How to Measure, Improve and Increase Commitment for Donor Retention


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Presented at the Institute of Fundraising National Convention, London, July 2013. Retention is every organizations number one problem. The key is managing the donor relationship to increase commitment and drive long term sustainable revenue growth. Applying a commercial model framework, Jann Schultz at Operation Smile has worked with DonorVoice to define the experiences and touchpoints that drive commitment. The case study reviews the model and insights to improve and increase donor retention.

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  • How to Measure, Improve and Increase CommitmentPresented at the Institute of Fundraising National Convention, London, UKJuly 2, 2013Prepared by:Josh Whichard, Partner, Donor VoiceJann Schultz, Associate Vice President Donor Services, Operation SmileV. 7Overview: Retention is every organization’s numberone problem. The key is managing the relationship with the donor to increase commitment and drive long term sustainable revenue growth. Applying a commercial model framework, Operation Smile has worked with DonorVoice to define the experiences and touchpoints that drive commitment. The case study reviews the model and how the organization is applying these insights to improve and increase donor retention.JANN SECTION STARTS HERE:Welcome, thank you for joining us today. My name is Jann Schultz and I am responsible for Donor Services at Operation Smile based at our US Headquarters. I’m here today with Josh Whichard, who is a Partner at DonorVoice. Operation Smile has been working with DonorVoice to understand and better manage relationships with our constituents to increase commitment and create long-term sustainable growth for our organization. So I know it is late in the day, and you’ve attended a variety of presentations. I’m sure you’re wondering what a couple of Yanks can share with you that will benefit your organization. Our goal is to provide you with at least 5 key takeaways – and maybe a few other ideas - that will help you measure, improve retention, increase donor commitment and drive long term growth for your program.
  • JANN:So, for the next hour we want to share with you what we believe is the primary challenge for all charity fundraising programs. We are going to walk you through what we believe to be the solution – with some new insights and strategies that provide better outcomes. At Operation Smile we have the proof – but change is difficult - and requires dedication and focus to achieve results - so I want to share what we have been working on for the past year.We will wrap up it all up with key takeaways that starting today can make a difference to your fundraising programs.
  • JANN:So, who is Operation Smile?Well,I am going to apply a bit of what we’ve learned through our work with DonorVoice and not overwhelm you with information and statistics on who we are…The statistics are proof of our progress but they aren’t the essence of who we are or what we do. Simply stated, we are an organization that is dedicated to changing lives forever.
  • JANN: Just a moment ago, I mentioned that we believe there is a primary challenge for all fundraising programs – and that problem is retention of donors.
  • JANN: The data to support this conclusion is bountiful and compelling - yet significant improvement across the sector has been largely unattainable. Here in the UK, Blackbaud conducted a benchmarking study that showed that retention rates have not improved even 1% in the last 5 years (see blue chart)Looking at the statistics internationally only slightly more than half of organizations - in any given country - can boast retention retention rates higher than 60% (orange chart)And specifically within the United States – less than 3% report overall retention higher than 70% - and only 1 out of every 6 donors increases their giving, YOY.
  • JANN:The issue is the “old model” of replacing donors through acquisition. This simply is no longer working and for most organizations is not a viable strategy.At Operation Smile we have been able to outpace other international relief charities in the US - and as you can see in this chart - we are in a small minority of organizations that can show year over year growth for the past 5 years in new donor acquisition.But despite this unprecedented growth - we are losing the war against donor attrition. Quantifying this in dollars, fixing the retention problem is a $10 million opportunity for my organization.
  • JANN:So the problem is retention. But simply keeping a donor from one year to the next by itself is a weak goal. The better goal - a common goal - the holy grailfor all of us as fundraisers - should be creating a path of sustainable long-term growth for our organizations.Josh…
  • JOSH SECTION STARTS HERE:Audience participation – Raise your hand if you have developed and deployed a new approach in the last 12 months that your organization believes will significantly move the needle on retention and create a path towards sustainable long-term growth.
