Friday, 19 June 2009

Attrition – ignored for a decade?

This graph illustrates Adrian Sargeant’s analysis of donor retention in the cash-giving files of the UK’s top ten fundraising charities in 1998.

Over the past decade it has become the most important graph in Bluefrog.

Published widely in 1999 and 2000, we must have quoted it 2,000 times.

It drives our approach to fundraising. We have invested hundreds of thousands over the years in seeking to understand it.

Why do half of all new donors never give again after year one?

And why, after five years, are we left with only 8% continuing to give?

When, in 2002, Ken Burnett published a new edition of Relationship Fundraising, it must in part have been because of his dismay at seeing these statistics, and what they reflected – that his 1992 edition of Relationship Fundraising was being ignored.

We even had a mini recession in 2001-2002, when the dot-com popped, to jolt us into action.

But it took Adrian himself to underscore the significance of these findings in 2004, in Building Donor Loyalty, co-authored by Elaine Jay. The graph above is Figure 1.1 in the book.

He comments on the shift among charities towards recruiting committed givers as a reaction to the challenges with cash donors, with committed givers yielding lower attrition rates – typically 20% at the time.

“Although that is a dramatic improvement,” he said, “it is still far from ideal. Imagine losing 20% of your friends each year!”

Worst case scenario realised
However, five more years have slipped by and we find ourselves in more difficult times.

I wonder whether Ken or Adrian envisaged this first decade of the 21st century ending with attrition levels among committed givers reaching 70% in year one.

But this is precisely the picture our analysis has uncovered. The following year-one attrition levels are for face-to-face recruitment:
  • Medical Research 64%
  • Overseas Development 65%
  • Mental Health 62%
  • Homelessness 64%
  • Elderly 70%
  • International Medical Research 64%
  • Children’s Health 64%

And this is not isolated to street recruitment. Average attrition levels for all types of regular givers were revealed by Rapidata in its analysis of Direct Debit cancellations in January:

However, Rapidata’s analysis, revealing soaring cancellation rates, can in some ways be misleading, implying that attrition has been problematic only in the last year. But take a closer look: before the credit crunch and recession, cancellation rates fluctuated around the 3.5% per month mark. In other words, we appear to have been content to be recruiting donors knowing that four out of ten of these supposedly ‘committed givers’ would turn their back on us within a year.

It is almost too late to wake up to what is happening. But it is imperative for the sector that we do.

We have ignored the fundraising prophets of doom (namely, Adrian and Ken).

As Adrian himself puts it, in his foreword to our lapsing research paper (PDF), “we continue to waste large sums of money on unnecessary acquisition and neglect the fact that were we to achieve even minute increases in donor retention the impact on performance would be profound.”

“Picking an easy number to illustrate,” he continues, “I estimated back in 2004 that a 10% increase in retention could lead to a whopping 200% increase in the lifetime value of the fundraising donorbase.”

Turning research into action
Bluefrog’s research into lapsers is one of the largest studies into the psychology of lapsing ever conducted. Based on its findings we have created a multi-step programme for donor retention from the point of recruitment. Called Protect the Donor, it is reproduced here in summary:
  • Start a relationship in the first place
  • Manage your donors’ expectations
  • Communicate in a way that pulls, not pushes
  • Think about the four donor needs
  • Provide choice
  • Know your donors. Look, listen and remember
  • Part as friends

For me, this boils down to one overarching recommendation: ensure that donors are engaged in the relationship.

Treat me like a real person
At the risk of this becoming a Sargeant eulogy, I think it is worth quoting him again – albeit alongside his co-author, Elaine Jay – in their 2005 research, Redefining Commitment.

They identified two different types of commitment. Passive commitment exists where a donor feels no strong desire for the relationship with an organisation to continue and has no sense of ‘bond’ to the organisation. Intertia is all that maintains the relationship. And the weakness of this paper-thin connection is now being revealed, as fundraising megaliths such as the NSPCC, report spiralling cancellations by their £2-a-month Direct Debit cohorts.

Adrian and Elaine define active commitment, by contrast, as ‘the genuine desire on the part of a donor to maintain a favoured relationship’. Child sponsorship is just one example of where this commitment can be seen – and our own work with ActionAid over the past decade reflects what others who run these schemes report, i.e. single figure attrition rates.

The challenge, then, is to nurture that desire and it is here that I turn to Gary Larson for inspiration, and his satirical cartoon series, The Far Side.

The point being that we need to go back to basics and put the donor first in our thinking, for that is what is important to her:
  • Engage her by using her name, often, e.g. on the cover of a report you’re enclosing with a request for money
  • Engage her by showing her you remember things about her, e.g. the month and year she started supporting you
  • Engage her by giving her something to do alongside donating, e.g. writing a card to someone who benefits from your work
  • Engage her by showing her you respect her, e.g. by asking her what she’d like to hear about
  • Engage her by connecting her to your work, e.g. individual stories of the difference you are making – think of the success of Charity:Water and KIVA
  • Engage her by “delivering on your promise” to her, as Karen Osborne puts it, and telling her how you used her money

Before the recession, this sort of thinking was called ‘stewardship’. That phrase is outdated. This is now called ‘a formula for survival’.

Tuesday, 9 June 2009

Harnessing talent

The past few weeks have been even busier than usual, and blogging has been pushed into the background I'm afraid.

To avoid another day passing with no posts, I thought I'd share this email, which I received today, from a former team member - announcing some great news.

It struck me how important it is to spot and then harness talent, to avoid it being wasted. This person was in a role that didn't give any outlet for his creativity. I changed that, moving him into a donor retention marketing role, and he has subsequently shone in a similar position.

I'm glad I had the chance to manage him, and I'm sure he'll go onto great things. Anyone who writes emails like this to his mates will go far...

(I've anonymised it with XXXXs.)

Subject: Ah, what the hell...


Sometimes in life you've got to roll the dice. You've got to defy logic and all the evidence before your eyes, and go with your good old-fashioned gut instinct. You know what it's like. You're not sure why you're doing something, but you do it anyway. Think Kevin Costner in "Field of Dreams". If you build it, they will come… And 99% of the time you're right. At least that's what I've found.

Of course there are exceptions:

- When I hired XXXX
- When I hired XXXX
- When I said to my old boss "he's boring, but you can probably trust him" when she asked me about a potential new recruit. His name was XXXX. [he ended up moonlighting]
- When I stole booze from XXXX's house after her surprise birthday party
- When XXXX, XXXX and I decided to have a quick lunchtime pint in Brighton (after meeting a supplier) and 9 hours later I found myself on a train platform in East Croydon, smelling of sambuca
- When I started spread-betting (at the desk) on the Ashes on the first day of that really busy period in 2005

.. Ok maybe it's nearer 98% of the time I get it right.

Anyway, there I am on my XX birthday last week. I'm looking at my finances and everything's screaming bankruptcy:

Massive mortgage
Spiralling childcare costs
Enormous debt repayments

.. And I'm thinking to myself "XXXX, you're in the stickiest situation since XXXX bought a new dress and asked if it suited her.." There's no easy way out. Except maybe, just maybe there is. What's the one thing that might overshadow your financial meltdown? What's the one thing that doesn't cost much, is stress-free and doesn't have any long-term consequences…?

A wedding.

You beauty - a wedding. Of course. Hell they don't cost much, there's no stress and you can forget about it the day after.

So last week I proposed to XXXX and she said yes.

And in one swoop, all my problems were solved.

It's a beautiful thing.