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Where's the acquisition in the retention equation?

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Where's the acquisition in the retention equation?

  1. 1. Laura Connors, National Parks Conservation Association Sharon Dreyfuss, World Wildlife Fund Kerri Kerr, Avalon Consulting Where's the Acquisition in the Retention Equation? 1
  2. 2. Here with you today… Laura Connors – Acting Vice President, Membership, National Parks Conservation Association • NPCA’s mission is to protect our national parks for future generations. • NPCA has more than 1 million members and supporters. Sharon Dreyfuss – Manager, Direct Response and Acquisition, World Wildlife Fund • WWF’s mission is to conserve nature and reduce the most pressing threats to the diversity of life on Earth. • WWF has a mature fundraising program with over 1 million members. Kerri Kerr – Senior Vice President, Avalon Consulting Group • Avalon is a full-service direct marketing fundraising agency. • Since 1997, Avalon has helped our clients raise millions of dollars to achieve their visions for a better world—while building relationships with people who share their passion and support their important causes. 2
  3. 3. Acquisition in the Retention Equation In today’s session… Learn how leading fundraising organizations are using data to make strategic changes to improve their membership retention. See how fundraising programs are evaluating program success based on both upfront and long-term performance metrics. Know how to move beyond basic campaign analysis with more insightful master file analysis that will lead to real strategic change and impact on retention. 3
  4. 4. How do we define “acquisition”? A system of acquiring new donors to an organization using a variety of channels, formats and techniques. 4
  5. 5. How do we define “retention”? Donors who start the year having given a gift in the previous 12 month period, and make a gift in the subsequent 12 month period, are considered retained. Ex: If you start the year with 1,000 “current” donors, and over the period of the next 12 months 600 of them make a gift, retention is 60% for the year. 5
  6. 6. Why retention and acquisition? Traditional discussions around retention have focused on the donor experience. Yet, data shows a clear link between the start of the donor relationship and that donor’s subsequent retention and long-term value. If donors don’t join your organization for the right reasons – namely, passion about your mission and a desire to make a real difference – then no amount of engagement and retention activities will keep them on board. Acquisition provides a critical opportunity to focus expense where the organization will get the best return and retention – on how those donors are acquired in the first place. 6
  7. 7. Retention Offer •Price Point •Premiums •Message •Benefits Channel •Direct Mail •Telemarketing •Web •Email •Face to Face •DRTV Audience •List Selection •Key Demographics Retention is closely linked to three core elements of new donor acquisition… 7
  8. 8. Case Studies: Evaluating and Structuring Acquisition Programs with an Eye on Retention 8
  9. 9. CHANNEL 9
  10. 10. Channel xxx Background: NPCA’s large and robust acquisition program encompasses multiple channels. While direct mail is dominant by volume, analysis has shown that joins from the web and email are very valuable and show stronger long-term value metrics. After five years, web and email joins’ retention is notably higher than direct mail joins. 23.4% 22.1% 18.6% 15.3% 14.0% 26.2% 27.9% 23.4% 19.7% 19.6% 28.4% 30.5% 24.9% 22.1% 22.2% 10% 15% 20% 25% 30% 35% Year 1 Year 2 Year 3 Year 4 Year 5 Direct Mail Joins Web Joins Email Joins 10
  11. 11. #Bridge15 Email joins have the highest donor value, although direct mail joins have been increasing in value over time. Channel xxx $81 $152 Direct Mail Web Email 5 Year Donor Value $43 • Donor value is nearly doubled for web joins and tripled for email joins. • Yet, low response rates and universe limitations restrict the growth of web and email joins.
