Disaster Donor Retention – Reprise

Disaster Donor Retention – Reprise

Like you, over the past several weeks our attention has been focused on Hurricane Harvey and Hurricane Irma and the destructive paths that they’ve carved through the U.S. And as our managing partner Bill returns home from his 2nd evacuation in less than 12 months, our thoughts and prayers are with the many people who were affected by the storms. But, as we did last year at this time after Hurricane Matthew, we think it’s a good time to look at the trends of new donors who respond to natural disasters and their retention in the following year – or lack thereof. Below is a graph for a social services nonprofit in an area hit by a natural disaster in FY13. This graph shows the number of new donors acquired each year. There was an 88% spike in the number of new donors in FY13, then a 58% decrease in new donors the next year. And below is the overall retention for the same organization. Their overall Retention dropped 12% – from 53% to 46% in the year after the disaster (although retention recovered nicely in FY15). And in FY14, Second Year Donor Retention dropped 30%, from 6 to 18%! Sometimes, there’s little that can be done to increase these new donors’ retention. They are motivated to give by the disaster and may not be converted to give to the organization’s overall mission. In surveys, many donors don’t even consider themselves donors TO the organization, but instead to the event. “I gave to Hurricane Matthew”, NOT “I gave to XYZ Organization.” Still, these donors should receive all of the stewardship...
The Last Word in Measuring Engagement

The Last Word in Measuring Engagement

If you could summarize the consultant chatter over the past decade into one phrase, I would nominate “donor engagement” as the winning phrase. But what does that mean exactly? As a donor behavior scientist, I am a firm believer in what Peter Drucker said: “If you can’t measure it, you can’t manage it.” So, here at Analytical Ones, we’ve developed a new Engagement Score (ES). We think it’s the last word in measuring engagement. Over the past decade, we’ve been experimenting with many different models to best measure engagement. The problem is they tend to get far too complicated. And sometimes a simple metric is better than a perfect metric. Last week, my business partner stumbled upon this reddit link and shared it with me: https://i.redd.it/fy0zvuob8tfz.jpg Basically, this link shows the different ways Starbucks calculates Long-term Value (LTV). To summarize, their “average” 20-year customer LTV is $14,100. Think about that. The average beverage costs between $3-$4 at Starbucks. Talk about engagement. Now, at Analytical Ones, we think a 20-year LTV is far too long of a period. We use a 5-year LTV instead. Starbucks 5-year LTV would be $3,525. Our new ES is based on two assumptions: 1) That engagement is best measured by LTV; and, 2) Starbucks is the Gold Standard of engagement. OK, this may not be a perfect model because it doesn’t consider volunteering and other measures. But we think any of our model’s deficiencies are mitigated by the beauty of its simplicity. You can calculate your ES by dividing your organization’s 5-year donor LTV by 3,525, then multiply by 100. Or, by equation: ((Nonprofit LTV/Starbucks...