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2. Donor Retention & Monthly Donors: 5 Steps to Financial Stability

3. Presentation Title Your Presenter Jon Biedermann Vice President, Fundraising Products Division 20 Years at SofterWare, 23 years Nonprofit Experience Helped Create DonorPerfect Online in 2001 Board Member The Giving Institute/Giving USA Foundation Warrington Youth Baseball (Fundraising) Video Golfers for Underdogs (VP, Yes- Really!) Friends of Kids Castle (Finance Director) Father of 4 beautiful children, husband of a very patient and forgiving wife, and cat-herder for 2 neurotic cats and 1 brand new kitten.

4. Presentation Title Your Presenter Jon Biedermann CHASE Speaker/Attendee since 2009!

5. Presentation Title Your Presenter Jon Biedermann CHASE Speaker/Attendee since 2009! And I LOVE LONDON

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8.  Why Retention?  All About Retention  Definition  Retention Rate / Attrition Rate / Life Time Value  National Stats / Fundraising Effectiveness Project  Your Stats – How DonorPerfect can Help  Life Time Value and Why it Matters  5 Easy Steps to Create a Monthly Giving Program  Summary  Q&A Agenda

9. Presentation Title What is Customer Retention?

10. Presentation Title What is Customer Retention? Retention rate is the ratio of the number of retained customers to the number at risk of not being retained. Customers who bought this time period and the previous time period All Customers who bought the previous time period

11. Presentation Title Retention Rates of International Restaurant Chains (The number of people who ate in a restaurant in the last month, divided by the number of people who ate in the same restaurant in the last 6 months)

12. Presentation Title What is Donor Retention? The same concept! Donor Retention rate is the ratio of the number of retained donors to the number at risk of not giving again. Donors who gave this time period and the previous time period All donors who gave the previous time period

13. Presentation Title Why is Retention Important? Since customers/donors in all businesses never last forever, retaining existing customers is critical to growing the business. An organization with a retention rate of 80% and acquiring new donors at a rate of 20% per year will remain flat. That same organization with a retention rate of 90% and acquiring the same 20% in new donors will grow +10% per year, and the organization will DOUBLE in about 7 years.

14. Presentation Title Why is Retention Important?

15. Presentation Title Why is Retention Important?

16. Presentation Title Why is Retention Important? Doubles in 7 years…

17. Presentation Title Why is Retention Important? By understanding Donor Retention, you can calculate your donor’s Life Time Value (LTV). You can then determine how much money you can invest to acquire a donor, or keep them even longer.

18. Presentation Title Another ‘Real Life’ Example: Netflix https://blog.kissmetrics.com/how- netflix-measures-you/

19. Presentation Title How Does This Apply to Non-Profits? Annual Donor Retention is a percentage calculated as those who donated in the last 12 months AND donated in months 13-24, divided by the number of ALL donors who donated in months 13-24 The inverse (1 – Retention rate), is the Attrition Rate.

20. Presentation Title How does this apply to Non-Profits? Example: Non Profit ABC Org. had: 500 active donors in 2013, 600 active donors in 2014 In 2014, 200 of these also gave in 2013. 400 were new donors. 300 donors gave in 2013, but not in 2014. Retention Rate = 200/(500) = 40% Attrition Rate = 60%

21. Presentation Title How does this apply to Non-Profits?

22. Presentation Title How does this apply to Non-Profits?

23. Presentation Title How does this apply to Non-Profits?

24. Presentation Title Why Does This Matter to Non-Profits? LIFE TIME VALUE!

25. Presentation Title Why Does This Matter to Non-Profits? Life Time Value = Lifetime of a donor (in years) * Average Annual Giving Amount

26. Presentation Title Why Does This Matter to Non-Profits? Life Time Value = Lifetime of a donor (in years) * Average Annual Giving Amount (Hard to get (Except in DonorPerfect of course)) (Easy to get = Total Annual Rev/Donors)

27. Presentation Title Why Does This Matter to Non-Profits? Life Time of an Average Donor = 1 ÷ (1 – Retention Rate) Which is the same as… 1 ÷ Attrition Rate

28. Presentation Title Why Does This Matter to Non-Profits? Life Time of an Average Donor = 1 ÷ (1 – Retention Rate) Which is the same as… 1 ÷ Attrition Rate Example: Retention Rate = 40% Attrition Rate = 1 ÷ (1-.44) = 60% Life Time = 1 ÷.60 = 1.66 years (18 months)

29. Presentation Title Why Does This Matter to Non-Profits? Life Time Value (LTV) = Life Time * Average Annual Donations Example: Retention Rate = 40% Attrition Rate = 60% Life Time = 1 ÷ 60% = 1.66 years Average Annual Donations = £ 500.00 LTV = 1.66 * £ 500.00 = £ 833.33

30. Presentation Title But wait! How are you SURE????

31. Presentation Title But wait! How are you SURE????

32. Presentation Title But wait! How are you SURE????

33. Presentation Title But wait! How are you SURE???? LTV = £ 833,319 ÷ 1,000 donors = £ 833.32

34. Presentation Title Why Does This Matter to Non-Profits? Increase the Retention Rate by 20%, and the LTV increases 50%. Example: Retention Rate = 60% Attrition Rate = 40% Life Time = 1 / 40% = 2.5 years (30 months) Average Annual Donation = £ 500.00 LTV = 2.5 * £ 500.00 = £ 1,250.00 Or more than 50% more than £ 833.33!!!

