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Lifetime value.  We’ve talked about how to calculate it, how to simplify the calculation, why to focus on it, how to use it in acquisition, and how and why to segment by it.

In short: we are fans.  As you will see in this post, it’s a simple way of understanding and adjusting your program, donors, and channels.

But it can be daunting.  It involves summing an infinite series of numbers, which means calculus.  At least for me, calculus is more relevant as “stuff that builds up on your teeth” than “thing you studied in high school.”

So let’s have technology do the work for us with Excel or Google Sheets or whatever spreadsheet program you have available.  We’ll use 2018’s average retention information from the Fundraising Effectiveness Project as our example.

Step one: build a column of what your retention rates will be.  Here, I started with the first-year retention rate of 20.2%.  For the subsequent years, I used a formula of

Previous year’s retention * multiyear retention rate +
Two years ago’s retention * recapture rate

Then, copy that formula for your chosen lookback period.  It should look something like this:

Step two: in the next column, put the value that you would get per period (in this case, per year).  For this example, I assumed you acquired someone at a $30 average gift and get 1.6 gits per year from them ($50 in year one).  I further assumed that each year would have an increase of 5%:

Step three: in the third column, multiple the value from column one and the value from column two, then sum that column:

Voila.  Which is French for “here’s your lifetime value calculation.”  In this case, a donor acquired for $30 with these metrics will give an additional $38.63 in the next 20 years.*

Why is this important?  Because if you are acquiring these donors for $40, you must:

  • Decrease your acquisition cost,
  • Increase your retention,
  • Increase the amount you get from your donors each year,
  • Stop acquiring donors in this way, or
  • Reconcile yourself to the fact you are using donor dollars to subsidize the people you are paying to run your acquisition and retention programs.

If you aren’t doing this calculation, you may be doing this last bullet point unconsciously.  There is a major nonprofit doing both door and street face-to-face fundraising.  They did this calculation and found their door-to-door operation was more than doubling their investment over five years.  Their street operation, however, was making less money than if they had bought U.S. treasury bonds.

(Why?  While I don’t know this nonprofit’s specific retention data and couldn’t share it if I did, Target benchmarking finds face-to-face done door-to-door has an average 13-month retention rate of 55%; street fundraising has a retention rate of 33%.  As you will see from your own Excel calculations, retention rate compounds, making more of a difference to these calculations than anything else.)

I did this for a program I ran once upon a time, trying to find the difference between premium-acquired donors and non-premium acquired donors (a fun exercise if you are looking to justify additional cost-to-acquire to get a better donor).  It turned out in this case, it didn’t matter – neither group was paying for themselves.  As much as I hate to see organizations shut down acquisition, this is a clear sign to at least pull back to sustainable levels while you work and test to create a program that makes financial sense.

On the more optimistic side of the ledger, you can also use this to choose among good options.  Should your push in digital fundraising be for one-time or monthly donors by default?  It will depend by audience, but this lifetime value calculation can help you make the case for a monthly strategy that lags in the short term, but makes up for it with better retention and annual giving amounts.

Hope this helps,
Nick

* This is simplified – on one hand, it doesn’t take into account bequest gifts; on the other, it doesn’t take into account the cost of soliciting these donors.  All in all, it should approximately balance out…

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The Agitator | Fundraising, Direct Marke.. by Nick Ellinger, Vp Of Marketing Stra.. - 2d ago

A quick one for you…

The Nonprofit Alliance is now offering a series of “Test of the Month” webinars.  On the third Thursday of every month at noon Eastern/9 AM Pacific, we’ll meet for 30 minutes to discuss fundraising experiments from the scientific literature and/or real-life testing.  That’s two days from now, hence the odd Tuesday post.  It’s open to any nonprofits and you can register here.

And if you have a test you’d like to share, we are looking for brave testers with a story to tell.  Just let me know!

Thanks and hope to see you there,
Nick

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The Agitator | Fundraising, Direct Marke.. by Nick Ellinger, Vp Of Marketing Stra.. - 3d ago

There is a healthy debate over the role of nonprofits in politics.  For traditional 501(c)3s in the United States, part of our charter is that our political efforts will be minimal.  Minimal, however, isn’t nothing; many nonprofits are very successful in making political change a part of their mission.  Others shy away from politics and work to remain apolitical in their outlook.

I was reminded of this debate with the win of the U.S. women’s national soccer team in the most recent World Cup.  Many professional tut-tutters criticized them for bringing politics into sports for saying they will not go to the White House or advocating for equal pay or being open about who they love.  The refrain goes that there should be places we go to just enjoy without the weightier issues of life intruding.  If athletes want to make political statements, they should do it when we don’t have to pay attention to them.

It is instructive that few who decry politics in sports also decry politics in chicken sandwich restaurants or markets for hobby supplies.  Or vice versa.  Across the political spectrum, when you hear a call for politics to get out of something, it is invariably a call for politics that the speaker doesn’t agree with to get out of something.

