Jon Biedermann, vice president of Donor Perfect and one of the original partners of #GivingTuedsay, knows a thing or two about donor retention. Charity Digital News grabbed a few moments with him recently to discuss restoring public faith in charities, the power of data and his mobile misgivings.
What common mistakes do charities make around donor retention?
The biggest one is probably not measuring their numbers. When I speak at events, I ask how many people in the audience know, within a few percentage points, how many donors they have. I asked that question in a room of 125 people in a nationally known development conference and only one person raised their hand. The biggest problem is that people don’t measure it and you can’t improve what you don’t measure.
There has been a lot of negative press about English charities and their fundraising techniques. How can they use tech to approach people in a softer way?
It’s all about relationships with your donors: knowing who they are and what their preferences are. Do they want to be contacted by phone less frequently or not at all? I read the [Etherington] report and one poor person was solicited over 300 times! That’s more of a rarity that comes about because people keep on selling names on lists but the vast majority of non-profits we work with aren’t in that business. That’s why you have good tech. Whether it’s your database, your CRM system or your donor management system, you need something that keeps track of your donors’ preferences. A lot of people think everybody does it by email but nothing could be further from the truth. It really depends upon what the donor prefers, not what you prefer.
How can charities use big data to improve their fundraising intelligence?
It’s all about analysing your data, but also segmenting it, and looking for donor behaviour trends. In good software you should be able to segment your retention rate, not just overall, because it varies by different segments of your database. If you’re able to slice and dice, you can know, for example, that your overall retention is probably around 40 per cent – which is the worldwide average. That means you’re losing six out of ten donors year-on-year.
In reality you generally lose about eight out of ten of the donors that give once, but as soon as they give a second gift the retention rate sky rockets to around 60 per cent. By knowing that, you can go to the board and say that if they make that second gift their retention rates go up and that means their lifetime value goes up. If their lifetime value goes up it can be about a £1,200 difference. You can afford to spend ten to 15 per cent of that to invest into converting them over, because there’s a payoff in terms of a second gift.
What should charities do to capitalise on mobile giving?
That’s another thing to be careful about. For #GivingTuesday we were able to track all of the mobile giving and it ended up being about 29 per cent of all gifts were made through a mobile device. The average donor, worldwide, is in their sixties or even early seventies if yours is a religious organisation, and those people generally don’t use a mobile device. They either can’t see well enough to enter credit card details on such a small screen or they have tremors in their fingers, which make it harder.
What development officers have to know is to never self-project their own interest on what they think their donor interests would be. Just because they use their mobile devices to make donations, doesn’t mean their target audience will. You should have a good strategy for mobile giving but it is by no means the most important thing.
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