Analysing Cancelation Reasons

A couple of posts ago I looked at donor’s pathway to cancelling. The next stage to look at the reasons they give us for cancelling and what that tells us about our program.   One issue with this is that people don’t always tell you the real reason why they cancel.  We know this because we never get told that they’re cancelling because I’ve never seen the cancellation reason “Thinking about it for a while because I doesn’t really feel that inspired, then got out of bed on the wrong side and opened an electricity bill.” People tell us what they feel ok with telling us. Its not often that they feel ok with telling us that they don’t really care anymore.

But although they may feel bad about telling us the whole truth, we should never judge them for the reasons they stop giving.  People do not cancel because they have suddenly turned evil. There are influences that have lead to this cancellation which are within your control (change these), and there influences that are outside of your control (don’t sweat about these). Never get upset with ex donors. Its not their fault

Anyway, here’s an interpretation of cancellation reasons and what they might be saying about your program.

“My financial circumstances have changed” – 90% of the time their financial circumstances have not changed, the donor is just trying to let you down gently.  It’s the RG version of “its not you, its me”, in that it’s very definitely you, they just don’t want to break your heart by telling you you’re boring or your breath smells.  What that generally equates to in charity terms is that they don’t think you’re worth the money their giving you.  If your getting a large number of people cancelling early for this reasons tends to mean that they didn’t really want to give to you in the first place and you should look at your recruitment channels. Maybe F2F fundraisers are not engaging people enough or worse, signing up people who don’t really want to give. If people are still dropping off in big numbers after the first few months it means that you’re not communicating with them well enough.  You need to tell them how great they are, how much of a difference they are making and do it more frequently.  Incidentally this accounts for a large percentage of most cancellations files across most charities I’ve seen.  It’s terrifying to know that we are loosing people because of reasons which are relatively easily fixed.

“I’m a Student/Pensioner” – A more specific reason, and likely to be true, but not necessarily telling you what you need to know. It’s easy to make the leap to thinking that they shouldn’t have been recruited, but that’s not quite the case.  It means that they were being recruited in a way which didn’t make them feel the program was right for them.  It could be that they were recruited at a donation level that was too high, or they felt that their donation was too small to make a difference.  It could be that, as with the “financial circumstances” they weren’t engaged enough. Again this could be a reason with the recruitment channel, but it might not be as simple as bringing on the wrong people, they might be bringing them on in the wrong way.

“I’ve just become unemployed/I’m going traveling for a year” – This is completely out of your control sadly, but it if it’s any consolation getting this means that your doing your job.  By telling you that it’s a limited period of time that they wont be able to give for, they  are keeping the door open for giving to you in the future. Invite them to stay on email lists and certainly flag them for reactivation programs.

“I don’t like this thing your organisation did” – Going back to the Buckaroo theory of cancellation, this must have been the last of several straws.   Komen for the Cure’s withdrawal of support for Programs with Planned Parenthood programs  is a recent and well known example of this. When decisions are made  that move away from an organisations’ normal operations or values, they are usually made at high level and with the understanding that this will upset some of your supporter base.  This hopefully gives you time to plan a clear and concise explanation of the charities actions that can be communicated to supporters.   The other side of the coin is if people are coming into your organisation with false expectations about what you are or what you does. One of the reasons why clarity of message is so important in the recruitment process.

The Donor’s Decision to Cancel (and Buckaroo)

A lot of the posts in here have been about point of recruitment, that moment when someone decides to join your organisation and donate to you, but what about the other end of the journey, the cancellation point. This is harder to talk about,  but in many ways more important.

We all dream of recruiting donors who stay on until they die, but the reality is that most of our donors will decide to cancel at some point and the more we know about their reasons for doing so, the better equipped we are to stop them. There are a few different pathways to the cancellation, but let’s start with the most common the donor decision to stop giving.

This journey to the cancellation point generally starts with a mild discomfort. Its fairly safe to assume that to a greater or lesser extent this mild discomfort is present in most if not all of your donors. If your totally honest with yourself you’re also likely to notice this in your own giving patterns. There is often a nagging part of your brain that asks if money is best directed towards The Human Fund or would putting it towards Far Cry 3 be a better investment. It doesn’t make you or your donors a bad person, it makes you and normal.

These nagging moments are usually prompted by something, which for dramatic effect we’ll call “straws”( as in those things that break camel’s backs, a metaphor I will decline in a couple of paragraphs). These straws come in several basic categories.

Specific Personal Straws

Something that affects the individual and probably none of your other donors.  This could be loosing a Job, a big bill coming in, saving for something. It could even be someone having a getting out of bed on the wrong side. 

