By Tim Paris, Guest Author
Nonprofit organizations already understand the importance of donor retention. It’s a well-known adage that retaining a donor is much more cost-effective than acquiring a new one. Multiply this effect across your entire donor base and you see some significant time- and cost-saving benefits.
Plus, it’s easier to grow your relationships with retained donors and increase their gifts over time. And if you can funnel them into your recurring giving program, you’ll have more reliable flows of incoming revenue to drive your mission—a major fundraising ROI boost.
But donor retention is tricky. Many nonprofits struggle with it.
This usually isn’t for a lack of trying but rather a reliance on outdated or purely reactive tactics. Your data and technology can and should play a very active role in driving donor retention. Let’s explore how.
The Main Idea: The best way to boost retention is to proactively reduce churn.
When donors lose interest or engagement, your retention rate starts to falter. But taking a purely reactive approach to fighting churn - such as waiting until a donor has missed a payment before getting in touch - can hold organizations back. You’ve already lost donors at this point and can only try to piece together why they left.
Donors can decide to stop giving to your nonprofit for any number of reasons, and getting back in touch with them after the fact can be difficult. You could scour your engagement data to see exactly where you lost their attention, but this process is time-consuming and can create more confusion than answers.
Instead, proactively identifying donors before they churn or lapse from your giving program will create direct results—saving more donations and relationships, safeguarding your retention rate, and setting your organization up to thrive. The challenge is how to use your data to identify these donors.
A Data-Driven Retention Strategy
By using artificial intelligence tools that analyze data in your CRM to predict churn events, you can begin improving donor retention in a streamlined, scalable way. We’ve seen organizations use AI software to generate some amazing results with this easy donor retention formula:
Step 1: Predict
Data feeds into the machine learning algorithm, which identifies deep patterns and generates predictions for how individual donors are likely to behave in the future. Use the AI to predict churn propensity and quickly build a list of at-risk donors.
Step 2: Engage
Develop a strategy for reaching out to your list of at-risk donors. We’ve found that phone calls are the most effective way to get your mission back on donors’ minds without asking for money. You can keep using your data at this stage to determine the best opportunities and messages that will resonate with your at-risk donors.
Step 3: Measure and Repeat
Track your re-engagement results over time and keep iterating on your process. Watch your churn rate drop and your retention rate soar!
By proactively saving at-risk donors with this model, you’ll have more time to dig into why they were at risk than you would otherwise if you were constantly scrambling to replace their churned gifts. It’s an all-around better outcome for your team, mission, and donors.
AI software has become more than just a buzzword; it’s an accessible reality for nonprofits today. If your traditional data strategies tend to raise more questions than answers (or if you just never have the time to study your data at all), AI can be an easy way to save time, raise more money, and give all of your strategies a modern edge.
Tim Paris is the co-founder and CEO of Dataro. He holds a PhD in Cognitive Neuroscience and a Bachelor’s degree in Psychology. Following roles in academia and startups, he co-founded Dataro in 2018 alongside schoolmate David Lyndon. The company’s mission is to help charities improve fundraising using the latest machine learning and predictive modelling techniques.