The truth is that the lack of a political statement is itself a political statement.  It says you are fine with where things are right now.  Silence is consent.

It is also a legitimate political statement.  There are times we must advocate for change.  There are times, to steal William Buckley’s phrase, we must stand athwart history yelling stop.  To each according to their values.

So the question for your organization is 1) are things now as they should be and 2) if not, are we on a trajectory that they will be in a reasonable amount of time.  If the answer is no, we should be advocating. (And if the reasons to change the world don’t sway you, let’s also remember that advocacy is often a strong way to get people into your organization who then may become donors.)

The great part of this is that political does not always mean partisan.  Consider this statement from Billy Shore, founder of Share our Strength, about why they are encouraging people to vote:

“We intend to reach out to donors, volunteers, and grantees to make sure they know that the efforts we’ve worked on so hard for so long — from protecting the vital nutritional assistance provided by the Supplemental Nutrition Assistance Program to increasing participation in school breakfast and summer meals — could succeed or fail based on the composition of the next Congress.

We won’t urge them to vote for specific candidates, but we will urge them to vote … There is nothing more nonpartisan, patriotic, or American than encouraging people to vote.  Every nonprofit and civic organization should assume some responsibility for at least communicating with its donors, volunteers, and others who have a stake in their causes.  The reach and influence nonprofits have are valuable assets.  Not to deploy them on behalf of a stronger civic society is not only counterproductive but also civically and morally irresponsible.”

Share our Strength works with executives and legislatures of all parties.  Its mission is, or should be, non-partisan.  That doesn’t make it apolitical – the stakes are high for them on what political decisions are reached.  So too for all our missions.

Or, in the words of a beloved MADD public policy volunteer Nadine Milford, “I can’t tell you who to vote for.  But I can tell you if you keep sending me who you’ve been sending me, you’re going to get what you’ve always got.”

So what statement will you make?  Is there a way your supporters can speed your work with their voices as well as their pocketbooks?

Nick

P.S.  U-S-A!  U-S-A!  U-S-A!

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The Agitator | Fundraising, Direct Marke.. by Nick Ellinger, Vp Of Marketing Stra.. - 6d ago

The real limited resource isn’t money.  Sure, budgets are tight for most.  But if you found a magic box where you put one dollar in and got two dollars out immediately, I’ll wager phrases like “hiring freeze,” “unbudgeted expense,” and “budgeting cycle” would be thrown out the window pretty quickly.

(Also, you’d have to decide whether that was a business-use magic box or a personal-use magic box…)

So budgets are always available for the right effort.  How about on the donor side?  Yes, the #1 reason donors say they lapse is that they could no longer afford to give (per Adrian  Sargeant’s research).

But what does that mean?  One of the great pleasures of reading through tens of thousands of pieces of donor feedback each year is you get great stories.  One comment was from a woman who said she was eating her cat’s cat food to save money because God had called on her to give generously to this charity.

Thankfully, this charity did the right thing, calling this donor to persuade her that they could do with a smaller monthly gift from her so she could eat food intended for humans.

But the point stands – most of us have trade-offs we could make if we wanted to give more to charity or to more charities.  The limitation isn’t usually money.

The real limited resource isn’t communications.  A bit behind on your fundraising goal?  Write another email or mail piece; if it’s quantity you are after, it’s very easy to do.  You can use our Year-End Mad Libs email generator if you need.  Or, if it’s not year-end, forward the last email you did with a short intro:

Dear [first name],

I wanted to make sure you saw my last email, because things are really super duper urgent.  You see, Timmy’s trapped under the combine harvester again.  We need your support to help Timmy and boys like him.  Can you chip in $5 today?

Thank you in advance for your support,
June Lockhart
President, Lassie International

Granted, the long-term impact of a reminder email is negative and most of the revenues from a new mail piece will be cannibalized from your existing pieces.  But the pop in immediate revenue should give you enough time to update your resume and flee.

The limited resource is time and attention: yours and your donors’.  With apologies to Elvis and Willie Nelson, other than our cat-food consumer above, we are not always on our donors’ minds.  Most of their time is spent on things other than charities; even of the time spent thinking about charities, only a portion is spent on you.

There are only two ways to deal with this limited resources: capture more of your donors’ attention or do more with the attention you have.  For the former, on Monday, we talked about increasing your value proposition as necessary to increasing giving.  The same for using our donor’s most precious resource – their time.  They need to know you will be relevant to them and worth spending time with.  For the latter, to do more with the attention you have, you are working to reduce friction.  Part of the take-off of monthly giving is because of an implied contract between you and the donor: we will make it very easy for you to do even more of the good you seek to do in the world.

