New regular F&P contributor, Adrian Sargeant, continues examining the issue of attrition, the drivers of retention and what nonprofits can do to inspire donor commitment.
Donor satisfaction with the quality of service provided by the fundraising team is the single biggest driver of loyalty. There have been similar findings in the commercial sector. For this reason, customer satisfaction surveys are now ubiquitous. Such surveys typically ask customers to report how satisfied they are with each aspect of the service and end with ‘Overall, how satisfied are you?’
Why the commercial interest? Corporates discovered long ago the value of customers who indicate they are very satisfied. On average, across a range of contexts, they are six times more likely to repurchase than those who are merely satisfied. In the context of fundraising the multiple isn’t quite so high but research still shows that very satisfied donors are twice as likely to be giving next year as those who are only satisfied.
The upshot: charities need to measure donor perceptions of quality of service. This requires development of a measure that is properly tailored to the organisation. It will need to reflect the existing pattern of communication; the content, style and tone of that communication; the different ways in which donors can interact with the organisation; the manner in which any issues or complaints may be dealt with; and (in a membership context) perceptions of the package of benefits that may be offered.
An aggregate satisfaction score can easily be created by calculating the average rating across all the various dimensions, or preferably by calculating the total score. An alternative would be to also ask donors how satisfied they are overall. In this latter case, however, it would still be necessary to pose the additional questions, since there is otherwise no mechanism for determining how to improve.
More recent work has looked at the role of donor commitment in driving loyalty. Another learning from the commercial world is that sometimes even very satisfied customers quit. One day they will just decide to do business with someone else. This reveals that satisfaction, while important, is not the only underlying factor at play. Some customers will quit, because even though they feel satisfied, they lack commitment to the organisation.
Commitment is defined as a genuine desire to maintain a relationship into the future. In the giving context it is a genuine passion for, or belief in what the organisation is trying to achieve: ‘I really care about the future work of this organisation.’ It differs from satisfaction because satisfaction is an amalgam of past experience while commitment is a forward looking construct.
It turns out that in the nonprofit context there are actually two types of commitment: passive commitment and active. Active commitment is the enduring passion for the organisation just described. Passive commitment refers to individuals who continue their support, not because they feel strongly about the organisation’s work but because they feel it is the ‘right thing to do.’ The work doesn’t excite them, but they know it’s important.
Passive commitment can also manifest in the realm of regular or sustained giving. Donors can look as though they are highly loyal, but in reality they are continuing their support only because they haven’t got around to cancelling, or had actually forgotten they were still giving. Quite a few nonprofits with monthly giving programs will notice a spike in attrition immediately after sending out a mailing. What they’ve done through the communication is to remind some folk who had forgotten they were still giving that they are in fact still doing so, and a small but significant percentage will rush out and cancel.
So how do we prevent this? In a large scale empirical study I identified the drivers of active commitment as:
1. Service quality – satisfaction with the quality of service from the fundraising team impacts on loyalty directly, and indirectly with favourable perceptions also driving the sense of commitment.
2. Risk – donors who believe no-one will suffer harm if they cancel their donation were found to be significantly more likely to lapse. To illustrate, a donor supporting a shelter for the homeless is more likely to develop commitment if they forge a close link in their mind between their gift and beneficiary impact. The stronger the belief that if they cancel their gift someone, somewhere, will be without a bed tonight, the more likely they are to develop commitment and through that, loyalty. By contrast, if they believe cancelling their gift won’t make the slightest difference to the organisation’s work, the less likely they are to remain loyal.
Fundraisers can therefore think through the messages used in their appeals and the way they thank donors, to engender loyalty. Thank-you letters, too, can go beyond acknowledging the gift, and impress on the donor the difference their donation has actually made.
3. Shared beliefs – With many thousands of nonprofits all doing related things, donors have a plethora of philanthropic options. Donors who share the vision of the world a nonprofit wants to see – and how this world will be delivered – will be a great deal more committed to the organisation than if they lack these perspectives. Nonprofits thus need to be clear about their beliefs and use all their powers of persuasion to explain why they hold these views. The more donors buy into an organisation’s beliefs, the more loyal they will be.
4. Learning – Donors who perceive they are being taken on a journey, deepening their understanding of the organisation and the work it is conducting, will exhibit higher loyalty levels than those who perceive only a series of transactions for a series of unconnected needs. Fundraisers therefore need to think through the journey supporters will take as they deepen their understanding of the organisation and the mission it is trying to accomplish. It is with good reason that some fundraisers now talk about planning ‘supporter journeys’. Research suggests this is key.
5. Personal link – for some causes, supporters may have a personal link to the organisation. Many medical research charities, for example, gain the support of those whose lives have been touched by the disease or disability. It is no surprise that such links determine loyalty.
6. Multiple engagements – This factor has two levels to it: one intuitive, one less so. The intuitive level is that donors who are also campaigners, who are also volunteers, who are also service users etc. will be a good deal more loyal than those who are only one of these things. A good strategy is thus to encourage donors to support the organisation in multiple ways. With the advent of the internet and e-mail this is now beautifully simple to accomplish and at almost zero incremental cost.
The second level is not so obvious. This work tells us that each time an organisation has a two-way interaction with a donor it builds a little loyalty. This could take the form of a piece of research asking donors their views. It might be offering them some choice over how they are communicated with (e.g. mail, e-mail, text) and how often. It might even be allowing choice over the content of these communications, according to their specific interests.
Each time a donor has to think through a choice, or the provision of a piece of information, they have to ‘rehearse’ in their mind the fact they have a relationship with the organisation. A tighter bond begins to evolve between them and the organisation concerned. The incremental increases in loyalty are not huge, but over time they can become quite substantive. Investing in an ongoing dialogue with donors is, therefore, a smart strategy to adopt.
Supporters can be asked to sign up for specific forms of communication, to offer recommendations or suggestions, to take part in research, to ‘ask the expert’, to campaign on behalf of the organisation, to ‘test’ their knowledge in a quiz, etc. The more two-way interactions that are engendered, the higher will be the level of loyalty achieved.
The final key driver of loyalty is trust. Donors who trust that the organisation will attain its stated impact on the beneficiary group, will be significantly more loyal than those lacking this trust. The provision of regular feedback is therefore important in driving loyalty, as is being able to justify the pattern of performance achieved. In seeking to build trust organisations need to:
- Communicate the impacts achieved on the beneficiary group.
- Honour the promises, or rather, be seen to honour the promises made to donors about how their money will be used. Most organisations do, in fact, keep their promises, but if donors aren’t provided with evidence of this fact, their level of trust will not be enhanced.
- Be seen to exhibit good judgement and hence communicate the rationale for decisions taken by the organisation in respect of its overall direction and/or the services offered to beneficiaries.
- Ensure communications match donor expectations in respect of content, frequency and quality.
There is, therefore, much that a nonprofit might do to build loyalty. But until there is a radical change in managerial emphasis I’m less than optimistic that we’re going to see a meaningful improvement in our figures. It is well past time to follow the lead of our commercial counterparts and make loyalty the issue for managers to address, rewarding them for the improvements in loyalty or any of its drivers that they are able to deliver.
Professor Adrian Sargeant is a world-leading researcher, thinker, and teacher of fundraising practice since the mid-1990s. Chair in Fundraising at Plymouth University and formerly the first Hartsook Chair in Fundraising at Indiana University’s Lilly Family School of Philanthropy, he has written over 10 books and 150 peer-reviewed articles on topics from donor loyalty to fundraising strategy.