  12. 12. Channel xxx Email and web joins are now 7% of new joins compared to 2.5% in 2009. FY09 FY10 FY11 FY12 FY13 FY14 DM New Joins Web Joins Email Joins TM Joins • Knowing the value and retention of new joins by channel, NPCA has allocated resources to growing web and email joins, while simultaneously working to increase the value of direct mail joins. 12
  13. 13. Channel Background: For WWF, all acquisition channels are tracked with the same metrics, and all compete on equal ground for investment dollars. • Direct mail acquisition • Reinstates • Direct Response TV • Online activities (banner ads, Change.org, Google, etc.) • DRTV – the cost to acquire a monthly member is 7 times greater than a direct mail donor, but the LTV of the donor is much higher and the net LTV is much higher. 13
  14. 14. Channel xxx Background: An environmental organization acquired a significant number of members through a face to face canvassing program. While the volume of acquisition joins increased at the peak of the program, revenue and overall file size remained flat. Canvass joins were the dominant channel of acquisition from FY06-FY09. 14
  15. 15. Channel Analysis by channel indicated that retention over five years varied dramatically by channel, with canvass joins far underperforming other direct marketing channels. 28.8% 20.9% 6.9% 7.0% 23.2% 13.6% Year 1 Year 2 Year 3 Year 4 Year 5 DM Joins Canvass Joins Web Joins With this information among other factors, the organization cancelled the program and shifted funds to more productive channels. 15
  16. 16. AUDIENCE 16
  17. 17. Audience – List Analysis • Utilize individual List Return on Investment metrics. • Don’t be fooled by upfront performance! -100% 0% 100% 200% 300% 400% 500% List 1 List 2 List 3 List 4 List 5 List 6 List 7 List 8 List 9 List 10 List 11 List 12 List 13 List 14 List 15 List 16 List 17 List 18 List 19 List 20 List 21 List 22 List 23 List 24 List 25 List 26 Gross Return on Investment at 3 Years 17
  18. 18. Members/Activists Member/Non- Activists 25-60M Lapsed/Activists 25-60M Lapsed/Non- Activists 61-120M Lapsed/Activists 61M-120M Lapsed/Non- Activists % retained Audience – Warm Prospects • Look for opportunities to analyze and include in-house lists (e.g., activists, visitors, etc.). In many situations, these pre-qualified lists show higher retention and value over time. • For NPCA, acquiring members who are also activists leads to stronger retention when compared to those not additionally qualified by activism. 18 Activists Non-Activists Members Lapsed Members Deep Lapsed Members
  19. 19. WWF Direct mail acquisition: • Work closely with list broker. • Share updated present value by list and list select quarterly. • Along with standard metrics, every list plan incorporates a Present Value Calculation. Goal: Mail lists that have positive “Total Present Value/Gross Cost ratio” of one or greater. Example: List Cost/ Donor (PL) Subs Rev/Donor Blended Net Cost/Donor Total Blend Net Gross Cost Per Donor Total Present Value/Donor Total PV/Gross Cost List A ($37.24) $ 82.28 $ 45.04 $ 0.35 $104.05 $149.09 1.43 List B ($15.87) $ 33.28 $ 17.41 $ 0.03 $43.72 $61.13 1.40 Audience – List Analysis 19
  20. 20. Audience – List Analysis xxxProspecting Database Case Study – Targeting Your Audience for Long-Term Value • In March of 2014, WWF teamed with Infogroup to create a Prospecting Database • Only worthwhile if you mail 10,000,000 pieces or more a year • Benefits: • Select high value names from the Prospect Database • Post-merge model outside lists, and drop names that are not high value with better projected retention • Review records regardless of list, and assign packages and ask strings at a record level 20
  21. 21. 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Retention Year 1 Retention Year 2 Retention Year 3 Retention Year 4 Retention Year 5 Retention Year 6 Retention Year 7 Increase of Female Retention over Male Audience – Demographics • Identify demographics that indicate a high-retaining donor. • Use these attributes to target your universe. • For WWF, female donors equate to higher retention. • WWF’s file is 74% female. After 7 years, females retain 1.8% better than males. 21 WWF uses this information for list qualification, selection, and enhanced targeting in acquisition.
  22. 22. 1 < 35 35 < 45 45 < 55 55 < 60 60 < 65 65 < 75 75 < 85 85+ Retention Year 1 Retention Year 7 Audience – Demographics • Similarly, for WWF (and many organizations), age matters. • Up to a point, the older the donor, the stronger the retention. • For WWF, 65-75 year olds retain best. • Invest your acquisition dollars to get the members who will pay back more over time. 22
  23. 23. Audience – List Analysis • Test and analyze co-op modeled lists as part of your acquisition audience. • For many organizations, co-op lists generate high retaining and high LTV members when compared to outside lists. • There are vast differences between co-ops – assess both short-term and long-term performance to determine the most productive universe. 23 46% 15% 13% -3% -11% -22% -39% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% Co-op #1 Co-op #2 Co-op #3 Co-op #4 Non-Coop (Outside Lists) Co-op #5 Co-op #6 GROI Year 1
  24. 24. Audience – Warm Prospects • Maximize your lapsed universe as a priority over outside lists. • For most organizations, the long-term donor value of lapsed re-acquired names far exceeds new joins. $0 $20 $40 $60 $80 $100 $120 $140 $160 <$10 $10-14 $15-19 $20-24 $25-49 $50-99 New Join Re-Acquired 24
  25. 25. OFFER 25