35. Presentation Title But wait! How are you SURE????

36. Presentation Title What’s Really Happening at Nonprofits? Not this… (Too Perfect)

37. Presentation Title More like this… 2+ Year donors have higher retention…

38. Presentation Title Actually like this…

39. Presentation Title Increasing LTV is critical to grow your Non Profit!

40. Presentation Title Increasing LTV is critical to grow your Non Profit!

41. Presentation Title USA Stats / Fundraising Effectiveness Project Started in 2006 (A great story!) Measures 8,025 non profits Retention Rate has declined from 43% to 39% back to 43% Economic Factors More Special Event/Small Donation Fundraising Did remain the same from 43% in 2013 Learn more: www.afpfep.org

42. Presentation Title National Stats / Fundraising Effectiveness Project www.afpfep.org

43. Presentation Title What’s YOUR Retention Rate?? It’s probably lower than you think.  Can be measured in DonorPerfect and other good fundraising software. DonorPerfect’s Dashboard and Comprehensive Financial Report includes Retention, Attrition Rate, and Revenue per Donor.

44. Presentation Title What’s YOUR Retention Rate??

45. Presentation Title What’s YOUR Retention Rate??

46. Presentation Title What’s YOUR Retention Rate??

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48. How Do You Improve Retention Rate? The MILLION QUID question…

49. Presentation Title How Do You Improve Retention Rate? #1 – Start TRACKING it! Why?

50. Presentation Title How Do You Improve Retention Rate? #2 - Focus on getting your single Gift Donors to donate a second gift. Why? Because Repeat Donor retention, on average, is 60-70%, much higher than the average retention rate of 40% Therefore, for every single gift donor you get to donate a second time, their LTV increases by 100%, I.E., LTV DOUBLES (1/.7 = 1.6666 years vs. 1/.3 = 3.33 years!!!)

51. Presentation Title How Do You Improve Retention Rate? Take the increase in LTV value of moving single donors to multiple year donors, and multiply by 10%-20% Why? Because that is the amount of money you can INVEST to ‘acquire’ these repeat donors, and still generate incremental revenue over their lifetime.

52. Presentation Title How Do You Improve Retention Rate? # 3 - More Communication with donors – 53% of all donors who left say they left an organization because of poor communication. 16% Due to Death 36% to More Deserving Causes # 4 - More Timely Acknowledgements 3 Days is best, 1 week minimum. More frequency – Thank 3 times for every ask.

53. Presentation Title How Do You Improve Retention Rate? # 5- Start (or improve) a Monthly Giving Program!

54. Presentation Title How Do You Improve Retention Rate? Why Monthly Giving? –Increases retention rates for monthly donors significantly- to 85%-90%! –Attracts much larger numbers of smaller donors to give more than they currently do –Worry less about cash flow – predict the future –Give donors the convenience they love –Attract younger donors

55. Presentation Title Monthly Donor Programs

56. Presentation Title Creating a Monthly Giving Program 5 Steps to create a successful program –Step 1: Make Sure Someone owns the Program Person ‘owns’ and is accountable Needs to be close to your website, your database (like DonorPerfect), and financial/accounting to make sure payments are being processed. Must be a team player and can navigate between departments / power silos.

57. Presentation Title 5 Steps to create a successful program –Step 2: Name the Program Pick one that ties closely to your mission Examples: –Circle –Friends –Sustainers –Circle of Guardians (my favorite) –Champions –Knights of the [INSERT YOUR ORG NAME HERE] Order Creating a Monthly Giving Program

58. Presentation Title 5 Steps to create a successful program –Step 3: Organise Your Processing Options Collect Payments via credit card and preferably Direct Debit –Donors are more comfortable using their credit card, BUT –Direct Debit (Check) donors have much higher retention rate Creating a Monthly Giving Program

59. Presentation Title 5 Steps to create a successful program –Step 4: Ask your donors! The general rules of fundraising apply –If you ask donors to join your program, they will! –Donors who just gave are most likely to give again or join the program. –The sooner you can convert a donor to recurring, the more they will give. –FOCUS, FOCUS, FOCUS. –It’s a myth there is a ‘bad time’ or ‘good time’ to convert donors- ask today! –Ask via multiple channels – website, email, print, direct mail, etc. –Target your monthly giving ask: Average Gift / 3 = First Monthly Ask –On average, the monthly giving amount among all nonprofits is £ 14- £16 Creating a Monthly Giving Program

60. Presentation Title 5 Steps to create a successful program –Step 5: Organise your Recognition Processes Thank your donors and recognize them Always confirm any action by a donor immediately Always send an official letter, even if they sign up online. Tell your donors what to expect –Special end of year tax letter? –Who do they call to upgrade/downgrade or have ?’s –Optional – Send them a gift (Though we have found it’s not necessary) »If you do- make sure to send it immediately Prepare for failed transactions Test, Measure, Test, Measure! Creating a Monthly Giving Program

61. Presentation Title Download the FREE Toolkit http://tinyurl.com/DPUKMonthly

62. Presentation Title Summary Donor Retention and Attrition (1 – Retention rate) should be measured and watched. All things measured improve! LifeTime of a donor = 1 / (1 – Retention Rate) LifeTime Value (LTV) = LifeTime * Average Annual Giving per Donor Think in terms of LTV increases/decreases when making acquisition/renewal decisions based on costs If you haven’t started a monthly giving program, it’s never too late to start! Download the kit today!

63. Presentation Title Questions??????