The challenge is that all of this takes its toll on your limited time and attention resources.  It’s harder to do different pitches for different donor identities, set up  processes to capture feedback and donor knowledge, and do the testing that assures your communications are maximizing their chance of getting a donation.

So what are you doing that isn’t making things either easier or better for your donors?  And can you get rid of that so your donors don’t have to get rid of you?

Nick

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I’m getting more curious and more concerned about why so many nonprofits sector so neglect the “basics.” Simple things like updating addresses. Identifying deceased donors. Or promptly sending a prompt and truly heartfelt “thank you”—on paper… in an envelope… with a stamp.

“Basics” that are considered mundane but left unattended damage every organization. Many caring fundraisers who work inside organizations spend time and money on good conferences and knowledgeable consultants.  And these consultants spend hours doling out solid advice on strategy, creative, techniques and other good “how to” stuff.

Yet, right below the surface of so many organizations seeking “best practices” is a very shaky foundation of bad data, and clunky or indifferent technology that stand as a bigger barrier to the use of good “how to” advice than I think many understand.  It’s as though the organization invests in buying a great refrigerator, but doesn’t have electricity to operate it.

I’m particularly focused on smaller organizations—those with fundraising revenue under $3 million: partly because the bigger guys can fend for themselves, but mainly because I’m curious if there are basic needs and inexpensive tools that would be helpful in meeting some of these basic needs for smaller groups given their limitations of staff, time and budget. (I’ve outlined a couple examples of these in the P.S.)

Now… my specific 5 minute request of you.

I’m seeking your help because I’ve been puzzling over the following statistics and trend:

A recent DMA study noted that average response rates from direct mail at 4.4% are a whopping 37 times higher than average email marketing rates at a mere 0.12%.  Other studies show the same disparity although the open, click-thru and response rates vary slightly.

This disparity between postal mail and digital mail coincides with the trend that the commercial sector is undergoing a resurgence and growth in the use of direct mail by 40+% a year while it seems to me that the nonprofit sector is doing less direct mail and more digital.

Stats like these, along with the recent 2019 M+R report noting that in the nonprofit world digital may have plateaued or is declining, triggers the following question:

Are smaller nonprofits taking advantage of the power of postal mail/direct mail?  Do they understand its financial potential?  If they do understand its potential why aren’t they using more direct mail/postal mail?

These are some of the questions worth asking if for no other reason than the answers may well improve revenue for smaller groups —and probably for larger groups as well. For example, if an email to donors has on average a 20% chance of being opened and a postal mail letter a 50% chance… and if the response rates average about 0.5 percent for an email while a printed letter delivered to the donor’s home enjoys a 4% response rate, that’s quite a difference in results.

Assume the average gift for both channels is $30. An email to 1000 donors, assuming no cost, but a .05 percent response rate will produce $150 from those thousand donors. The direct mail letter assuming it costs $750 to reach those thousand donors with a response rate of 4% will produce a total of $1200 minus the $750 cost of the mailing for a net income of $450.  For a group with 10,000 donors that’s a $2,000 difference in favor of postal mail.

It seems obvious to me which channel is preferable.  But there must be reasons why many organizations don’t take advantage of this.

Is my concern warranted?  Is there an under-use of direct mail/postal mail among smaller nonprofits?

If so, why? I can think of many reasons for this under-utilization – lack of knowledge, the logistical hassle of producing copy and art, selecting data, wrangling printers and mail houses, not to mention a belief among some that digital is ‘free” and on and on.

BUT… these are all guesses and personal insights that come from the two or three smaller organizations I volunteer with and messages I get from Agitatorreaders, so I need your help.

That’s why I’ve created this Brief Survey on the Use of Digital and Postal Mail   (that’s the 5 minutes I’m asking of you) to gain far more insight and guidance than I could ever gather on my own.

The questions are drafted so that both staff fundraisers and outside consultants can participate.  So, whatever your role,  I’d really appreciate your giving these questions some thought and contributing your time to complete this Survey. (And please comment as much as you wish.)

My thanks,

Roger

P.S.   I’m conducting this Survey because I’ve decided to do  far less consulting and instead focus on creating inexpensive, easy-to-use tools designed to solve some of the most “basic” problems faced by smaller nonprofits.

As an example of what I mean by “basic”, take the stumbling block of outdated addresses and therefore undeliverable mail. The average small nonprofit has between 5% and 7% bad addresses which means those donors will never see that great creative, best story, most powerful package or great strategy you create because they’ll never receive your mail. What a waste!

I doubt that most small nonprofits (and also the large ones) are aware of T. Clay Buck’s estimate that a file of only 10,000 donors with a 1% undeliverable-postal-address-rate costs the organization $155,000+ over a five year period. And since most organizations average 5% bad addresses that adds up to five-year income loss $750,000 for a nonprofit with 10,000 donors.