  • I often look at how things are done in the commercial sector as the guide to how we should be doing things better in the nonprofit world.In the commercial world, when determining the best approach to developing a new product or service a common framework for determining the best path comes from 1 of 3 options buy build or partner…“Buying” is our acquiring – and as Jann discussed the “old model” of acquiring more and more to offset those we lose and is becoming cost prohibitiveBuilding is growth through retention, cross-sell and upsell“Partnering” for a nonprofit could mean merging, which frankly, with the growth in the # of registered nonprofits is a trend we may see in years to come but it isn’t today’s solutionBased on the data and options we have I would argue our best path forward is to build.NOTE – IF I KEEP THIS I WILL LIKELY CHANGE THE VISUAL
  • Building isn’t necessarily a new concept. We recognize this is a a big undertaking or “the Holy Grail” as Jann referred to it.The reality is that success will requires change on all fronts…We can’t expect to change donor behavior if we don’t change our own – specifically, we as marketers need to:Change the way we view and measure the world and get new/different data Start paying attention to what REALLY matters to in the minds of our donorsDesign an experience based on what really matters and get rid of the stuff that doesn’t**NOTE – VIEW ABOVE IN SLIDESHOW MODE TO SEE THERE ARE TWO IMAGESCLICK -- “Two Heads Are Better Than One”
  • The flaw in our acquisition mindset is that we believe the good donors are all out there just waiting to be tapped on the shoulder…and the way we have churned through them would suggest we believe it was an infinite pool.I have been part of many file audits and when looking at the retention rates and someone (maybe even me) has questioned whether or not we are acquiring the “RIGHT” donors. Then we get into a deep dive looking at retention by $ amount and decide that the “RIGHT” donor is one who is acquired with a gift of $15 or more.The reality is that we need to recognize we are in the business of creating good donors. The world is full of well meaning generous people wiling to donate money to causes in need and our job is to turn those good people into good donors.Simply and directly stated, good donors are created and not born.
  • Josh:This is an attitudinal model with data collected through a quantitative survey researchAs I explain this you will recognize this as relationship theory…it applies to interpersonal relationships with friend, family, colleaguesWe come away with insights that inform two things:An understanding of what experiences impact the strength of relationship positively or negativelyVisibility into who are the ‘committed donors’ who we believe deserve more time, effort and spend
  • Attitudinal output from the model.Insight into the coverage
  • True cause and effectThis is the ‘reason to believe’
  • Key point -- this doesn't just apply to the US
  • Psychologist call this “Mere Recognition”…this is proof that this audience is ready to absorb, give and engage more.-- Donors are more in tune with org, see more of your communications and see less of competitors-- Looking (subconsciously) for ways to reinforce their decision to like you
  • JANN PICKS UP HERE…OK, overwhelmed by data? I want to move us away from the numbers and into practical application. But to do that, we need to keep in mind what Tony Elischer said in his plenary session yesterday morning, “Humans are multi-channel and multi-sensory.” Our ever changing world has shifted away from traditional one-way communication – from charities to constituents – to a two-way or even broader conversation covering a wide variety of experiences.For more than a decade, the for-profit world has been talking about loyalty and customer experience. Prior to joining Operation Smile, I spent 12 years in For-Profit work, focusing on customer experience. Tom Peters, Business Management Guru has said: “You must design the customer experience, or the customer will design it for you.” This is a fact that the non profit world ignores, at our peril.
  • JANN:The fact is, this word cloud highlights more than 83 different ways to experience Operation Smile.We need to make “experience” more than just a buzzword becauseEvery interaction between a constituent and your organization is a touchpointEvery touchpoint creates an experienceEvery experience can be either positive or negativeAt Operation Smile we cannot effectively focus on more than 83 different experiences and make each one of those touchpoints successful and positive. As Josh explained, we needed to understand which experiences were the most important to our donors so that we could focus on those. But it’s more than that. As Tony Elischer said so well – we need to focus on the future.We needed to know: What experiences are key drivers of a relationship with Operation Smile, what others were important, and what experiences were low impact that we needed to re-evaluate. So that is where our work with DonorVoice beganThe first step was to form a cross functional team – direct response, donor services, marketing, PR, digital and online, and our agency partners – to work on this project together.We developed a comprehensive survey with over 77 questions – we pushed the limits a bit, as Josh will tell you. These questions covered off each functional area.The survey was delivered online utilizing our traditional segmentation strategies. And despite the long survey, we had participation that provided us with constituent insights that were statistically valid.
  • JANN:The Donor Voice team then took the insights from the survey responses and plotted them along these two axis's – the horizontal indicating the level of importance to our donors, the vertical indicating how well Operation Smile performed.The quadrants allow us to focus our efforts on the upper right hand corner, on what is most important and highest performing to our high commitment donors – these are areas where we want to refine and even scale up. If it fell in the lower right hand corner, this was clearly important to our donors and needed repair or possible refining. If it fell to the left, these were the low impact experiences that we needed to re-evaluate.The DonorVoice team took our results and crafted these dimension grids. The cross functional team and our vendor partners were fully debriefed on every area covered in the survey. This took time and discussion and required a hard look at some of our “sacred cows” within Operation Smile.
