Once you’ve calculated your retention rate… what do you do with it?
It’s time to apply that information to your annual fundraising program.
Specifically, you’ll need to interpret what those retention rates mean for your organization. You’ll then be equipped to set reasonable retention goals for the upcoming year. Finally, you’ll map the strategy and tactics that will get you to your goal.
Interpreting your donor retention rates
Donor retention is a relative measurement. In order for it to mean something, you must have something with which to compare it.
Here are a few good places to start interpreting what your retention rates mean for your organization:
Compare your donor retention to the nonprofit sector as a whole
Start by comparing your organization’s overall retention to retention trends across the sector. Where do you find this information? There are a couple of annual surveys that measure donor retention across the US.
The Fundraising Effectiveness Project, a survey released each fall by AFP and The Urban Institute, found retention across-the-board was 39%. In 2011, it was 41%. http://www.afpnet.org/files/
Blackbaud’s research division, donorCentrics, found overall retention for nonprofits in 2012 to be 50.5%. https://www.blackbaud.com/
As you probably noticed, the results of the surveys are pretty far apart. Because the FEP uses data from smaller nonprofits than the NFPI, I tend to rely on the retention rates of the former when working with small nonprofits.
Keep in mind that these surveys are not representative samples of the entire sector. We’d of course be better off comparing our nonprofits to those of similar size, mission, and geographic region. Clearly, such specific statistics aren’t readily available. But at least these surveys give us a starting point.
Not to mention, it can also be nice to report to your board that you are 25% higher that the national average in donor retention!
Compare to your own retention rates from prior years
The most important comparison you can make is between your organization’s own retention rates from year-to-year. For example, if your retention in 2013 was 45% but in 2012 was 56% you’ve got a problem. You need to make sure your rates consistently trend up rather than down.
If you are just beginning to get in the habit of calculating retention rates, you may need to do a retro-calculation using your data from prior years. If you can’t find the time to do it, don’t worry. You’ll have data against which to measure your progress next year. The most important thing is that you started!
Compare your donor segments
If you do find your overall retention rates declining from year to year, you’ll want to investigate the cause. To identify which donor segment is bringing you down, look at the retention rates for individual donor segments that are important to your organization. These might be alumni, memorial gifts, patients and families or volunteers in addition to first-time donors and multi-year donors.
Comparing your donor segment retention rates to other segments (as well as to the same segment in previous years) will help you identify strengths and weaknesses within your annual fundraising program. Did alumni retention decrease by 25% over the year before? Come up with new tactics focused on this segment. Did new donor retention increase by 10%? Maybe the new donor welcome/thank you call you implemented last year is working! You’ll want to continue that for sure.
Set a retention goal for the upcoming year
Once you’ve done some comparing, segmenting, and planning new tactics for your underperforming segments, decide where you want to be next year. Use your research to come up with a reasonable goal for an overall retention rate. Also, set retention goals for your key donor segments.
Put it in writing
Create a document to include in your annual fundraising documentation notebook. Write down your goals, describe how you came up with that particular number, and why you believe it to be attainable.
For example, in 2013, North Florida Children’s Society (NFCS) had an overall retention rate of 45%. Retention of their most loyal donors (5 years of giving or more) was down 6% in 2013 from 66% in 2012. Their new donor retention was only 10%. They knew this needed improvement and decided to focus on these two donor segments in order to increase overall retention to 50%.
Define strategies and tactics you’ll use to achieve your goal
Based on your problem segments (or source of success), figure out what activities might encourage your donors to stay with you and renew their gift. Include these in your written plan.
Once NFCS established a reasonable goal, they wrote down exactly how they planned to achieve it:
Goal: Increase overall donor retention by 5%. 2014 Donor Retention will be 50%.
Strategy 1: Retain a minimum of 15% of new donors in 2014.
Tactics: Mail new donor welcome package. Board member thank-you calls to all new donors.
Strategy 2: Improve donor communications
Tactic: Create and publish a quarterly donor-centered newsletter to replace the agency-centered newsletter.
Strategy 3: Retain 65% of key loyal donors (5+ years of giving)
Tactic: Send hand-written thank you notes from board and program staff to donors who have given for 5 years or more. Establish a formal donor recognition society for these donors and invite to a free charter member appreciation reception.
Donor retention measures the health of your annual fundraising. But just knowing what that number is won’t improve anything. If it goes up, find out what is driving your success. What are you doing that is making your donors stay. What else can you do? If retention declines, identify the problem. What segment isn’t renewing support? Why are they leaving? How can you encourage them to stick around?
Most importantly, you need to document all of this so it can be useful in the future. And don’t forget to write down your plan!