That problem can now be solved with a simple, easy-to-use, and inexpensive service called TrueNCOA  that can be found in the Agitator Toolbox along with other tools for identifying deceased donors… and inexpensively appending age, income, real estate and other wealth data. (By the way, Bloomerang has fully integrated all this into their CRM system and makes automatic nightly updates available to their subscribers without charge and with no work or time on the part of the nonprofit .)

Your guidance will provide insight into what additional low-cost, automated direct mail tools may be helpful.  Again, thank you.

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The Agitator | Fundraising, Direct Marke.. by Nick Ellinger, Vp Of Marketing Stra.. - 1w ago

Every day on her way to work, a woman walks by the same bagel stand run by a guy who is clearly selling these bagels to survive.  So every day, that woman drops a dollar in the mug and leaves without asking for a bagel.

One day, she feels a tug on her sleeve as she’s leaving – it’s the man who runs the stand.  She says “I suppose you are wondering why I leave a dollar every day without taking a bagel?”

He replies “No, I just wanted to tell you bagels are now two dollars.”

So many of our donor upgrade strategies amount to this: asking that same person for a different amount or in a different way.  Circle the middle value.  Put some social proof to it.  Localize that social proof.  Reverse the ask string order, knowing that the first value has the most pull.  And, of course, et cetera.

As the author of our Science of Ask String white paper, I’m a fan of testing all these tactics.  It’s great when you can increase donations for no additional cost.

But donors largely lock in their giving if they make their second gift at the same amount.  De Bruyn and Prokopec looked at this phenomenon in their 2013 paper on ask strings.  They found the best value to anchor your ask string to for first-time donors was anything but their previous donation – higher and you increase average gift; lower and you increase response rate.  But the best value to anchor your ask string for repeat donors is what they’d given before.

These donors have set a value for the organization to which they are giving, just as the woman in the story at the beginning had set her value on zero bagels.

We will sometimes bemoan this: despite all our cleverness, why are donors not upgrading to our organization?  And at a macrolevel, why is nonprofit giving at two percent, plus or minus, of US GDP since we started keeping track.

The fault, dear Brutus, is not in our donors but in ourselves.

There is a reason no marketing campaign has ever been successful with the slogan “Same product!  Twice as expensive!”  Call it Newton’s First Law of Upgrading: A donor’s giving amount at rest will tend to remain at rest unless acted on by an outside force.

Thankfully, dear reader, you are an outside force.  Collectively, we are a force.

Our force must be aimed at increasing the value our donors get from our organizations.  We want them to give more and think it a bargain.  How do we do this beyond the pale simulations of additional value that are premiums and matching gift campaigns?

One is to focus on the individual’s impact, rather than the collective one.  As Dr. Kiki Koutmeridou has said in our Ask a Behavioral Scientist section:

“Major donors are more interested in the difference they will personally make, rather than the usual “together we can…” pitch. Charities should emphasize their personal impact and adapt the language and offers accordingly to increase conversion.

To invert this somewhat, people are more inclined to make major gifts (whatever that means for them) if they have a personal impact.

Another is to increase the value of that impact to the donor by making it more personal.  As we preach with identity, donors choose and stay with the nonprofits who can address not who the charity is, but who the donor is as it relates to the cause.  If I know you are a disease sufferer or cat person or a mountains person or were treated at our hospital or knew hunger once or someone whose family member has an intellectual disability or… or… or… and I can tailor the reason to give to that identity and the things you want to support, my charity is going to be more valuable to you.

In short, learning about donors and acting on that knowledge can make you more valuable to them.

We can also be a resource to our donors, giving them ever more value.  We’ve talked about an information exchange – giving to get – as a way of acquiring new constituents to our organizations.  But it does not stop there.  If you are continuing to deliver value along that constituent’s life with you, they will increase their giving.  Reciprocity scales.

In these ways, we can be the force that changes our donors’ behaviors not just once but permanently.  Here, as everywhere else, you get out what you put in.

Nick

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The Agitator | Fundraising, Direct Marke.. by Nick Ellinger, Vp Of Marketing Stra.. - 1w ago

… except parents with babies trying to get them to sleep.  And many dogs and their owners.  And those suffering from trauma where loud, explosive noises are a trigger.  And others.  For them, it’s negative.

Everyone loves ice cream… except the lactose intolerant.  And dieters.  And vegans.  And those who don’t like the taste.  And others.  For them, ice cream is a negative.

Even the nearly universally beloved have that niggly “nearly” in them.  If you are a mass marketer, you round up.  You assume that everyone loves the things that nearly everyone loves and you hope those who don’t bear this fact in silence.

But we are direct marketers.  We can and should be more evolved.  Let’s tick through our list.

Everyone loves ads that are more personalized.  Except when they advertise baby products to you after your child is stillborn.  Or are based on flawed third-party data the data practitioners can’t be bothered to update.  Or the ads reveal what you were shopping for for your partner’s surprise birthday present.  And others.  For them, it’s negative.

