As leaders in donor relationship management, you understand the benefits of a strong donor strategy. Not only can the engagement of an existing donor database lead to greater ROI in comparison to new donor acquisition, but a strong strategy can also work to enhance the overall reputation of your organization.
Donor retention is an essential part of helping organizations reach fundraising goals and ultimately fulfill their missions. This article will explain why nonprofit organizations must focus on donor relationship management, then review the four steps needed to establish an effective strategy.
Here are three reasons why nonprofit organizations must focus on donor relationship management:
1. Donor acquisition can be more costly than donor retention
Much like landing new business opportunities, acquisition of new donors can take more time and money versus delivering on donor retention. Outreach, prospect research, virtual events, and advertising can certainly add up over time.
Donor retention, on the other hand, can utilize existing strategy and tools that you already have access to. For example…
- Embrace existing donor data. The Donor Compass analytics tool can provide a measurement and ranking of donors based on past behavior, which will help reach overall targets sooner than with new donors.
- Expand opportunities with existing connections. While not past donors, a strategy for donors on the periphery of a nonprofit organization can work to get such individuals more involved in the overall mission or campaign.
2. Nonprofit organizations will have access to greater data from existing donors
As mentioned, donor analytic tools like Donor Compass provide guidance on which donors to target and nurture, allowing you to better allocate your time and resources. With existing donor data, outreach can be personalized based on demographics, recency of giving, types of donor engagement, and more.
3. Higher donor retention can result in greater fundraising totals
Building long-term relationships with donors can lead to greater overall donations in addition to lifetime value. According to a report from Imagine Canada, over one quarter of donors express that they are not engaged in a way that is meaningful to them and feel that charities can do a better job of communicating the value of donations. With this, repeat donors express that they would contribute more if the value of additional giving would be made clear. Consider the value of higher donor retention, combined with clear and transparent communication for repeat donor optimization.
Uncover the 4 stages of donor relationship management
By understanding the importance of a clear donor retention strategy, your nonprofit organization can now move into understanding the four stages – or four steps – of donor relationship management. To get started, organizations must have the support of leadership to drive change and maximize opportunity.
The 4 stages of donor relationship management can encompass the following:
- Tracking the donor journey
- Communicating with new or existing donors
- Ensuring the process is simple
- Continued engagement within the donor lifecycle
1. Tracking the donor journey
Tracking engagement as the first step ensures data compliance for the future. Data or fields to track is dependent on each nonprofit organization; however, below are the most frequently used metrics:
- Website and email engagement. If able to, tracking website and email activity will support optimization in the future. Understanding how frequently donors engage with an organization will help determine future engagement strategies.
- Personal and business connections. Donors can come in two forms: individual and business. Understanding similar details that individuals or businesses may have with one another can help to further develop strategy.
- Donation trends. A report from CanadaHelps.org discovered that donations happen most frequently during the month of December. Tracking the time of year, continuity of giving, recency, cumulative 10 yr giving history, and overall frequency will support key business decisions, and can help you to decide when to execute outreach campaigns.
2. Communicating with new or existing donors
Once tracking is set-up properly, the second stage of donor relationship management is communication.
Communication can come in multiple forms and mediums, whether email, phone, social media, or in person at events, to name just a few. Using the data tracking in step one, your organization can better understand which communication channels would work for your donor segment. For example, segmenting donors who engage most frequently via marketing emails and newsletters, would respond in a stronger way to a personal 1:1 email, versus donors who have never opened an email from your organization. Email communication is an effective means of connecting with a donor base, and can be more cost effective when compared to other tactics like direct mail.
When developing a communication strategy, carefully crafting a message is another essential element. Consider the following…
- Personalize the message to each donor as much as possible. Research has shown that donors respond significantly better to messages that resonate with them personally as opposed to generic “asks”.
- Include clear messaging on how and where to donate
- Be clear with how the nonprofit organization will use the funds provided
- Sign the letter from an Executive Director, CEO, or President to support the importance of the request
3. Ensuring the process is simple
There is nothing more frustrating than trying to do something good, only to have challenges in making the contribution. This is an essential piece of the donor relationship management process.
To help ensure this process is as straightforward as possible for donors, your organization can simplify donating in the following ways:
- Give donors the option to keep their credit card on file for quick and easy donation processing
- Simplify the donation landing page so that navigation is clear and easy
- Provide a clear and concise email confirmation immediately following the donation — and remember to include a thank you
- Enable auto-fill on website and landing page forms, making it easier for donors to complete their information — and avoid asking unnecessary or redundant questions
4. Continue engaging within the donor lifecycle
Every first-time donor has the potential to become a life-time supporter for your organization. Engagement opportunities for supporters does not always mean contribution of financial funds. Consistent and strategic nurturing can truly scale an organization’s potential.
There are multiple ways to engage with organizations beyond the wallet. Consider the following…
- Share emails, blogs, and videos with friends and family
- Participate in online and offline events
- Provide in-kind donations
- Become a board member or volunteer
In closing: track, engage and be sure to have a cycle of continuous appreciation.
Tracking data is essential to creating a strong donor relationship management strategy. Without understanding how data and analytics can impact an organization, one can feel lost in the process.
As a final, and essential, step in the process, do not forget to show continuous “thanks” and appreciation for your donors — especially first-time donors. From a personal 1:1 message to a lifecycle nurturing program that shows how and where their donation has gone, donors must feel appreciated and connected to your organization.
Focusing on donor engagement and retention will help to support and grow your nonprofit organization, allowing long-term goals to be achieved.