3 Keys to Donor Acquisition, Donor Retention, and Donor Upgrades
At a base level, the drivers of fundraising are to acquire new donors, retain existing donors, and increase the amount retained donors give (upgrades). Within these drivers there are a number of other factors (such as reducing attrition and maintaining giving levels), but in its most basic form fundraising can be narrowed down to these three drivers. These drivers are important because they are measurable fundraising outcomes and the primary contributors to fundraising success.
Three drivers of fundraising performance
- Acquire New Donors (Donor Acquisition)
- Retain Existing Donors (Donor Retention)
- Upgrade Existing Donors (Donor Upgrades)
The “Donors are Customers” Premise
I believe that donors are customers of your organization. This premise offers some interesting insights into how we think about and approach our fundraising efforts.
Donors, even ones that give in non-monetary ways, are contributing something to your organization in exchange for the “good feeling” they get by donating or the “social equity” your organization provides the community. They are “buying-into” the outcomes of your organization.
Donors are customers because there is an exchange between the donor and your organization. In the exchange, the customer (i.e. the donor) is looking for something of value, expects service, and is interested in how the exchange benefits them.
If we accept that donors are customers, the following three principles are the best practices that directly influence the three drivers of fundraising: donor acquisition, donor retention, and donor upgrades.
Three Principles of Best Practice Fundraising
1. Offer a valuable product
First and foremost, your organization needs to offer the market a valuable product. The market is comprised of all donors who are willing, able, and looking to donate to causes. Your goal is to lure them your direction and retain them with an incredibly powerful value proposition. Offering a valuable product differentiates you from other organizations.
The term “product” means the outcomes and impact you are having on the lives of others and the world. Your mission is a purpose, and by achieving this purpose, you create tangible impact that is valuable to society. A donor is interested in how their contribution, whether it is time, money, influence, or knowledge, makes an impact.
Each donor will evaluate the value of an organization’s product differently. Some may use emotional, societal, financial, or logical (among others) justifications to determine which organization’s products they find most valuable. However, in the end a donor contributes to your organization because they believe that the exchange of “good feeling” or “social equity” you provide through your mission outcomes is greater than their contribution to your organization. This occurs when your organization offers a valuable product.
2. Provide great service
I don’t know many people who don’t like or are indifferent toward great service. Personally, I enjoy great service. In fact, in certain circumstances I will choose to associate with certain companies, businesses, and nonprofit organizations based on the quality of service they provide.
Donors are no different. Donors expect great donor service.
Providing great service is about building relationships with, showing respect toward, and being responsive to donors. Making the donor experience enjoyable and easy for donors can be the reason someone gives to your organization. In addition, it may also be the reason they stay with your organization or upgrade their giving level in the future.
Great donor service is a about being responsive, attentive, accurate, timely, courteous, and gracious to your customers (i.e. donors), while providing them an experience that is memorable, valuable, and enjoyable.
3. Build a donor-focused approach
While this is a key component to providing great service to donors, it is also a much bigger topic. In addition to donor service, building a donor-focused approach is also about messaging and marketing.
Donors need, and in some cases want to know “what’s in it for them.” Why does their contribution to your organization matter to them? You know why it matters to you and your organization. It may mean a new building, or payroll next month, or financial security for the next two years. Those are all important to you and your organization, but it is more important to describe why the contribution to the organization impacts the donor. This puts the donor first and makes the contribution process about them.
For example, when you go to buy a new car, do you want to hear why your purchase of a car will improve the dealerships bottom line, or help them move inventory off the lot, or how the commission will help the salesman buy a new big screen TV? Most likely these reasons won’t get you any closer to purchasing the car. However, if the salesman explains how you will feel when you drive the car, how it will keep you and your family safe, and how the increased gas mileage will help you save money every year, you are more likely to listen and eventually purchase.
Donors want to know how their contribution affects them. Make the fundraising experience about the donor.
Manage performance for better fundraising results
There are many ways to acquire new donors, retain existing donors, and upgrade existing donors. While, this post doesn’t describe the best strategies for each of these categories, it offers a methodology and process that can be applied to a variety of fundraising strategies.
Use the following three-step process to improve fundraising performance.
Step 1: Set goals and define strategies
Start with clear goals. Goals can be as simple as “we want to improve acquisition conversion rates by 5%, retention rates by 10%, and upgrade rates by 15%.” Make sure to set a timeline for these goals (that will allow you to measure in step two).
Goals set a benchmark.
Next, define strategies that will help you achieve these goals. Strategies will vary from organization to organization. There is no perfect formula to achieve your goals. Pick a strategy or mix of strategies that include your understanding of your donors, best practices, consultant expertise, and proven methods. Then put your strategies to the test.
Remember to offer a valuable product, provide great service, and focus on the donor.
Steps two and three of this process will help you determine whether the strategies you pick to increase acquisition, retention, and upgrades actually work.
The goal is not to get your strategies right the first time, but to continuously improve over time (which we will describe in steps two and three).
Step 2: Measure and analyze data
As you put your strategies into practice, keep metrics related to your progress. These metrics should be key indicators of goal achievement and can be either quantitative, qualitative, or both.
It is very important to measure your efforts. Based on the timeline you created in your goals, consistently measure and benchmark your progress to your goals.
Analysis of these metrics will tell you whether your strategies are making an impact on acquisition, retention, and upgrades.
Don’t worry if your strategies aren’t yielding the results you hoped for. That is what step three is for.
Step 3: Continuously improve performance
Either in real-time or after your goal timeline is complete, evaluate what worked and what didn’t work. Find out what strategies were positive, negative, and neutral.
Even if the plan didn’t work, don’t worry. Use this information to make changes to your goals, timeline, and your strategies. Try a different formula. The goal is improvement, not perfection.
Regardless of the improvement you make and the new strategies you implement, maintain a focus on offering a valuable product, providing great service, and building a donor-focused approach.
Getting the most from your fundraising efforts
The goals of fundraising in their most basic form are simple. Generating positive performance toward these goals is difficult. When pressures build and the hurdles get higher, I recommend a refocus to basic core principles. Make fundraising simple. This makes it is easier to understand and implement. I hope this post helps you do that.
The core of good fundraising is about offering a valuable product, providing great service, and building a donor-focused approach. With these three principles you can develop strategies or a mix of strategies, manage performance toward your goals, and learn whether you are making an impact on acquiring, retaining, and upgrading donors.