Cancer
Research UK is already the biggest fundraising charity in
the UK. In its last financial year it raised £411 million
from its supporters. Now it plans to grow again, increasing
its spending on research from £315 million last year
to £400 million by 2010.
Allowing for fundraising and other costs, that means a considerable
jump in the charity’s net income. And that, says its
executive director of fundraising and supporter marketing
Richard Taylor, means increasing the value it gets from its
existing supporters.
For CRUK this is an obvious choice. It faces a problem other
charities probably wouldn’t mind: it already has about
six million supporters on its databases. As Taylor points
out, that limits the scope for recruitment. “If you’ve
got as many as one in ten of the population supporting you
at some point, increasing the number of givers is going to
be increasingly difficult,” he says.
However, there are arguments for this approach in any charity,
because the problem CRUK faces is shared to a greater or lesser
extent by other fundraisers. As Joe Saxton at nfpSynergy explains,
the costs of recruiting donors has increased in recent years,
although this has been offset by increasing lifetime values.
However, that means that to remain profitable charities have
to invest in promoting loyalty. “Otherwise you’re
putting all your effort into opening the taps to pour donors
into the bath without making sure the plug’s in,”
as he puts it.
And building loyalty can really pay off. Adrian Sargeant,
chair in fundraising at the Indiana University Center on Philanthropy
in the US and professor of nonprofit marketing at Bristol
Business School, says improving retention rates by as little
as 10 per cent can increase the lifetime value of a fundraising
database by anything between 150 and 200 per cent. The database
grows faster; less money is needed to recruit new donors;
and long-term donors are more likely to upgrade their giving,
support emergency appeals, recommend friends or even leave
a legacy.
“Even tiny improvements in loyalty make a big difference,”
he remarks.
Of course, it’s not that simple. For a start, there’s
an important distinction to be made between loyalty and retention.
As Karen Rothwell, director of marketing at the RSPB, explains,
charities tend to measure the latter because they can do so
relatively easily and it makes a good proxy for loyalty. “But
we shouldn’t forget that it is just a proxy,”
she says. “You also need softer measures of how engaged
and supportive your donors are.” Otherwise, she warns,
you may just be measuring apathy.
Saxton agrees. Particularly when it comes to regular givers
retention can be a poor indicator of loyalty. “Certainly
it’s possible to carry on giving to an organisation
without being loyal to it,” he says. “Someone
can keep a direct debit in place for years and just forget
about it.”
The problem with this is that a request to upgrade their giving
can then be just as likely to prompt the donor to cancel their
donation entirely. And, indeed, exit polling confirms that
about 10 per cent of those who stop giving to charities do
so because they have no memory of ever having started.
What this reflects is that charities by and large aren’t
that good at building relationships with their donors. “Most
charities pay lip service to how important it is to understand
their supporters, but I think there’s a lot more said
about it than done,” argues fundraising consultant John
Grain.
In fact, they can even struggle to provide a basic level of
service to supporters. Last month (March) Grain’s company
published the results of a mystery shopping exercise that
attempted to identify how well 25 development charities cultivated
the relationship with donors in the first six months after
an initial gift of £10 made by credit card.
The majority of the charities were well known names. The results
were not encouraging.
Out of the 25, only 11 offered to send the donor further information
about the charity to keep them up to date, and none offered
any control over what the donor would receive. Even more worrying,
11 failed to ask about Gift Aid, 14 failed to even acknowledge
the initial gift and three (including two big brands) failed
to contact the donor at all.
“I fail to see how you can claim to be focussing on
retention if you haven’t even said thank you,”
Grain points out.
This is a real problem for charities because the quality of
service they receive from the fundraising team is a key determinant
of loyalty, according to Sargeant. “It’s not rocket
science,” he says. “People who say they are very
satisfied with the quality of service are proven to be much
more loyal.” Despite this, very few charities regularly
measure donor satisfaction.
Top
Next steps
It has to be said that moving beyond this remains a challenge,
though. A number of big charities, for instance, have already
sought or are seeking to introduce CRM (customer relationship
management) solutions similar to CRUK’s to improve
their understanding of their donors and boost values. None
so far have really cracked it, says Guy Harris, managing
director at direct marketing specialist DMS. At least one
major charity that started doing so a few years ago is still
struggling to implement the original vision, he says.
Similarly, the attractions of gaining a single view of donors
and amalgamating existing databases can belie the difficulties
involved. “It’s a fantastic idea,” says
Saxton. “It’s just an awful lot harder to achieve
in practice.”
Too often charities imagine that amalgamating a number of
old database “dinosaurs” will result in a new,
single, nimble, “gazelle-like” result, he suggests.
The reality can be somewhat different. “In fact you
normally just end up with one even bigger dinosaur,”
warns Saxton.
Still, it is worth persevering with such efforts –
and not just because it will mean more money for charities
from those on their books.
As Sargeant points out, the sector has increasingly relied
on list swaps in recent years and a dwindling band of donors,
albeit more generous, are responsible for its voluntary
income. Long-term that doesn’t look entirely sustainable.
“It’s not growing the charity pie,” he
says. “What we need is a little more of the genuinely
missionary stuff, bringing new supporters into the sector.”
The problem with that is that it’s expensive. With
list swaps, charities may hope to break even on donor recruitment;
if they’re after new donors, they can lose half of
what they put in to it. With so much focus on keeping fundraising
costs down, the only way this will be attractive to charities
is if they can be confident those donors will provide decent
lifetime value. In the long term, the key to gaining the
next generation of donors may prove to be learning how to
look after the ones the sector already has.
How it will work
The key to what Cancer Research UK dubs its supporter relationship
management (SRM) programme is achieving a “single
support view”.
“It will enable us to learn where they come from,
why they support us, what their preferences are and what
their motivations are,” says Taylor. “Getting
those insights means we can track their journey with us
more clearly and talk to them in ways that will deepen that
relationship and keep them with us longer.” First,
though, it means spending a lot of money on IT and consultants.
The charity currently has six different databases –
one for legacies, one for direct marketing, another for
community fundraising, events and so on. These are to be
amalgamated into one.
Furthermore, the charity has also restructured to accommodate
the new strategy. A central marketing department will replace
separate functions found in each of the fundraising departments,
and will ensure coherence in its campaigns and prevent the
charity from competing against itself. Other central departments
will deal with supporter relationship management, high value
relationships, community fundraising and events, and strategic
development.
“It’s about organising the charity around the
supporter bases so we can plan more clearly,” explains
Taylor.
Such an approach should serve the charity well, suggests
Harris at DMS. Much of the reason for the failure of CRM
programmes, he suggests, is that charities aren’t
prepared to change the way they work to accommodate them.
“Too many fail to appreciate that CRM isn’t
just a piece of software,” he comments. “You
have to organise your group around it as well.”
However, it’s not going to be easy, and it’s
a major change for a charity of CRUK’s size. “It’s
complex; it’s expensive; and it takes time,”
says Taylor. “This is a long-term project.”
Despite this, though, the results he hopes for mean the
project would pay for itself within three years.
Top
To return to the April 08 features list click here
|
