An Alluring Proposition

Let’s face it. As direct-response fundraisers, we don’t spend enough time trying to renew lapsed donors. Most of our effort goes into acquisition and current-donor programs — and for good reason.

Current-donor mailings generate the bulk of your income, so that’s always your first priority. And even though most acquisition mailings lose money in the first year, they do create future donors. (Note: If you’re making money or breaking even on your acquisition mailings, you’re doing a great job. You should request a raise from your boss immediately, and write to us here at FundRaising Success and tell us how you’re doing it.)

Still, you can’t ignore those lapsed donors. Improving the results from your lapsed-donor program can generate a good amount of revenue without a lot of expense. The fact that some nonprofit organizations don’t have a renewal series is puzzling — and mailing your acquisition or active-donor package to lapsed donors isn’t enough.

“A donor isn’t a donor until he makes a second gift,” says Dick Murdock, president of Murdock Associates, a Dover, Mass.-based creative and strategic consultancy. “Consider creating a special series of your best renewal appeals for your first-year renewal audience. This can boost that critical first-year renewal rate, which will mean a big increase in revenue in subsequent years.”

Recency/frequency/amount
As a nonprofit mailer, you should be segmenting your lapsed donors into several groups based on date of last gift. Some mailers use 12-month intervals, but a few use six-month segments. The important thing to learn is how far back you can mail to renew your old donors at a reasonable return on investment.

Segmenting also gives you a chance to test different packages, components, copy and offers to maximize revenue and minimize costs for future promotions.

This also is true for lapsed donors who’ve made more than one gift. Try testing a different approach for this group since these donors are more valuable to your organization. That seems obvious, but not everyone does it. Also, lapsed donors who’ve made larger gifts — for example, two or three times the average gift for your file — should receive this same treatment, and both groups should be mailed more often.

Try using an easy, inexpensive offer test to differentiate these donors. Two to consider: testing the ask-string amounts or asking for a single amount.

Some is better than none
It’s important to make an upgrade effort relatively soon after a donor has made an initial gift. This makes sense in your quest to maximize revenue, and it keeps the mid-level and major-gifts people happy.

But conversely, not many organizations ever allow lapsed mid-level and major donors to be mailed a lower-level renewal effort. If these individuals have stopped donating, organizations are better off renewing them with a smaller ask than garnering no donation at all, especially if you’re talking about mailing donors two to three years after their last donations.

The bottom line is a renewal series that upgrades on the first effort and downgrades on the last few efforts will do more to maximize your revenue and bring back lapsed donors than if you make no effort at all or stick to a higher-level ask and get no response.

When you’re thinking about renewing lapsed donors, it’s a good idea to take a look at what magazines are doing for lapsed subscribers. Magazines traditionally have sent what seems like a never-ending renewal series to subscribers and lapsed subscribers. Some magazines send more than 15 efforts. You probably have experienced this.

They have what’s called a renewal at birth, which is the same as asking for a gift in an acknowledgment. If you’re not doing this, you should be. They also have early renewals, which can come as soon as 10 months before the subscription expires; and attached renewals, which are polybagged or glued to a current subscription’s last issue or, in many cases, multiple issues (for example, a combination of the penultimate issue, the last issue and a free issue after the paid subscription actually has expired). You could test something similar with your donor newsletter.

Two rules for renewals
Try to always remember the two rules of renewing lapsed donors:

1. Renew donors the same way you acquired them, especially if you bring them in with a gimmick (freemium, premium or sweeps).
2. Keep adding efforts as long as your cost per dollar mailed is less than that of your acquisition mailings. It’s important that you continue to mail your lapsed donors your regular donor mail in addition to the renewal series. The only way to get a gift is to ask, and sometimes it’s necessary to ask often in order to get that lapsed donor to give again.

In addition, renewals can take forever to test when looking at the results for an entire series. Try testing just the first two efforts, as that’s where the leverage is. You can try starting your renewal efforts a month earlier and see what happens. Try an extra effort at the end of your regular series, and also try telemarketing if you aren’t already.

Lapsed-donor examples
Joan Smyth, vice president of direct marketing at Covenant House in New York, is doing what she calls “anniversary telefundraising.”

“We identify one-gift donors and the time of year they made their gift,” she explains. “Then about two to three weeks before the anniversary of that gift, we do a pre-call to let them know the mailing is coming. We’ve seen a small but significant increase in telefundraising pledge rate and gift size.

“After six months of this, we’re hoping to see an increase in donor-retention rates,” she adds. “Amergent, our agency, proposed this project and helped us set it up, but our in-house call center is executing the project.”

This is a great idea that can be expanded into calling again at the end of two years from the date of the last gift, and it can — and should — be expanded into the mail.

Nancy Somma, associate director of development at Consumers Union, the largest independent tester of consumer products in the United States and publisher of Consumer Reports magazine, created a package that informed lapsed donors of how long it had been since their last gift. Research shows donors tend to not remember such things.

Todd Hendricks, senior director of direct response at the American Society for the Prevention of Cruelty to Animals, starts to mail renewals 12 months after the last gift and continues through 48 months. After four years, a lapsed donor receives the acquisition package, but with a very important change: Included is copy acknowledging the donor’s past commitment along with updates on important new program initiatives.

Another thing to try is telemarketing to your older, lapsed donors who haven’t given a gift in three to six years (sometimes you can go back as far as 10 years). You might lose 50 percent or more of the names, but it’s important not to give up; since the mail hasn’t worked, why not try the phone? Just be sure to minimize waste by running these names through a phone append and calling if you find a valid phone number. This is especially important if they’ve given more than one gift or given an especially large gift. Remember, renewing an old friendship usually is easier than making new ones.

“Renewal is all about response rate; everything else is secondary,” says Larry May of Greenwich, Conn.-based May Development Services. “Approach every contact with your donors or members from a response perspective. Could the response be higher? What other goal does the communication have that’s more significant than response? Could you achieve that goal and also increase response?”

May also recommends adding a reply card to your thank-you letters with soft asks such as, “I’d like to make an additional gift … .” Or, add a reply card with name labels attached. Develop mid-level or other special-event appeals such as holiday cards with pre-mailing announcements and follow-ups. Don’t stop sending your regular monthly appeals during these campaigns. Send everything and net more.

Monthly giving clubs
Encourage continued giving through monthly giving, or sustainer, programs, but reserve them for your best donors and solely promote them in your first or second renewal efforts. If you keep promoting this option, you’ll decrease response to your renewal efforts. If you ask donors to choose either a one-time donation or monthly giving, some of your audience will put off making the decision, possibly never coming back to it, and thus never donating at all.

Instead of inviting frequent donors to join monthly giving programs, draft them in — create a club name and simply inform your better donors that they automatically have become members and are eligible to receive monthly communications from your organization, telling them about the work you do and your ongoing progress.

At a recent Direct Marketing Fundraisers Association lunch in New York City, Lynn Edmonds, president of Holliston, Mass.-based L.W. Robbins Associates, presented a case study of a Native American school that did just that with positive results. The school got closer to its top-of-file donors, by increasing its communications with them and including them as part of a special “club” without having to commit to being monthly givers. Now it is expanding the program to be more proactive, and the results show an additional revenue increase.

In closing …
Once a year, try to get everyone in the development department to attend a renewal meeting. Pin all your renewals to a bulletin board. Then brainstorm together to develop new tests that could make a difference.

Cary Castle is a direct-response fundraising consultant. Contact: ccastle@nyc.rr.com.