Everyone loves thank you calls.  Except people who don’t like to get phone calls.  Or for whom the timing isn’t right.  And others.  For them, it’s negative and hurts retention.

Everyone loves a welcome mat and welcome communications.  Except those who already know this stuff about you and are already bought in.  For them, it’s negative; you are wasting their money and it hurts their retention.

Everyone loves more engagement with your organization if they are committed.  Except for what Sergeant and Shang call the “passive loyals.”  They have no interest in deepening their connection to you, but are fiercely loyal.  For them, engagement communications are negative.  They show you don’t know them and what they want.  You are spending money to annoy them.

Everyone loves being special, with “scarcity” even being one of Cialdini’s six laws of influence.  Except for those who don’t – our testing finds that one of the worse things you can do with some religious organizations is call a special group of donors “elite” or separate them from the humble masses.  Or except for those where you are making them special, but separate from values they hold dear.  On average, the average American likes being called the average American.  For many (not all), that’s a source of pride, as is being one of many worshippers who come from many backgrounds but believe in the same thing.  For them, trying to hold out the donor as special is negative and will backfire.

Everyone loves getting your Mother’s Day or Father’s Day greetings.  Except for those who just lost a parent.

And so on.  And so on.  And so on.

The message here?  Question the things you believe about “everyone.”  If not everyone loves fireworks or ice cream or someone calling to say thank you or a Mother’s Day card, what chance does your communication to everyone have?

Once you question, ask more.  Learn more.  Adapt more.  Repeat.

Like the Union for which the fireworks went off yesterday, you will never be perfect.  But you can be more perfect.

Nick

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The Agitator | Fundraising, Direct Marke.. by Nick Ellinger, Vp Of Marketing Stra.. - 2w ago

Tomorrow, we Americans will celebrate our Independence Day, called such because Amxit is a mouthful.

I wanted to focus on the fundraisers – as ever, the real unsung heroes of the revolution.  The techniques and the situation may sound very modern…

Urgent need.  In 1780, the Continental Army surrendered Charleston to the British Army, essentially ending the existence of an organized army in the south (guerilla warfare continued).  The loss was blamed largely on lack of provisions (Washington’s line from the musical ‘Hamilton ‘, “I’m working with a third of what our Congress has promised” may not have been verbatim and certainly was not delivered in rap, but was true where funding was concerned).

Organizing. Esther Reed, a prominent Philadelphian formed the Philadelphia Ladies Association in response with a goal “to contribute as much as could depend on them, to the deliverance of their country.”  Similar associations were advertised and popped up in other states/colonies.  The calls to action reflected on British actions and atrocities in a strong example of building a common identity in shared opposition to a foe.

Door-to-door canvassing. Not only did volunteers do face-to-face fundraising, but they split up the territory to avoid cannibalization.  This is a tactic adopted by many street fundraisers today to avoid a tragedy of the commons (see Ian MacQuillin’s comment here, for example).

Greater attachment from certain donor identities.  Just as charities today generally raise more from those with a direct connection to their issue, some of the most generous donors to the cause were the wives of Continental Army soldiers.

As ever, the Pareto principle. The result spanned the socioeconomic spectrum with historians saying donors ranged from those giving shilling and pence on up.  But about three percent of the total funds raised were from two donors.

High-level acknowledgments and battles over restricted giving.  Upon the receipt of funds from Reed – over $300,000 in 1780 dollars or $5.4 million in 2019 bucks – George Washington himself wrote her back, saying

“This fresh mark of the patriotism of the Ladies entitles them to the highest applause of their Country. It is impossible for the Army, not to feel a superior gratitude, on such an instance of goodness.”

(Compare your own acknowledgment letters to this…)

But he also said he wanted to use the money for shirts for his men.  Reed replied they were working to get linen for shirts but that she wanted the money to go for rewards for the soldiers: “the whole of the Money to be changed into hard Dollars, & giving each Soldier two, to be entirely at his own disposal.”

Washington replied, saying “It was not my intention to divert the benevolent donation of the Ladies from the channel they wish it to flow in” but then marshalling his arguments against pay for the men (in large part, because they’d use it to get drunk).  Reed relented, not altogether happily, saying she would work on getting the shirts made.  If all donors were so willing to give without strings!

So, this American Independence Day, we remember the fundraisers with challenges then as they are today.  It’s a good reminder that when you pledge your lives, your fortune, and your sacred honor, someone has to be there to make sure you part with that fortune.

Nick

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It’s more than ironic that a large nonprofit employing both a $5 million direct response acquisition program and a F-2-F program costing the same $5 million will cumulatively spend hundreds of hours and thousands of dollars on the preparation of their direct mail package, but totally neglect any significant investment in the training and monitoring of its canvassers.