Values Straws

Anyone who’s been to a school reunion will vouch that people change over time; their priorities change, their start to care about new things and stop caring about some other things. They may have may have starter giving to your environmental organisation when they were an idealistic geology student with dreadlocks, but now they work for a mining company, they not so hot on you. On the other hand it could be that your organisation has changed and the donor hasn’t changed in the same way,

Public Straws

These are things that affect people on a wider scale. The most obvious example would be the GFC. But others could be along the lines of the natural disasters, cost of living increases, changes in legislation etc…

Communication Straws

This is a specific thing that the organisation has done which has annoyed the donor.  This cold be on the level of organisational mission such as policy the donor dislikes or negative media involving your organisation. Or it could be the way in which you’ve interacted with then from the tone of a letter they received or an-opt out auto upgrade.

Now imagine the game, Buckaroo.  If you don’t know the game it involves placing bits little plastic items on a spring loaded plastic mule.  One wrong move or too much weight and the mule kicks and who ever placed the last piece is the loser. The crucial thing is you never know what is going to be too much, it could be the first piece or the tenth piece.  The more items are placed on the mule, the more chance the next piece will set off the mule.

Now, prepare for a stretched metaphor.

Donor’s decision to cancel is a lot like the game.  Their donation is the mule; the different straws are the items.  The straws are placed on the mule, without you knowing what’s being placed, when it’s being placed or whether it’s being placed in a way that sets off the mule. You do know however that different items are being placed on the mule at all times and as time passes, the more items are being added. When the mule kicks, the donor cancels and you both loose.

You’re not privy to the any of the pressures being put on the donor’s desire to give and each donor will be loaded to spring under a slightly different weight.  You do know that as time passes and more items are being placed on the mule, the more chance there is of the next piece setting off the mule.  This means you have to be ready for the mule to spring at any time. Identifying the potential influences, especially the ones that  tip donors over the edge most regularly, will help in objection handling with individuals. The bigger question is how we can use our knowledge of the model to improve our retention long term.

Balancing average pledge

As a fundraiser working for an agency I was very concerned with retention.  Our efforts for recruiting a higher percentage led us to looking at the effects of pledge amount.  We found what most of you reading would expect, that generally. The more you give, the more likely you are to cancel sooner. As we prided ourselves on giving our donors the best return on their investment we then worked hard and successfully on reducing our average pledge.  The followed a positive impact on retention and our clients were generally happy; on top of the improved retention a drop in average place in F2F generally also means a cheaper cost per donor.

However one thing that I didn’t realise at the time was medium term effect of a lower average pledge. The first, most important and perhaps most surprising that a lower average pledge means it takes longer to break even on a cohort of donors. There are a number of assumptions that are involved in this statement, and feel free to challenge any of them, but the evidence I’ve seen for myself plus the anecdotal evidence, backs it up. Assuming that the recruitment cost is based on donation amounts with a retention clawback or built in, assumed discount. Assuming that the reduced gift means that there is a relatively consistent attrition level across all donation rates. And assuming that the improved attrition isn’t more than say 10% better at year one. The reason for this is that there is less money coming in in “profit” from the donors who passed the break even point. The reduction in pledge is necessarily caused by a lowers targets across the board, meaning it stops donors signing up for more than they can afford or care to give, but it also lowers the amount that people who could afford to give more, give less.

On top of this, the reduced pledge means reduced overall income and, to rub salt into the wound, less financial gain from upgrades.  As an RG fundraiser, the frustration felt from these issues is only topped by the knowledge that this is only a medium term problem and you’re actually getting better value for money. Regular giving is all about the long term. It may take you six months longer to break even and be running a $10,000 under budget, but you know in two years time this will have paid off, probably several times over.

So what’s more important here? Higher initial income or more donors down the track. The slightly dull answer is somewhere that you need to find balance that works for you and you’re suppliers. They know that a high average pledge will mean higher attrition and less work for them in the long run, so they’re likely to work with you to try and keep it in boundaries that work for both you and them. It’s also important to remember that constantly pushing the pledge amounts down won’t increase retention after a certain point.

The Active Donor

One of the times I’ve been angriest in my career as a fundraiser, actually in my life, was when someone  working at a charity said the following.  To my face.

“They’re just the Face to Face donors.  They’re not engaged with what we do, most of them probably don’t event know who they’re giving to.”

After I’d been sedated and had time to think, I realised that this is probably the way in which many people in NGOs think of F2F donors. There are some common, but deadly, misconceptions about the donors that fuel our organisations work. This include

• Most don’t know much about the work the charity does.
• They care very little our the work we do, they don’t share the same values
• Many don’t even know the organisations they donate to.

Although there is an element of truth to some of these claims (see the left hand side of the bell curve of engagement) it does an enormous discredit to vast numbers of people.  Part of this attitude comes from negative views on the methodology of F2F, assumptions that people are bullied into signing, or only join because they fancy the fundraiser.

However, we can’t lay the blame for these attitudes solely on others.  The way in which we treat donors reinforces this idea, when there’s the opportunity to do so much more.

