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Organizations often ask about how they can attract new customers or donors and ensure success in their sales or development programs. While trying to assess their opportunities, my first questions will normally surround their donor or customer retention rate, database management, and recognition or acknowledgment program. Their reaction is typically one of confusion because they want to talk about attraction rather than retention. However, I can, without question, tell them that one depends on the other.
Throughout my career, I’ve seen both businesses and nonprofits dedicate significant resources to bring new business in the door while they let established relationships evaporate before their eyes. It’s common to see those flashy new customer offers while existing customers often wonder where their $50 bonus is for doing business as a customer for 25 years or so.
What’s wrong with this picture? It typically costs much more to bring in a new customer than it does to retain an existing one. Plus, those customers who are retained are much more likely to give your organization a positive review or referral than those who leave, correct? If we truly want new dollars, why aren’t we doing a better job of taking care of them? Let’s focus on a personal experience I’ve had as a donor in the nonprofit sector.
My wife and I have been fortunate to give what we would consider significant or major gifts to a few organizations over the last ten years. They’re the same organizations that I know are concerned about attracting new donors. However, they have had very different approaches to fostering our gifts and relationships. While the gift amounts were all basically the same, we’ll label three of the organizations, A, B, & C, for the purposes of this discussion.
Organization A
This organization conducted their campaign more informally; however, they did establish opportunities to provide gifts supporting various aspects of their project. Once our gift was made, we received a standard thank you letter, no acknowledgment of the items we sponsored, and no direct follow-up regarding the campaign. We receive no personal communication with the organization except annual giving records.
Organization B
This was a more formal campaign with collateral material that outlined the project, gift ranges, and sponsorship opportunities. Following this gift, we received the standard letter acknowledging the gift and an invitation to a special event for supporters of the campaign. Our selected sponsorship was morphed into a different public acknowledgment than was promised in the original collateral material. It was done without communication with the donors about the change. There was limited electronic communication regarding the project’s progress and further needs.
Organization C
The gift to this organization was made with an understanding of the future parameters and expectations. After the gift we received a more personalized recognition and thank you. In addition, there were several communications both electronically and personally, with creative slants to some of the more traditional means of acknowledgment. We were given several opportunities to interact and provide feedback on the organization’s direction. Even years after the original gift we receive regular updates on the organization.
Which organization would you think is doing a better job of cultivating and fostering the original gift and relationship? If you said C, you would be correct. Which organization do you think we’d be most likely to support again? Once again, C is the correct answer. Organization B lost our trust by making changes to the recognition program offered without communicating that fact. Gifts to organization A became more obligational with an “expectation” that we would continue to give.
When organizations want to learn how to bring in additional donations or supporters, you can see why I want to know what their acknowledgment and retention look like. They need to have the proper foundation in place to do a good job of attracting new donors and encouraging additional gifts from their current supporters. Once they have proven their retention ability, they can consider reaching out to new prospects if they want to build on that success. The example is transferrable to businesses and their customers. Treat the ones you have well, and they can be your best advocates.
Consider whether you should take a hard look at how your organization is communicating with existing supporters. Ask for feedback and LISTEN to their responses. It may be time to enlist a third party to provide an objective opinion. Don’t dismiss critical comments, use them as a springboard for change and incorporate suggestions in your approaches.
Relationships are the key to developing lasting supporters and customers, bringing those unfamiliar closer to the organization. Foster those relationships in simple, unique, and endearing ways. Remember, people give to people they know with a cause. Relationships can flourish in small or larger organizations with a commitment to develop them. Today’s technology can help you in your endeavors, so prioritize the retention effort and the rest will follow.
David J. Fry, MPS,CDT is Founder/CEO of Effective Advancement Strategies in Greensburg and author of Build a Nonprofit Castle. He consults with businesses and nonprofits throughout Indiana. He may be contacted at strategies@etczone.com