  26. 26. Offer – Price Point xxx Background: The National Parks Conservation Association acquired most donors through their acquisition program with a $15 starting ask. Donor- level analysis showed a clear correlation between a lower first gift and reduced five year retention. Five year retention increases by 35% for new joins at the $25 first gift. 5.5% 8.7% 10.5% 13.4% 18.1% 22.9% 27.3% Year 5 $1-9 $10-14 $15-19 $20-24 $25-49 $50-99 $100+ +35% 26
  27. 27. Offer – Price Point -34% -26% $15 Ask $25 Ask ROI after 1 year Because a higher ask string typically equals fewer donors and potentially less revenue, NPCA tested the control $15 ask against a $25 ask string. At the end of one year, retained members were virtually the same in quantity, and net revenue and ROI favored the $25 ask, allowing NPCA to ramp up the strategy. Initial joins and retained members after 1 year 27 2381 2019 560 546 $15 Ask $25 Ask Initial joins Retained Initial joins Retained
  28. 28. Offer – Premium xxx Background: NPCA has historically acquired donors with a premium at the $15 level. In 2012, the organization conducted a test of a package with no premium to assess if the long-term value and retention offset the initial higher response rate. 0.90% 0.67% Response Rate Premium No Premium Initial response rate was 34% higher for the premium package. 28
  29. 29. 19.7% 24.3% Year 2 Retention No PremiumPremium Offer – Premium • After two years, retention was 23% higher for the No Premium package. • However, the initial volume of donors acquired with a premium was enough to offset stronger LTV metrics from the no-premium group, leaving Year 1 net revenue virtually tied, and Year 2 strongly favoring the Premium joins. 29 4% higher for Premium joins 114% higher for Premium joins Premium No Premium Year 1 Net Revenue Year 2 Net Revenue While retention is a key part of the equation, other elements must also be considered in decision making. $0
  30. 30. As with NPCA, WWF analysis has shown that higher initial gifts equate to higher retention. • Donors who join at $100 or more retain best, but there are not many of those! • Sweet spot: The sweet spot is $33 or above, and that group has lifetime revenue 3 times over other joins. Offer – Price Point Goal: Increase those who join over the premium awarding ask amount. Donors who choose to give more than the premium price point retain better. 30 -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% < $16 $16 $17 <= $26 $26 <= $52 $52 <= $100 $100+ Retention differences by first gift amount (<$16 baseline) Retention Year 7 Retention Year 1
  31. 31. 13.9% 14.8% 9.4% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Retention Year 1 Retention Year 2 Retention Year 3 Retention Year 4 Retention Year 5 Retention Year 6 One Premium No Premium Maximum Number of Premiums (21) • WWF analysis has shown that receiving a high number of premiums, and also certain “killer” join premiums, equates to a lower retention rate as it impacts the type of member acquired. • Members are tracked by join premium and retention over time. • Over 7 years, people who joined and opted out of the premium retained the best. • Those who received the maximum number of premiums over time showed the weakest retention. Offer – Premium 31
  32. 32. Offer – Message xxx Background: A performing arts organization sees ebbs and flows in new member acquisition directly related to ticket sales to popular performances. There is a clear relationship between spikes in acquisition in a popular performance year and declines in retention the following year. FY13 = popular performance drives new joins to record highs. 0 2,000 4,000 6,000 8,000 FY12 FY13 FY14 DM Joins TM Joins Web Joins Email Joins 32
  33. 33. Offer – Message xxx • Popular performance = retention spikes in 2013. • New joins triggered by popular performance retain at weaker rates the following year. • Recognizing this trend and increasing efforts to retain those offer-inspired joins is key, although challenging. 51.7% 51.9% 64.4% 66.0% 29.8% 25.8% 20% 30% 40% 50% 60% 70% FY12 FY13 FY14 Overall Multi-Year First-Year Overall, multi-year, and first-year retention over a three year period. Large event 33
  34. 34. Offer – Message xxx Background: A conservation organization focused acquisition aggressively on an urgent single-issue, single-species topic. While new joins increased, subsequent retention of those joins was weak as later messaging covered a variety of topics and species. 34 0% 5% 10% 15% 20% 25% 30% 35% 40% Year 1 Retention Year 2 Retention Historical Average Species Specific Package, Sample Year 1 Species Specific Package, Sample Year 2 • Species-specific package shows weaker retention compared to historical averages. • Organization tested into a broader-focused package to increase long-term value, retention and revenue.
  35. 35. Analysis Understand the impact by channel and the appropriate channel usage Test and measure retention by offer: message, price point, events, benefits or other key variables. Understand and utilize key demographics and donor attributes to target your audience Monitor improvement of key metrics on an ongoing basis In summary: Maximizing retention in acquisition… 35
  36. 36. Questions? 36
  37. 37. Laura Connors Deputy Vice President for Membership National Parks Conservation Association lconnors@npca.org Sharon Dreyfuss Manager - Direct Response and Acquisition World Wildlife Fund sharon.dreyfuss@WWFUS.org Kerri Kerr Senior Vice President Avalon Consulting Group kerrik@avalonconsulting.net Thank You! 37

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