Most F-2-F operations care only  about is volume – the number of new donors acquired—period.  Not the experience of the donor.  Not the retention rate.  And certainly not the canvasser.  They are paid per donor and the goal is to increase that revenue while keeping costs low.  It is this volume-only mindset that assures the ultimate failure or sub-par performance of a F-2-F program.

You see, canvassers are to F-2-F what the package and copy are to direct mail—the messenger and motivator to the donor.  Ironically, there are hundreds of blogs, books and webinars on direct response copy and creative… hundreds of skilled copywriters employed in preparing the package…and endless testing aimed at “beating the control,” but sadly little or no serious thought and little testing and evaluation is involved when it comes to the multi-million expenditure for F-2-F.

Why this myopic and ultimately self-destructive mindset?

To better understand why nonprofits would spend millions on F-2-F but largely ignore the key engine of success — the canvasser—I interviewed Richard Duke, the National Canvass Director of DVCanvass . For 10 years prior to joining DVCanvass Richard was a part of Greenpeace USA’s much-touted in-house canvass operation, serving most recently as National Training Director.

I framed my questions around areas I consider most important in assuring a high-value, sustainable, and growing F-2-F program:

  • The quality/training of the canvassers
  • The experience and satisfaction of the new donor with the solicitation process
  • The capture by the organization of key donor data, e.g. satisfaction, commitment, and donor identity
  • The effective use of this information/data by the nonprofit to provide the best, personalized donor experience and assure maximum retention.

Every one of these four elements are essential if the ultimate business goal— maximizing total net lifetime value for your charity—is to be realized.

Sadly, Richard’s insights confirmed what I’ve long suspected:  today’s F-2-F efforts are largely concerned with the volume of new acquisition with little or no attention paid by the nonprofits or the canvass firms to the key issue of retention.

In Richard’s words:

“Canvassers know that the organizations won’t use any of the data that could be collected during the sale in a back-end retention process.  All the organizations care about is the credit card information.

“So, if the organization doesn’t care, neither do the canvassers.  This lack of concern about using data on the part of the organization infects the canvasser’s behavior.  Pretty soon they forget to bring the welcome package…they don’t remember the donor’s name…eventually they don’t give a shit about getting this valuable information because they know they will be rewarded for what the folks back at the office are paying attention to –volume.

“And if the organizations don’t care or don’t know how to use data about the donor on the back-end then you end up with seeking only the most gross data –age, credit card, EFT, name and address.”

Quality Data Makes a BIG Difference

After a decade of managing F-2-F programs and canvassers in the “street” and “at the door” Richard says there’s a far better way. “By prioritizing the acquisition of qualitydata over mere volume of sales you need to sign up fewer donors per week to make the program far more valuable for the nonprofit.”

Here’s the data that Richard and the teams at DVCanvass seek and why it makes a difference:

  • Donor Identity and Donor Commitment at the point of sale.
  • Donor Satisfaction post-sale

“When these key data elements are tied back to the individual canvasser and modeled it gives our client and us the capacity to see not only how many they sign up but the predicted lifetime value and what steps we can take to improve by qualitatively digging in and seeing what differs in approach, style and little idiosyncrasies that separate those that deliver high quality from low quality.  Differences that will never be looked at or understood if the only measuring stick is head count.  Or worse, looked at and arriving at the exact wrong answer – one that may increase volume at the expense of quality.  That works if you only care about acquisition conversion but not if you care about program profitability”

Focus on the Canvasser

If you believe that experience and skill matters in fundraising and if you’re involved with F-2-F you have to be concerned with the horrible churn rate among canvassers.  The average tenure of a F-2-F canvasser is 40 to 60 days –something no other business would tolerate save for shady boiler room telemarketers and the graveyard shift at 7-Eleven.

Some of this churn is due to the fact that otherwise-noble nonprofits tolerate the fact that their canvassers are paid below-living-wage and have few or no benefits.  Also, their work is harshly tied to output – ahhh, once more “volume” rears its ugly head.

It doesn’t have to— and shouldn’t — be this way.

In reviewing research on F-2-F payment and retention conducted by DonorVoice in the US and Europe it is clear that the ability and skill of a canvasser to both acquire data and provide the donor with a satisfying experience is critically important.  (Specifically, these studies have found that the loss of donors in the first six months can be cut in half by using these data.)

So, I asked Richard, whose DVCanvass is putting the research of its affiliated company, DonorVoice, into practice in the field, just how this translates in the selection, training and retention of skilled canvassers.

Here are the key takeaways from my interview with Richard on how and why the gathering of quality data is important for both the canvasser and the nonprofit:

  • Obsessive Focus on Volume Harms Both the Organization and the Canvasser.

“The obsessive focus on volume to the exclusion of virtually everything else damages the canvasser, the organization and the donor.  When acquisition volume takes precedent over everything else canvassers focus mainly on getting a “yes” and they stop listening.