  • JANN: One sacred cow that we had to address with our MarComm team is that our fundraising message isn’t our Operation Smile mission statement.There are only 5 message points plotted here, but we have more than 13 programmatic areas that our marketing and branding team communicate to the public. All of these services are important, but they aren’t necessarily how we connect with our donors. In our efforts to integrate our communications, we were adding other things that were considered important to our branding and our programs team - and as a result - diluting our key messages that resonate with highly committed donors.The study also validated something that we already knew – that the images of children before and after surgery and the opportunity for our supporters to make that transformation possible, resonates with our committed donors. Our Highly Committed Donors told us that a key experience is the opportunity as a donor to provide “immediate, life-changing results.”
  • JANN:This prompted changes to our Email Campaign for our Holiday Symbolic Gift Catalog In 2011 – we utilized many of our Smile Ambassadors to promote the catalog to encourage the purchase of symbolicholiday gifts to give to loved ones – including the use of video imbedded in the email. (Banner shown)In 2012 – we focused on the donor (not the organization) and used the key experience messages. (The copy was written by our online agency, M+R – who had attended the debrief and were leveraging the learning from the study.) Catalog emails have traditionally performed poorly compared to our other online campaigns and appeals. In contrast, this email was a very strong performer.   This email outperformed 2011’s email by a long shot, with more than $10k increase in revenue.
  • JANN:Another key experience for high commitment donors was sharing success through photos and stories of the children we help.We recognized that our DM acquired donors don’t have the benefit of the storytelling and images that take place during our DRTV show. So we tested an “evergreen” newsletter insert to better engage and inform our new donors with compelling photos and stories. The results of the test:1.       we had a 24% increase in average gift in the TY responses, and2.       a 7% increase in annual revenue per donorWe have rolled out the evergreen newsletter strategy going forward.Another area we discovered was the value of Social Media to Operation Smile.The study identified that 3 out of every 4 people who are highly committed donors are engaged with Operation Smile on Social Media.This was confirmed by Tony Elischers session yesterday and his staggering statistics on the Social Media revolution.
  • JANN:Internally this understanding of our Highly Committed Donors validated our investment in the resources we put towards Social Media. Currently we are active on Facebook (+60K Likes) and Twitter (+45K Followers), as well as a presence on Pinterest, LinkedIn and FB causes.It also is an area where we need to refine and scale – for example, we need to do a better job of leading our new donors to engage with us on social media – to bond with the organization and build towards high commitment.In our new donor welcome package, we now encourage new donors to connect with us online – this is an example of copy from the evergreen newsletter - of how we are providing a map for how our donors can define their own experiences with Operation Smile.
  • Jann:This performance grid was a cause for celebration and for dismay for members of my Donor Services team.The study identified that we have been successful in our efforts to promptly acknowledge gifts in a personalized way. - And, it also clearly showed me that our outbound Thank You call strategy was performing poorly and that the personal thank you calls we had been making to all levels of donors ranked poorly in performance and importance.
  • JANN: (I’m still working on talking points)The philosophy behind these experiences is based on our Donor First Commitment. (Review DFC) One of the ways that we demonstrate our commitment is the area of gift processing.- We deposit all gifts on the day of receipt (donations received in the mail this morning and deposited in the bank by this afternoon) and we send an acknowledgement/tax receipt for their gift within 48 hours. The acknowledgement is a personalized TY that is written at the same time that we write the appeal copy, so that the thank you very clearly links our single gift donors to the emotional reason that they gave their gift.Key Learning: Based on donor feedback, we have been further evaluating our phone based Thank You strategy.Depsite best intentions, we were inadvertently creating phone fatigure.So I too a radical decision…to STOP all thank you calls while we rested the channel and redefined our processes.Working with Josh – we have been developing a new GRATITUDE strategy that will move away from a transactional thank you for a gift to focus on providing recognition at key milestones and focus our investment in relationship building and on our Highly Committed Donors.
  • JANN:A WALL STREET JOURNAL reporter at the 2013 National Retail Convention said -- “Retention is the new acquisition and customer service is the new marketing”We have certainly seen that social media is becoming a platform for people to spread the word, both good and bad…resolving bad experiences has increasing importance as that megaphone (social media) grows.With our Donor First Commitment, Operation Smile has invested a lot in this space and rate very highly (top right quadrant) – this helped inform decisions on where we should (or should not) invest our next dollar because we don’t have an unlimited budget (e.g. after hours or bilingual support)We are addressing this important but very poorly performing insight re: opportunities for donors to make their views known as part of our new Gratitude Strategy. I am repurposing 3 high touch service team members to be entirely focused on our Highly Committed Donors. We will be leveraging surveys and proactively providing opportunities for donors to share suggestions and feedback.So this has been about how Operation Smile has used this concept and information…what can you do starting today…Josh?
