The Importance of Recruiting First Renewals

Posted by on Dec 6, 2016 in Communication, Donor Cultivation, Featured, Membership, Plans and Budgets, Staff Development, Uncategorized | 1 comment

The Importance of Recruiting First Renewals

One of the metrics we tend to pay the most attention to is the total number of donors we have. And for some pretty good reasons. We need to know how many newsletters to print and how many annual meeting notices to prepare. The number of members helps us predict how much revenue we can expect next year, and the more members we have generally means that more of that revenue will be unrestricted. And certainly more members generally translates into more local prominence and political clout.

We don’t tend to pay as much attention to the make-up of that donor base, and we probably should. Less than half of the donors who are brand new, having made just a single gift, will make a second gift within a year or so. And depending on how they were recruited, the chances may be far less. For example, gift members renew at a notoriously dismal rate, often less than 10%.

In other words, the more first givers you have on your membership roll, the lower your renewal rate will be and the less accurately you will be able to predict revenue.

However, once a donor has responded to at least one “renewal” notice – once they have made a second gift or a “first renewal” gift – the chances that they will give again dramatically improve. This tends to be true regardless of how they were first recruited.

For this reason, the “conversion rate” from first givers to first renewals is one of the more important metrics you will want to pay attention to. It might even be the most significant metric related to membership growth. Several weeks ago, I offered strategies for improving this metric. (See Development Planning from Scratch: Current Donors.) These included:

  • Phone call thank yous for joining.
  • Sending a special newsletter right after they join jammed with information about land trusts work and how they can plug in.
  • Focusing some proportion of the social media and emailed communications to people who have just recently joined and may not understand the significance of what they are seeing and reading.
  • Hosting special new member events such as information meetings or field trips especially for new members.
  • Checking in with them using a postcard at the three, six, and nine-month marks to remind them of the difference their contributions make in your programs. Mention especially any leverage their giving made possible, for example as match for federal or state funding.

This week, let’s take this a step further. Consider the donor experience from the moment of making the first gift all the way through making the third gift. What do they see? How do they experience the organization?

For exercises like this, I like to actually envision a specific person – my friend Nancy for example. Say Nancy writes a check and mails it on a Thursday. About a week later, she gets a Thank You letter in the mail. (She doesn’t know that you didn’t receive it until Monday, and she doesn’t know that you always get acknowledgement letters out the very next day. All she knows is that she gets the letter a week after her gift.)

A month goes by, and Nancy receives a newsletter that looks exactly like the organizational newsletter except that it says WELCOME across the front. It includes information about programs and projects that is framed so that someone like Nancy who knows nothing about how things work around there can easily understand. And it includes a calendar of events section that lists upcoming opportunities to plug into what’s going on. The Executive Director has written a couple of notes on the paper drawing her attention to one of the events and encouraging her to attend.

The regular newsletter comes about six weeks later, and new issues arrive approximately every three months. She receives a postcard after five months from the Membership Chair thanking her for her membership and inviting her to communicate if she has any questions. She gets a second postcard after ten months with the same messages except that this one advises her that a renewal letter is on its way and encourages her to respond. Finally, she gets the renewal letter.

What do you think? Does she renew?

Most people don’t. Most organizations experience 30-45 percent retention between the first and second years. Maybe the enhanced attention described above pushes that to 50%, which would make a big difference.

Here’s what I think: The added costs, both in materials and in staff time is worth the investment. It costs money to recruit new members. Depending on methodology (and what you actually count), it can cost $50-80 to recruit each new member. If the new member gives you $35 or $50, you’ve already lost money. You make that money back with the first renewals.

But there’s a huge difference between a 30% first renewal rate and a 50% first renewal rate. It’s huge in terms of how quickly you make the initial investment back. It’s also huge in terms of the rate at which your overall membership can grow.

Why not make First Renewals the goal? The number of First Renewals you recruit every year might even be more important than the number of First Givers (new members) you recruit.

Instead of simply tracking how many new members were recruited and how much it cost to recruit them, you will need to track the costs all the way through their first year of membership and how much they gave including their first renewal.

The obvious problem is that no one is set up currently to actually track cost information in a manner that would allow for any analysis. The costs of printing newsletters and renewal notices, for example are often lumped into the general fundraising budget, or even the general operating budget.

I have asked several land trust colleagues, including French Creek Valley Conservancy, to help me gather such information for 2017 and establish some baseline information.

Perhaps you’d be willing to join her and make this a more interesting study. In the first year, we’ll be able to report how many First Givers have made gifts, how they were recruited, how much it cost to recruit them, and how much they gave. By the end of 2018, we’ll be able to report similar information for First Renewals.

Maybe we’ll do a Rally presentation together sometime with the data.

Are you “in?” If so, let me know at David (at) DevelopmentForConservation (dot) com.

Cheers,

-da

 

Photo by Ray Hennessy courtesy of Stocksnap.io.

* * * * *

 

Fundraiser’s Almanac
Here’s what I’ve been thinking about for December. What are YOU thinking about?

 

Fall Appeal 2nd Drop

If my Year-end appeal has two drops, I am getting the second drop ready for mailing today or tomorrow. (See also Fall Appeal Planning)

 

Good News

From solicitations to newsletters, to updates and thank you letters, the importance of communicating warmth, openness, and a sense of momentum is magnified in December. People want to know that their gifts made a difference and were noticed. I’ve talked on this blog about communicating Good News. When I do, I try to remember that the donor is part of the “we” that got it done.

 

Planning for Year-End

This is NOT the time for fundraisers to take a vacation. This year, both Christmas and New Year’s Day are Sundays. That means that I am working that week to:

  • Be there to answer the phone when donors call to make a last-minute gift of stock.
  • Send out follow-up emails to people who have not yet responded to the Fall Appeal.
  • Write personal thank you letters.
  • Call my board members to tell them how much I appreciate them serving on the board.
  • Get my filing done.

 

One Comment

  1. Another quality post, David! I think the concepts you present have considerable merit, but part of me believes that a lot of organizations lack the tools necessary to track the metrics you outline. I think it is incumbent on the technology companies in the sector to create tools that help nonprofit professionals more easily get a hold of these metrics so that they can implement the suggestions you make.

    Great post as always.