In general terms, our communication do little or nothing to encourage anything other than sit back and not cancel. We send them magazines and newsletters telling them how great we are, and, if we’re better at our job, how great they are. We call them up and ask them for more money or to update their details, but none of this invites them to do anything more.  The thing is that we can and we should.

Do not underestimate what kind of a commitment making a monthly gift is.  Admittedly some donors won’t notice the gift going out each month, but declines tell us that a good percentage of our donors don’t have enough money in the account or on their card to complete the donation.  They are committing their last cents to our cause.   If they are doing all they can financially so why limit them to just a financial contribution. Imagine if we tapped into the enthusiasm and asked them to take a small action. Something easy and immediate other than donating that helps attain your organisational  goals: sign a petition, send a postcard to send off, tell a friend about the charity.

Not everyone will take the action of course, as with any call to action there are going to be a majority of people who say no, or who cant be bothered or who forget.  But imagine if just 5% of your donor base wrote to their MP about an issue you’re campaigning on, or encouraged one of their friends to sign up as well. For many charities this would be a sea change in what they can achieve.

On top of that as well imagine the possibilities for retention.  When donors do something other than give you money, the more they are engaged.  The more they engage, the longer they stay, the more likely they are to increase their gift, the more they are likely to remember you in their will. When donors move on being active they become much more than RG donors, they start to become an integral part of your fundraising strategy and even your organisation.

However, all of this requires a change of thinking however and possibly one outside of just the fundraising department.  There needs to be shift in viewing the donor as sitting in an armchair not remembering that they’re giving to you, to someone standing on the front line of your protest, telling their friends that they give to you. And the paradigm shift is only the beginning, when you’re looking at your donor base in this way, the entire way in which you communicate with them changes. It becomes more interactive, more frequent, more inspiring and yes, more work.  But the rewards more than make up for it.

The Bell Curve of Giving A Toss

The most important metrics in regular giving are retention percentages.  They determine ROI, income, donor numbers and pretty therefore pretty much what your organisation is going to be able to achieve in the next few years.   The biggest single influence on attrition rates is recruitment source.  Sadly, a lot of internal NGO conversation seems to stop there.  However F2F teams and agencies the world over, have spent enormous amounts of time and resourcing trying to work out why this is.  The main answer that they seem to come up with is that source reflects and/or influences donors engagement with the organisaion.  

Ability and Desire… again

You may have read in a previous post that a bit too much attention is paid towards demographics of the donors being recruited. Income, age and location do carry some weight. But the reality of the situation is the number of people who cancelling because they really cannot afford to give any donation to you is very small.  What’s much more important is how much they care about the work you do. 

Giving a Toss

It’s the amount of love, not the amount of money that a donor is giving that determines their how long they’re likely to give for.  If they really care about what you do then when they decide to start saving for a home, they’ll make room for the $25 a month in their budget.  If they loose their job then they’ll reduce or put their donation on hold while they look around for a new position if they value their donation to your organisation highly enough.

Bellcurve

Everyone is an individual and so everyone who responds to recruitment ask will therefore respond in a different way.  This means that every recruitment methodology is likely to recruit a cohort of donors whose engagement with your organisation looks a little like a bell.  There will be a small amount who care a lot, a small amount who hardly care at all (I have no idea why these people sign up, but they always seem to) and a big chunk of people in the middle.  The exact contours of your bell curve will vary depending on source, but they will probably all take a similar shape.

Prove It

I can’t.  And this is the most difficult thing basing a concept on something as unmeasureable as emotion.  Like a black whole, you can see the effects of it (on retention rather than gravitational pull), but you can’t actually see the thing itself. If demonstrating it to yourself is impossible, then imagine how hard it’s going to be to the board.

So why bother with it at all.

Because even if you can’t base budgets around it, it gives you a framework for strategies to retain people.   If you know source a (green) has better retention than source b (blue) you can start to work out where along the bell curve you want to focus your attention.  Do you want to focus your communications streams on the less engaged donors, the very engaged donors or somewhere in the middle (hint, its the latter answer, the question is where in the middle).  We’ll look at the bell curve again in the near future as were only scrapping the surface of what it can tell you.

Do Demographics Really Matter?

As an RG fundraiser, there are certain characteristics you are convinced you want to see more of in your database because conventional wisdom tells you that they will give for longer.  For example, you want to more people over the age of 30.  You want to see more people with an occupation listed as some thing like manager, rather than someone who’s listed as “student” or  “unemployed”.     There’s a clear logic behind this, that’s strongly backed up by data so really there shouldn’t be any room for a headline a contrary as I’ve put above.  But there is another side to the story, at least to a limited extent.