“When canvassers are measured only by the amount of money raised and the number of new donors brought in, they ignore ‘quality’.  The result is they churn through prospects, fail to listen and enter into a dialogue with the prospects and provide a satisfactory experience for the donor.  With this volume mindset they may sign up 5 new donors, have 3 quit and in their rush, piss off 10 people who will never talk to the organization.

“It’s far more valuable for the organization if we sign up 3 people, keep 2 and establish a good connection with the other 10, rather than to rush through signing up 5 only to quickly lose them.”

  • Donor Satisfaction a Key Metric for Organization and Canvasser.

“The use of the “Donor Satisfaction” with the F-2-F sale is a groundbreaking metric.  Captured right after the sale the satisfaction score enables the organization and/or the canvass firm to identify those canvassers who are producing high volume, but low-quality donors from those who may have fewer sales but are bringing in donors who stick around and fulfill their pledges.

“By capturing data involving satisfaction, commitment and donor identity not only does the organization gain information that will—if used– dramatically increase retention and value, but improves the training, effectiveness and morale of the canvasser.”

  • Do NOT Slavishly Marry the Canvasser to the Script

“Most canvassing operations tie the canvasser to a pre-determined script.  This is a mistake because when a properly trained canvasser actually listens and holds a conversation with the donor not only does the success rate goes up, but so does the tenure of the canvasser.  This is counterintuitive for most firms where the belief is ‘we have to teach you what to so you can hit volume.’

“For example, let’s assume a door campaign for an international child sponsorship organization.  The prospect answers the door and the canvasser explains why he’s there.  ‘That’s interesting’, says the prospect, ‘I was in the Peace Corps in Senegal and know the importance of programs like yours.

“At this point using the conventional approach the canvasser would more or less ignore this piece of information from the donor, stick to the pre-ordained script and press on for the sale. What a mistake.  The canvasser, the unspoken message conveyed to the prospect as a result of this tightly scripted approach says, ‘I don’t care about you.  I only care about the sale.’

“A far more effective alternative comes from a canvasser properly trained to listen and engage in conversation would stop…ask the prospect about his Peace Corps experience and then bring the conversation back to the mission of the organization and match the prospect’s experience and motivation with the organization’s need.

“In short, the canvasser does need to focus on the organization’s selling points and the donor’s needs, not run amok on what appeals to the canvasser) about the organization.

(Also see Part 2 in this series for more on the canvasser conversation. Roger)

Déjà vu all over again.

I began this series wondering if F-2-F will avoid the dismal fate of direct mail and telemarketing where the obsessive focus on acquisition volume overwhelms and short changes what should be an even greater focus on the donor and the data and steps required for significant donor retention.

Clearly, we know what should and can  be done.  What I fear is the multi-million-dollar waste and vast opportunity we’ll miss if F-2-F organizations continue their blind adherence to volume.

Roger

P.S. A last call for those who wish to learn more, DonorVoice and others are hosting F2F Acquisition: Oasis or Mirage on July 10th, 2-5 PM, in Washington’s National Harbor (right before the Bridge conference).  It’s for those thinking about F2F to hear from those who have entered the channel and know the details.  Speakers include Shira Mitchell from Special Olympics, Jill Miller from The Nature Conservancy, and sustaining giving gurus from One + All.  If you’re interested, please reserve your place with Nick at nellinger@thedonorvoice.com.

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Given the unique opportunity to capture information directly from the donor that is essential for assuring higher retention and donor value, it is ironic that most F2F operations simply ignore this bonanza.

In fact, it’s more than ironic.  It’s downright wasteful and irresponsible.

I call it the “The F2F Paradox”.

… On the one hand, the canvasser is presented with the opportunity to gather terrific, important and useful details about the supporter;

On the other hand, the organization turns its back on the opportunity by failing to capture and act on this information, thus crippling its own retention efforts and condemning the long-term effectiveness of the program.

Over and over we’ve preached about the high-yield importance of “donor identity” (herehere, here, here, and many other places)—understanding the specific motivation of an individual donor; ‘why’ that donor gives to you.

What better time than at the point-of-solicitation to find out “why” a supporter signed on?  To find out what parts of the organization’s mission most interests the supporter?  To discover the array of information that will help us craft donor experiences that ensure maximum retention and loyalty?

Yet sadly, most canvass operations know very little, if anything,  other than name, age, address and credit card number, about who they sign up. Of course, this reality is hardly unique to F2F; it’s the norm in the nonprofit sector whether the solicitation is being conducted by mail, phone or online.

None of these other channels present the direct, personal opportunity to gather data and information about the individual donor right on the spot, then employ that information to meet the donor’s needs and better assure retention.

