how will they know to choose you over your competitors?

3. The writing does matter…

Making the assumption that the individuals who receive your acquisition letter won’t read it is a common error in this process. People read what interests them and they will continue reading for as long as they stay interested. Ergo, the more informed they will be and the more they will be willing to participate. Remember, these people don’t know you personally (yet) and you want them to. Don’t you?

4. Accurately interpret your acquisition results…

You shouldn’t think that your direct mail acquisition is a failure just because it loses money. Don’t get down on yourself if your Average Gift, Response Rate, Net Income, or Cost Per Dollar Raised is lower than expected. Net Cost per Donor Acquired is the only number that should hold any significance in calculating the success of your acquisition mail piece.

Calculate your Net Cost per Donor Acquired by dividing your net income (income minus expenses) by the number of donors acquired.

Direct mail donor acquisition mailings almost always lose money. The end goal of an acquisition is to spread awareness and generate loyal donors, not donations, contacts, not cash (at least not at first).

5. Don’t lose sight of the lifetime value of these donors…

The success of your direct mail acquisition is not measured in the immediate response you see from new donors. It comes later with the second, third, forth, etc. gifts, from your news donors and when these same new donors increase their gift amount, participate in your capital campaigns, make a major gift, and ultimately leave a legacy in their wills.

Showing appreciation to your newly acquired donors is key in the effort retain them and increase their lifetime value. Thank them promptly (with a thank-you letter), demonstrate how their gift is making a difference (with a donor newsletter), and ask them for a second gift (with a fundraising letter) sooner rather than later for the best results.

At the One to One Group, we use a special formula to help our clients recapture lybunt and sybunt donors, which is an easier and more effective way to reduce your churn. Stay tuned for more on this subject!

To Rethink Non-Profits

After spending my day hung up on an article I read this morning about reexamining fundraising and everything we know about it, I felt compelled to share a quote from it with my friends:

“And so it is in today’s world of nonprofit fundraising, communications and management. More than ever survival depends on innovation, the willingness to challenge old assumptions and, to no small degree, the ability to discover and use better measurements, benchmarks and other metrics that are based on more than myth and convention. Metrics that help us more strategically, accurately and competitively steer a course into a successful future…

“It’s more than coincidence that Moneyball begins with a quote from Yankees star Mickey Mantle: “It’s unbelievable how much you don’t know about the game you’ve been playing all your life.”

While I’m sure Mickey Mantle was referencing baseball, and not non-profit organizations when he spoke these famous words, it amazes me how this statement holds such a universal truth.

With the world we live in today, as ever-evolving as it is, it’s important to step back every so often and challenge the stratigies we apply in our daily work and think about how we can improve upon them.

The best laid plans

The Scottish poet, Robert Burns, wrote many years ago that, “The best laid schemes of mice and men, oftimes go awry”. Little did he know that he would actually be writing of my initial plan to update The One to One Group website, and what would become of it.

While virtually every business entity on the planet has a website (not to mention a wealth of individuals with one), it wasn’t until I became involved in the process of creating the component parts for our website that I finally realized just how many hours of creative time it actually takes to write and assemble resources that become a meaningful tool for clients and colleagues.

Thanks to the talent and patience of Elsie Gilmore from True Green Studios, as well as the perseverance of my colleagues (and especially my wife, Kathleen, who Manages our Client Services Division), I am pleased to able to introduce the NEW website for The One to One Group to you.

Among its many features:

Resources that provide you with access to One to One case studies, news articles, press releases and more;
Links to our Facebook page, blogs, Twitter account…and the ability to program an RSS feed for blog posts;
A connection to our newest entity, One to One DocuSource, located in North Carolina;
Contacts to all key staff members at both locations…and much more.

Thankfully, some of my younger colleagues will actively manage our Facebook and Twitter posts…so I know that they will be in good hands.

I invite you to visit the site, kick a few of the tires, and send me your feedback at bweiner@the1to1group.com. Like any creative asset, this site is a work-in-progress and will continue to evolve.

Welcome to our website, and best wishes for a prosperous 2012!