Logic

The logical viewpoint on this states that greater ability someone has to give; the greater the likelihood that they will give for longer. If someone is a manager of, say a paper supply company, in their mid 30s, it’s reasonable to assume that they are going to have more disposable income than a 21 year old student. It’s therefore reasonable to draw the conclusion that they won’t notice their donations to your organisations as much and are therefore less likely to cancel. It would therefore be logical to try and recruit more managers at paper supply companies than students.

Ability vs. Desire

Even though this logic is correct there is a danger that in looking at ability to give, we ignore a much greater factor in the likelihood someone will keep on giving; their desire to give.  The greatest influence on retention short, medium and long term is source.  Be it one F2F agency producing a much higher quality of donors than another, or one time cash donors becoming  amazing RGs, 2-step donors out performing one step, this plays a far greater roll than any demographic information you can attribute to an RG donor.

Demographic Squeezing

The danger of being entirely demographic focussed is that it can be used to white wash underlying issues.  If a face to face agency has bad attrition, the temptation is to tell them to recruit less of donors in some demographics or to stop recruiting those sort of donors altogether.  Although there may be some small short term pay offs with this, its won’t fix the issue. Bad retention is caused by donors who are less engaged with the charity than they should be.  When there is a trigger that asks if they really want to keep giving, their thought process is more likely to swing towards not giving to the organisation you really care about. This is why more of these donors will cancel sooner. .  Having more donors at a certain age, won’t make them more engaged. In fact, the fundraisers may try so hard on the donors in that demographic that they sign up more people who less engaged. As they would normally be, meaning your retention becomes lower.

So completely useless then?

Well no, there are excellent uses for using demographics in improving retention.  You may be able to see issues of ability to give that need to be addressed.  For example, if there were a high proportion of people being signed up then cancelling early in traditionally lower income areas, you may want to make sure less recruitment happens there… if feasible.  Just don’t tell your fundraisers only to go to the well off areas as they will burn these out more quickly, receive more complaints and probably wont improve you’re retention at all.

Demographics do matter; but you probably wouldn’t have read the article if that had been the title You can find things from them that give you a great deal of insight into how your program is tracking and to a certain extent why its tracking that way.  But donors are human beings are too complex to be defined by one characteristic.  Treat them as people, individuals and not as herds.

Five Basic Ingredients For Making Your RG Program A Club

You’ve probably noticed that most of the posts so far have been about bringing a donor on board, starting their relationship with your organisation.  You’ve probably been thinking that this is symptom of the fact that I come from a donor recruitment perspective.  You’d be right, I think. But you also know that starting a donors journey is, in every sense, the only beginning of the story; the first date in what we hope will become a long and loving marriage. If you’ll allow me to change the direction of my metaphors for a second, one of the best ways to keep a donor on board is to make them feel part of something, a movement, a club, a tribe.Here are some of the cornerstones of what you should give donors in order to build  an effective club.

Give it a name: One day there I’ll write a post on my favourite program names.  They’re an important part of giving your donor tribe an identity. Some of my favourites include Amnesty’s “Human Rights Defender”, Greenpeace’s old “Rainbow Warriors” program name (I may be making this up, but I think that’s what it was called) and Fred Hollow’s Foundation’s “Miracle Club”.  I’ve also seen ideas floating around about different clubs for different levels of giving, for example giving $25 p/m makes you silver member, $35 turns you into gold.

Give them a card: Someway of demonstrating that they’re a member to themselves and to others. Keep it as exclusive as possible something that only donors can have.  There are arguments for membership cards giving donors discounts at shops etc… use these with extreme caution.  Depending on where you’re based their may be legal issues, and it potentially detracts from why people are giving in the first place.

Talk to them: In terms of outbound communication you shouldn’t need to be told again that it’s important to write to the donor not about the organisation (If you do need to be told again, may I introduce you to Messers Ahern, Brooks and Burnett).  The best clubs will let their members know about whats going on in the right manner and at the right time. Also the best clubs know its important to listen to their members and you should encourage feedback from your donors. Ensure that the people who pick up the phone to your people want to talk to them and be helpful. Ensure emails, tweets and Facebook posts are answered.

Give them a place to meet: From scout huts to Gentlemen’s clubs the greatest clubs crate places for their members to interact. It’s not something that has yet caught on with donation programs due to practical issues such of finding somewhere to fit  10,000 plus people. But 21st century technology is all about bringing people together. One if the best ideas that’s been floating around recently is that of closed Facebook groups for donors.

Give them other something to do: Encourage  your donors to write letters, run raffles, bake cakes, sizzle sausages. The more actions they take for your cause, people like two contribute so give them opportunities to do so. Not only do the community actions keep the donor engaged and giving, but they also bring in extra support for your cause, in terms of funding or activism

There are of course many more of these ideas and not all of these are the right fit for everyone. The engagement of donors becomes increasingly important in world where consumer opinion drives performance.  A club helps give a sense of belonging, which helps retain your supporters year in and year out.