Building Donor Loyalty Adrian Sargeant Robert F. Hartsook Professor of Fundraising Indiana University – Purdue University Indianapolis 22-Apr-19

Objectives To explain what lifetime value is To explain what the concept has to offer To identify what drives lifetime value in a charity context….. To explain why donors terminate their support To explore how to plan for retention 22-Apr-19

Is Retention An Issue? Improving attrition rates by 10% can improve revenue generated by 50% 100% 150-200% 22-Apr-19

Defection Curve 22-Apr-19

What Is Lifetime Value? “the total net contribution that a customer generates during his/her lifetime on a house list” 22-Apr-19

Value Segments Value £1000 + £500 - £1000 £100 - £500 £20 - £100 £20 and under £20 - £100 Value 22-Apr-19

Perspectives on Value Historic Future Segment Individual 22-Apr-19

LTV n LTV = åCi (1 + d) -i i=1 Where c = net contribution from each year’s fundraising activity d = discount rate i = expected duration of each relationship in years 22-Apr-19

Key Decisions Costs/revenues Duration of lifetime Discount Rates 22-Apr-19

What can it do for you? Assigning Acquisition Allowances Choosing media for initial donor acquisition Setting criteria for donor marketing Investing in the reactivation of donors Assigning an asset value to the fundraising database. 22-Apr-19

What Drives Donor Value….??? So……... What Drives Donor Value….??? 22-Apr-19

Socio Economic Groups 22-Apr-19

Why Do Customers Defect? 22-Apr-19

50 Ways To Lose Your Lover? 22-Apr-19

50 Way To Lose Your Lover Ignore Them Lie To Them Fail To Return Calls or Answer Letters Fail To Deliver On Promises Be Uncivil Increase Prices Don’t Turn Up On Time Etc. 22-Apr-19

Customer Satisfaction 22-Apr-19

Will Customers Buy From You Again 22-Apr-19

Service Quality Perception Expectation Importance And Trends Competition 22-Apr-19

So what’s likely to drive donor loyalty? 22-Apr-19

Only one nonprofit study Identification negatively correlated with contact with other organizations… And expectation confirmation (Bhattarcharya et al 1995) 22-Apr-19

Reasons For Quitting No longer able to afford support No memory of ever supporting!! Still supporting by other means Feeling that other causes are more deserving X no longer needs my support Relocated Not reminded to give again X did not inform me how my monies were used Xs communications were inappropriate X asked for inappropriate sums 22-Apr-19

Donor Satisfaction 22-Apr-19

But what about commitment? 22-Apr-19

Qualitative Phase 22-Apr-19

22-Apr-19

Quantitative Phase 22-Apr-19

Structural Equation Model - .27 Service Quality .27 .20 Passive Commitment - - Risk .10 + .22 .11 .58 + .18 .14 Trust Loyalty + .21 + + Shared Beliefs .41 .54 .37 + Active Commitment .13 Personal Link + .11 Learning .23 + Multiple Engagements

Fundraising Products and Audiences for Them Adoption schemes (adopt a dog) Low-value donors Sponsorship schemes (sponsor a child) Low- and high-value donors Membership Service users, low-value donors Events Service users, high- and low-value donors, volunteers, activists, lobbyists Planned giving recognition High-value donors Legacy/bequest clubs Friends schemes Recognition societies Monthly-giving clubs Activist community Research updates Newsletters Service-user group Merchandise for sale From Building Donor Loyalty: The Fundraiser’s Guide to Increasing Lifetime Value by Adrian Sargeant and Elaine Jay, 2004, Jossey-Bass.

So……. 22-Apr-19

Thank You