Long-lapsed donors: they might be gone, but don't forget them.
Active donors are often thought of as committed, loyal supporters who have a strong understanding and dedication to the cause. When they stop giving for a year or two, or three, it is assumed that they have decided they're no longer interested, like a romance that's ended.
When asked to come back, lapsed donors respond, but not like they used to when they were active. When you compare their performance to the active donor group fundraisers find them wanting.
So to keep program healthy, fundraisers turn to the unknown: acquisition. Like a new romance, newly acquired donors offer the chance for a lasting, rewarding relationship. Even though response in acquisition is often well below lapsed reactivation, we're excited to be gaining new donors who are fresh, open minded and possibly ... younger.
The underlying assumption--that active donors are committed and lapsed donors have changed their minds--is more a product of our own attitudes than a realistic understanding of how people behave. In truth, a large percentage of your active donors churn out every year. Donor churn is the natural state of donor-base marketing.
Roughly 30 percent to 40 percent of this year's donors will not make a gift next year. After five years, only 15 percent to 20 percent of current donors will still be in the 0-12 month category. The donor base is churning like a stormy tide, in and out.
There are two ways to replace the active donors who don't respond: lapsed renewal and new donor acquisition. For almost every nonprofit, lapsed reactivation offers better initial return on investment and more long-term value (LTV).
Unfortunately, reactivation is almost an afterthought. Most nonprofits put considerably more effort and funding into acquisition than lapsed reactivation. There's almost certainly an opportunity to increase your efforts with lapses, and your program will benefit from it.
Statistical modeling is one way to identify lapsed donors who are most likely to renew. Using a variety of transactional and demographic factors, a good model can lead you to the most profitable audience. The downside is models tend to pinpoint a relatively small target audience within what is usually a very large pool of lapsed donors. It's common for a lapsed universe to be five times or more the size of the active group.
You can reactivate the greatest number of lapses through a program that combines basic RFMA segmentation with third-party recency matching. This can be very complex, but here's the essence of how it works. RFMA = Recency, Frequency, Monetary and Affinity.
* Recency: When was the most recent contribution?
* Frequency: How often did the donor give, in the most recent year of their giving and in their lifetime giving?
* Monetary: What is the donor's gift amount? An easy approach is to use their last gift, which is usually their average giving level, but you can also average their giving in their most recent year.
* Affinity: To which mailings did they respond? When selecting lapsed donors to receive a specific appeal, let's say your September appeal, those who gave to previous September appeals are good prospects. If you have different appeal types/tracks, such as mission/no premium, greeting cards, etc.--that response affinity will also target the best prospects.
Recency is the key driver in this technique. The other characteristics will change as recency decreases. For example, among the most recent lapses you can have a very broad, open FMA strategy. Nearly everyone who made a gift 13 to 24 months ago is a good reactivation prospect. Low dollar donors are usually eliminated, but almost everyone who made a gift of $15 or more, but skipped last year, will get several appeals this year.
You tighten up the other factors as you move out in time to 25 months and beyond since the last gift. Only donors with two or three gifts (frequency) in their history might be included. The monetary level will go up as the last gift is farther in the past. Package affinity will also be tightened so maybe only donors who actually gave to this appeal or a very similar appeal will be selected.
The result is a smaller group is selected as the time lapsed increases. If you graphed it, the selection would resemble a wedge that starts out big and gets smaller year-by-year.
What about all the donors who didn't fit into your RFMA criteria? There's a great tool available today to find big pools in these long lapsed names, going back to as much as 15 years lapsed (sounds impossible, but it works).
Co-operative transactional databases are available that allow you to discover which of your long lapsed donors are actively giving to other organizations. These "co-ops" contain billions of transactions on tens of millions of households. Abacus (Epsilon), Apogee (Infogroup), Donorbase (Lake Group Media), IBehavior (KBM Data Services), Nonprofit Partners Program (Dataline) Target Analysis (Blackbaud) and Wiland (Wiland Direct) are some of the co-ops to consider.
Your lapsed donors who have recent giving (or catalog purchasing) activity in a co-op are very strong prospects for reactivation. Among more recent lapses, you can find 30 percent or more with recent activity by matching to multiple coops. The matching percentage declines as the lapses get older, but even 10+ year lapses can match up to 20 percent.
Overall, the co-op matches will perform better or equal to new donor acquisition. Since the name is yours, the cost is lower. LTV is usually higher. Every lapsed donor who renews is already a two-time donor, at minimum.
One important consideration: Lapses who renew should be treated like new donors. If you have an aggressive new donor conversion (second gift) promotion track, be sure your reactivated donors get into the same track. You'll get more of them to stay in the 0-12 month category.
Don't spend time thinking about why donors are lapsing. The churn is predictable and impossible to stop, although it can be minimized. Chase your lapsed donors with a solid strategy and aggressive promotion. In the end, most of them still love you.
Stephanie Ceruolo is vice president and general manager of Infogroup Nonprofit Solutions. Her email is Stephanie. Ceruolo@infogroup.com. Larry May is senior vice president of strategic development for Infogroup Nonprofit Solutions. His email is Larry.May@infogroup.com
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|Author:||Ceruolo, Stephanie; May, Larry|
|Publication:||The Non-profit Times|
|Date:||Jul 1, 2016|
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