Friday, April 5, 2013

The New Science Of Fundraising Metrics & Increasing Retention

Donor retention and measurement is an interesting conversation for any fundraising group to have. So often we gravitate to the linear aspect of measurement because it's easy to grasp. Southwest airlines several years ago decided to measure happiness a unique but highly impactful exercise. As an industry
we may be served extremely well not to throw in the towel so quickly on designing metrics around monetary transactions. Because with a little work we might be able to actually measure the right things and the things that will create the greatest impact to the bottom line that we wish to have. Now this is not to say that the money aspect is not critical to the business of raising money because clearly that is our purpose, however it is important to note that our success with the raising of money is directly related to the length of time our customers or donors choose to remain connected to our organization and our mission.

Another significant achilles' heel for our industry is that our metrics in general are short in nature. We measure items connected to how we are doing compared to last year,   interesting and important pieces of data to understand but they do very little in helping us understand the momentum that we are creating with the people we wish to remain connected to.  Many of the conversations today regarding donor retention revolve around renewing a gift. This consistent focus on the transaction of a gift is continuing to drink from the poisoned well that has actually caused the retention issues we wish to resolve.

I have spent my career studying and redesigning the process of fundraising to address this significant
issue of donor retention. What I've concluded is very similar to the theories that were demonstrated in the movie Money Ball. In a wonderful scene between Brad Pitt and Jonah Hill in the garage Jonah looked at Brad said baseball is archaic in its thinking. They are measuring all the wrong things. You shouldn't be looking to buy players you should be looking to buy wins, and in order to buy wins you need to buy runs.

Take that same logic and drop that over the raising of money. In order to raise money you actually need donors. To raise the most amount of money from those donors you need to keep them longer and have them feel that supporting your organization is adding value and quality to their life.

So what if  you measured major gift officers by looking at the individuals that they manage. What is the average length of time that their donors have remained on the books. Is that length of time increasing or decreasing. That's a linear metric connected to the sustaining of a relationship. Have their gifts for this pool grown over a period of time has it remained stagnant or is it shrinking.  To begin measuring performance around sustaining and deepening relationships with the people that organizations are strategically connected to will pay significantly higher dividends than the shortsighted metric of how many visits that you make this month.

If we focus on the transaction we will accomplish very little with building a motivated donor
 If you want to raise money you need to have donors.  If you want to have donors supporting you at the capacity with which they could give you need to have emotionally motivated committed donors. If you want to have emotionally motivated and committed donors you need to be measuring whether or not you are adding value to their life. One way to measure that value is the length of time they choose to remain connected in support of  your organization. Since donors typically do not lead with their best gift retention (length of time) matters.

Our traditional belief that measuring transactions will deliver the most resources to our bottom line have
clearly been proven to be inaccurate over time. As it becomes increasingly more challenging to connect with people in an incredibly crowded space we will need to rethink how we've been connecting with our donors over the last 50 years. If am continually surprised that the largest provider of software to our industry does not even have a method of giving you actual retention rates. If you do not know the average length of time your donors stay on the books today and how that relates to the length of time 5 & 10 years ago, then every strategy decision you make is unrelated to your organizations ability to grow strategic relationships.

If you are interested in this proprietary measurement tool or head here. What to dramatically increase retention with proven practices? check out the Donor Retention Boot Camp this summer.

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