Seize the Moment

The great tragedy is that the best canvassers are already gathering this information, save for the data capture part.  The best canvassers have an innate ability to get prospective donors to share germane, personal details about themselves. Details that explain why they might support your organization.  These same canvassers use those details to craft their response – in any other scenario, this would be called “having a conversation.”  You share something about yourself and I say something that is responsive to it.

What should be required is:

  • Transforming this approach into a semi-scripted conversation so that training can be conducted and to standardize the Identity data (i.e. the donor’s innate motivation to support the organization) then….
  • Recording this information in the recruitment software.

The script would begin with understanding the possible motivators specific to the cause (this requires subject matter expertise on the topic, not just guessing), asking donors to share in a conversational way,  and then framing the discussion with organization-specific messaging.

Let’s take an organization focused on refugee or immigrant rights for examples of what donor identity might include:

  • Working overseas in one of the countries where the organization operates (Place-based Identity)
  • Immigrant relating to those whom the organization’s work affects (Immigrant Identity)
  • Someone who believes in the need to help those less fortunate than themselves (Helper Identity)
  • Someone who believes the world is interconnected. (Globalist Identity)

These illustrations of identity share one thing in common.  Each is personal to the donor and represents an innate sense of self.  Although each person has lots of identities (e.g., gender, religion, party affiliation, occupation, parent, etc.) identities like those listed above are only relevant and ‘activated’ based on a specific situation or context.

What’s important to note is that when an identity is activated it also triggers a set of specific values and goals that dictate the donor’s behavior as she/he subconsciously seeks to act in a way that reinforces those values and goals.

All this boils down to one inexorable fact; the most important message for driving behaviors ( In F2F the desired behaviors are (1) to sign up and (2) stick around) is the one that makes it clear that supporting this charity will be in keeping with the donor’s Identity-based values and goals. 

Selling this way can be done with the proper scripting, training and incentive structure.

Now, juxtapose this approach with the far more typical or conventional approach I highlighted in the last post. In that typical approach, the canvasser is also highly motivated by the work of the organization.  BUT…the canvasser’s personal hot button is his/her own focus on misbehavior by immigration officers or any number of other, discrete sub-areas of the organization’s program and not the donor’s.

In this example, the canvasser is out there passionately selling his/her own hot button and working hard to hit quota.  He/she does.  But the donors who signed up had to mentally work very hard to see how this passionately presented issue tied in with who they are.  In short, a failure to create motivation with staying power.

The far more likely outcome (borne out by the lousy retention data) is that this donor signed up not because she/he understood how it helped or benefited them and reinforced their goals/values,  but because the canvasser was energetic, smart and passionate and it felt good.  The “feeling good” was a bit infectious and signing up was a way to keep the feeling going…but only for a very short period of time.

The road to Retention Hell is paved with good intentions; and there’s no question that most canvassers and their agencies possess good intentions in spades.  Sadly, that’s not enough. What they need is training and direction that properly reflects the psychology of decision making.

Merely having a better script that helps qualify people and increases the likelihood that we’ve made a solid, lasting connection at the point-of-sale is simply not enough.

And that’s why understanding the “F2F Paradox” is so important.  If key data like donor identity is lost, never captured and therefore never passed back to the charity then the organization is setting itself up for suboptimum experiences post acquisition at best, and failure at worst.

The only thing worse than a newly recruited donor quitting in the first 30 days is the newly recruited donor who would not have quit if only the organization had the data and process to build on the positive recruitment interaction.

With those data, the organization could have delivered relevant Identity-reinforcing content.

Donor Voice has clients that have reduced month 2 attrition by 20 percent simply by versioning the month 1 stewardship emails.   The illustration below highlights what versioning – in this case, a Parent vs. Non-Parent welcome letter – can look like.  This isn’t a big or difficult lift and yet barriers to implementing this seem to abound.

If we are to get serious about retention and not repeat the sins of the past, then we need to commit to these principles.

  • Understand the psychology of giving. It is all about the donor and their needs.  The organization is merely a conduit.
  • Just intellectually knowing about donorcentricity is not enough.
  • You must understand this well enough (or have an agency that does) to put process in place from training, to Key Performance Indicators (KPIs), to incentive structures—all designed around “why” people give.
  • Putting principles 1 thru 3 gets you half-way there– optimizing the acquisition side of the two-sided coin.
  • To deliver on retention improvements you must also get past the one-size fits nobody donor journey.

Frankly, if your F2F retention plan starts and stops with age quotas, or a one-size-fits-nobody journey even if it’s ‘tailored’ to F2F with some back-end systems and a clawback from your agency then you should expect nothing more than a 33% (street), year one retention rate.

All you’ll end up with is a payback period (depending on vendor pricing) that is almost impossible to justify.

Roger

P.S. Next up? An interview with Richard Duke, National Canvass Director of DVCanvass, who for 10 years prior was a part of Greenpeace USA’s in-house canvass operation, most recently serving as National Training Director.

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