Why Your Data Is Crucial for Effective Donor Retention

Let me get this out of the way first: Yes, this is another article that talks about data instead of how to effectively craft a full-fledged marketing strategy for your nonprofit.

But what you need to know is that your marketing strategy is already partially crafted by the data you’ve been collecting in your donor management software over the years; you just need to pull the information out of the data.

Trust me, there are few people that roll their eyes as hard as I do when I read an article talking about “big data,” but the fact of the matter is that I rely heavily on it, despite my feelings about the buzzword.

Data aren’t just numbers; they tell a story about your donors that you can use to meet them where they are physically, mentally and financially. This is especially true for improving your donor retention efforts.

Donor Retention: Perception versus Reality

In the “2018 Nonprofit Leadership Impact Study,” a surprising 22 percent of nonprofits stated that their donor retention is between 75 percent to 100 percent and 34 percent stated retention is at 51 percent to 75 percent. Of those same respondents, only 8 percent reported that they feel donor retention is a challenge.

While I admire the optimism from the people in the survey, it made me question whether they had taken a good, long look at their database to see whether their perception of donor retention matches the reality of donor retention rates in the U.S.

The 2017 Charitable Giving Report had a different take on retention rates for nonprofits in the U.S.:

• 31 percent: first-year offline-only
•  61 percent: multi-year offline-only
•  25 percent: first-year online-only
•  64 percent: multi-year online-only

Compare that with average acquisition rates from the “Impact Study,” which put almost half of the respondents estimating acquisition making up under 20 percent of their new donors.

Listen, I remember sitting in ninth-grade algebra rolling my eyes and thinking, “When am I ever going to need to know this stuff?” But now’s the time when you’ve got to bust out the TI-85 calculator app on your phone and do some math to determine what your actual donor retention and acquisition rates are.

Let’s make the equation easy for my sake.

If you have a total of 1,000 donors in 2016 and in 2017, your acquisition rates were at 20 percent; and out of 1,000 prospects, you successfully recruited 200 new donors.

Now you have 1,200 donors. Let’s take the average first-year retention rate of 31 percent and solve for X.

x/200 = 31 percent

Based on the average retention rate for the first year, only 62 of those newly acquired donors will stick around for another year. Think about how much you spent acquiring those new donors. It costs almost five times more to acquire a new donor than to retain an existing donor, and it typically takes around 18 months of donations before a donor relationship is valuable.

I would imagine the value of donor retention is starting to make sense (and cents) now if it didn’t already.

So, what does all this have to do with your donor database?

Making (and Sticking) to a Plan

Most of us don’t wake up every morning and say to ourselves, “I’m just going to let waves of chaos wash over me like a beach during high tide in a hurricane.”

Yet, if we’re honest, we all have days where we feel like that sad, lonely palm tree taking a beating from the wind, waves and rain, which is why making a plan and sticking to it is so critical to maintaining your donor database.

Being able to pull the numbers surrounding your donor acquisition and retention should take as few steps as possible, so set your donor data up to do so. Map out the factors that may affect donor retention, such as annual income, household size, address, age, gender, marital state, etc.

Some donor management tools will allow you to limit the type of information entered in a certain field (i.e. letter only or numbers only), which will help to keep things uniform; but it’s also helpful to create a reference guide for entering data so that each person entering information does so in a uniform manner.

Now here’s the important part: Make sure everyone sticks to the plan. The amount of time uniformly entering data will save you in the long run will shock you, not to mention the reduction of bald spots generated due to pulling out your own hair while staring at messy data.

Practicing Good Data Hygiene

Speaking of messy data, there’s an old saying from John Wesley that goes, “Cleanliness is indeed next to godliness,” and there is nothing more heavenly than a spotless donor database.

I realize that’s a bit of a hyperbolic statement, but as someone who spends a good amount of time eyeball-deep in databases, there’s a special kind of euphoria that comes from information adding up across each and every entry.

When I talk about good data hygiene, I’m talking about more than a perfect donor entry. Data cleansing is an ongoing task that involves ridding your database of duplicates, making sure that households are properly set up, and ensuring physical and email addresses are still current.

Of course, de-duping your database is usually a pretty simple process that should be built into your donor management software (you can also do it in Excel), but some of the other aspects of data hygiene require something that most successful executive directors will agree is critical to donor retention: personal interaction.

Keeping your data up to date means contacting existing donors to make sure their information is current. It opens the door for personal connection that can stay closed if you let the information in your database stagnate. Stagnant data usually leads to stagnant or lost donors.

Start by attempting to contact anyone whose email has bounced or whose direct mail has come back to you as undeliverable and then move on to donors who haven’t been contacted in a certain amount of time.

Not only will you be able to update information, you’ll begin to get a richer picture of your constituents.

Telling a Story Through Data

That brings me to the fun part of data and donor retention. Just when you think you can’t look at another cell on a spreadsheet, the data starts to come together to form a picture of your donors. This is the crux of why data is important for donor retention.

When you can easily break out portions of constituents collected through a well-planned data entry process and maintained through consistent check-ins, you can quickly identify your strengths and weaknesses, and develop a strategy to harness them for better donor retention.

For example, let’s say you notice that 80 percent of your first-time online donors have not made a second donation in the year following the initial donation. That’s a problem, but if you’re collecting data, you may be able to find patterns you couldn’t find by simply relying on anecdotal evidence.

Are most lost donors a certain age range, gender or race? How often were they emailed after their donation? Did you maintain top of mind awareness with them? Have they volunteered with the organization or attended an event instead of donating? Are they still engaging with the organization?

By identifying patterns in the data, you can begin to develop stories about your existing donors and the ones you’re losing. When you have a fully fleshed out story, developing a strategy to meet your audiences where they are becomes much easier because you’re now thinking about how you would treat another human rather than an impossibly large dataset. 

Think of donor data as a valuable gift from your constituents and treat it as such by keeping it clean and organized not only out of respect to your donors, but also out of respect for your sanity.