  • Making retention THE priority for the next 12 months…not one of “THE PRIORITIE(S)” Insight into how your engagement strategies makes donors feel and think is a missing link – their perception is your realitySimplifying the message or changing the path you lead donors …there are broad experiences you deliver today that aren’t perfectWe all already know our “ask or offer” can’t be one size fits all…so much of our testing today fails because we target a “random nth”…donors who love you more will be more responsive to cross-sell and upsellRetention is the acquisition and customer service is the new marketing – every problem is an opportunity in disguiseRelationships aren’t built overnight or through any single communication – map out this new plan, make sure it is meaningful and quantify the impact over the next 12 months.
  • How to Measure, Improve and Increase Commitment for Donor Retention

    1. 1. 1
    2. 2. 2  Problem  The Solution: Different Mindset, Insight & Strategy  Turning Insights into Action – Operation Smile Case Study  5 Things You Should Start Doing Differently Today
    3. 3. 3 We provide safe surgeries in remote places that deliver immediate life changing results.
    4. 4. 4
    5. 5. 5 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 2008 2009 2010 2011 AxisTitle Blackbaud Global Benchmarking Study Single Gift Recurring Giving
    6. 6. 6
    7. 7. 7
    8. 8. 8
    9. 9. Build & Customize Better overall Experience Insight into Donor Mindset Change Marketers Mindset 10
    10. 10. The Mind is a Terrible Thing to Waste! Impacting how the donor feels/thinks about your organization is THE key to retention. 12
    11. 11. Commitment to Organization Functional Connection Personal Connection Behavior Constituent Experiences • Marketing/Brand • Donor Service • Fundraising • Engagement • Operations Reliable/Consistent Experience More emotive Motive/intent to maintain
    12. 12. Committed 59% Potential 24% Vulnerable 11% Transactional 6% Operation Smile Commitment Segmentation 14 High Commitment. They are your best donors historically and prospectively; these donors who will overlook mistakes, defend you, recommend you and provide greatest financial return. Potentials. This is your prospect pool for relationship building and moving folks to the tribe. Vulnerable. The vast majority are not worth putting extra spend against, the ROI simply is not there. Transactional. There is no cost effective way to improve the relationship – there are simply too many other, better targets to focus marketing spend. Benchmark: •National avg: 43% •DV client avg: 44%
    13. 13. Overlaying Commitment (Cause) & Giving (Effect) 15 Average Operation Smile Commitment Average Total Actions Average Total Gift Average # of Gifts Average Months Since Last Gift Committed 91 3.5 $1,016.04 12.6 5.1 Potential 63 3.4 $819.98 9.1 7.3 Vulnerable 43 2.6 $369.82 8.0 6.5 Transactional 18 2.1 $253.16 3.2 9.9 TOTAL SAMPLE 75 3.3 $872.54 11.0 6.0 Identify Relationship segments, understand what you do to CAUSE strong relationships and manage the business here to increase giving and doing.
    14. 14. UK House File Benchmarking Overall Donor Commitment Score (DCS) High Commitment DCS % of File that is High Commitment % Difference in Giving for High vs. Low Commitment RSPCA 83 88 43% 57% TearFund 82 97 37% 149% ActionAid 81 99 33% 41% WaterAid 79 95 32% 34% AICR 76 97 27% 9% RSPB 76 95 32% 13% Barnardos 71 94 29% 34% Univ Bristol 63 86 24% 138% Guidepost 44 75 17% 443% House File Average 73 92 30% 105%
    15. 15. £79 £162 £0 £20 £40 £60 £80 £100 £120 £140 £160 £180 Low Commitment High Commitment 3 year giving average £83,000 more for every 1,000 donors = Source: National UK Study Reason to believe
    16. 16. 18
    17. 17. 19 Purchased from Online Shop Taken Activist Action Purchased a Branded product in Retail 52% 39% 32% 52% 58% 26% 53% 33% 30% Current Monthly Lapsed Monthly Never Monthly Purchased from Online Shop Taken Activist Action Purchased a Branded product in Retail 68% 40% 40% 61% 35% 30% 47% 29% 28% 56% 21% 28% Commited Potential Vulnerable Transactional
    18. 18. Single Gift Donors Regular Donors Emergency Donors High Commitment Potential for High Commitment Low Commitment How Donors View Your Organization How Your Organization Views the Donors 20
    19. 19. 50 55 60 65 70 75 80 85 90 95 100 87 87 81 77 68 55 Donor and Activist Special Donor Monthly Donor Regular Donor Lapsed Activist Only The Problem with Organization Centric Segmentation Source: UK House File Study Participant
    20. 20. Because All of Your Offers Aren’t for Everyone 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 1 2 3 4 5 Low Commitment High Commitment Number of products Source: UK House File Study Participant
    21. 21. 23
    22. 22. Making Sense of Key Experiences What if we could separate all of these experiences into three buckets: 1. Key drivers of relationship 2. Important but not key driver 3. Low impact experiences to re-evaluate 24 CURRENT STATE FUTURE STATE
    23. 23. 25 Repair and/or Replace Refine and/or Scale Repair and/or Refine Performance Importance High High
    24. 24. Delivering safe surgery to remote places Delivering immediate, life changing results Helping children live with dignity Having the highest standards of safety, hygiene and care Using Global Standards of Care so every child benefits from the same equipment and procedures Importance Performance What Message Connects Donors with Operation Smile
    25. 25. 27 Better “Brand” Message Better Results (BEFORE) Subject: Holiday shopping tips from Brooke Burke Charvet (AFTER) Subject: Get Your Life-Changing Gift NOW
    26. 26. Using Social Media Sharing Success through Photo Albums & Video Provide materials (DVD’s) Conference Calls Promoting Student Programs Raising Money from Friends Celebrity Endorsers Inlcude in My Will Support through Consumer Purchases Gift Catalog Importance Performance Understanding What Good Engagement Means
    27. 27. 72% of Facebook likes are High Commitment Donors 78% of Twitter followers are High Commitment Donors Offering a Map vs. Menu
    28. 28. Calling to personally thank you for your gift Delivering a personalized thank you for your support Showing their appreciation for your support with token gifts (e.g. t- shirt, magnet, shopping tote, scarf) Thanking you for your gift within 48 hours 30 Importance Performance Expressing Appreciation for Gifts
    29. 29. Putting the Donor First at Operation Smile • Prompt deposit of gifts • Speed of acknowledgement – 48 hours • Appeal Acknowledgements – personalized and linked to reason for giving • From a Thank You Strategy to a new Gratitude Strategy 31
    30. 30. Providing bilingual customer service support Providing convenient hours for customer service Providing helpful customer service Providing knowledgeable customer service Providing convenient options for reaching customer service e.g. email, website, live chat, etc. Providing opportunities to make my views known (e.g. solicit your opinion on where to focus effort, easy to make suggestions 32 Importance Performance Donor Service Dimension
    31. 31. 33
    32. 32. 5 Things You Should Start Doing Today 34 1) Make Retention THE Priority Not A Priority 1) Invest in Collecting Actionable Donor Feedback 2) Make changes to the overall experience 3) Tailor an experience to a specific segment 4) Donor Service = Marketing
    33. 33. Contact Information Jann Schultz AVP Donor Services, Operation Smile +1 757.321.7645 +1 757.593.6560 LinkedIn: Jann (Erickson) Schultz Twitter: @jannschultz Josh Whichard Partner, Donor Voice +1 240.888.6301 LinkedIn: Josh Whichard 35
    34. 34. 36
    35. 35. Commitment is not only “a” framework it is THE best Commitment Favorability Satisfaction Recommend/NPS High £162.07 £154.10 £154.62 £125.88 Low £79.22 £92.14 £97.93 £120.45 % increase 105% 67% 58% 5% Highest HIGH & lowest LOW Biggest % Increase Source: National UK Study
    36. 36. 38 1 Roadmap Impact H M L H M L Level of Effort EXPERIENCE DIMENSION DESCRIPTION 1 Engagement Expand use of conf. calls, Photos & Video 2 Engagement Expand promotion of social media 3 Engagement Commitment segment/frequency for Catalog 4 Mission/Focus New combination of message and images to refine Acquisition 5 Mission/Focus Editorial emphasis on key dimensions in Renewal 6 Donor Service Promote Donor First Commitment & Create donor feedback opportunities 7 Acknowledgement Improve performance via improved relevance 8 Relevant Info Align Smile Report to Commitment 9 The Ask Inform ask strategy using Commitment score 10 Transforming Donors High $ Directed Giving & Donor Testimonial 1 23 4 5 7 9 6 10 Organizational Focus Over Next 12 Months 8