Donor Retention Management

Donors or Gamblers  

Are purchasers of charitable raffle tickets gamblers or donors?

Many participants are gamblers. They just want entertainment and a chance to win the jackpot. Others are motivated to participate in a charitable raffle by their belief in that charities work.  Probably most players participate for both reasons, the possibility of winning the jackpot and to support a worthy cause. Regardless of motivation, each player is making a donation so for convenience let's call them donors.

Non Profit Donor Retention Problem                                                                                    

Adrian Sargeant, the Robert F. Hartsook Chair in Fundraising at the Center on Philanthropy at Indiana University in his Blackbaud paper recognizes that retention is a significant problem for non profits and simply improving attrition rates by only 10% can improve the lifetime value of a donor base by as much as 200%. He further observes the reasons customers leave a commercial enterprise. The following pie chart summarizes the relative strength of these reasons.

Although the above chart refers to commercial enterprises 68% of customers left because the vendor simply showed no interest. In other words they did not communicate again with the customer. Donors reasons for no longer donating to a particular cause are strikingly similar. Consider this breakdown of the reasons observed by Sergeant that donors provide for discontinuing donating.

 

Causes out of Charities Control


Charity Controllable Causes

Donor no longer able to afford support


Donor has no memory of ever supporting

Donor relocates


Nonprofit asked for inappropriate sums

Donor is still supporting in some other manner ex. volunteering


Donor believes cause no longer needs their support



Donor never asked to support again



Nonprofit failed to inform donor how donations were used

For clarity, we segmented these reasons to stop donating into causes that are out of the charities control and those that are under the charities control. It is striking that 5 of the 6 reasons, under control of the charity, just like with the commercial enterprises, could be solved with better communications.  

Strengthen the Nonprofit/Donor Relationship  

After the purchase of a ticket many charities fall short in their donor relationship management.  This is not necessarily the charities fault.  Before the advent of technology, managing the relationship after a ticket purchase would have been difficult or impossible.  Traditional 50/50 raffles, where the purchaser retains half the ticket while the other half is put in the draw drum provides no opportunity to continue the relationship with the charity after the draw.  These donors can't be tracked.  They can't be remarketed to. They are gone. Even raffles that require the name, address, and telephone number be retained demand significant effort to enter all this information CORRECTLY into a database. It is a tedious task, requiring a significant investment of time and money. Therefore many charities do not perform this function well and miss the opportunity to strengthen their rapport with their donors.

Technology solves this problem.  With electronic 50/50 raffles cell phone numbers of donors can be obtained.  For the charity this delivers an ongoing method of communication with its donors. However, phoning all these donors is not very time effective.  A more elegant and efficient method would be to SMS your message to the donor.  This can even be taken one step further, an SMS message could be sent to that donor, asking if they want to participate in another raffle and their full contact details could be taken.  Now the charity, with minimal effort, has complete contact information in digital format for the participants in their electronic 50/50 raffle.

What's the next step?  Converting the once transaction based 50/50 raffle customer into a long term raffle user would be ideal.

With every 50/50 raffle your database grows and now your marketing efforts towards longer term raffles can be targeted rather than the traditional shotgun approach.  Growing your database and keeping in contact with all donors is the key to a successful donor relationship management program.

Does Motivation Matter?   

At the beginning of this article I asked "Are purchasers of charitable raffle tickets gamblers or donors?" For the purpose of this article I maintain that at the very least a portion of raffle players are donors. They are motivated at least partially by the wish to contribute to a worthy cause. In reality players are both gamblers and donors.  Even if some participants are solely motivated by the desire to win a prize, it doesn't really matter…perhaps it's even better.

The psychology of gambling is a complex topic with many competing theories, articles and studies written about it.  For brevities sake, to avoid getting bogged down in conflicting theories, we can assume that at the very least by offering the gambler a chance to purchase a ticket to win a prize, you are offering them something and supplying them with something (the thrill of a win, thrill of a loss etc).  Something is always better than nothing.

Psychology has long established that having an option, even when the option is not exercised, is satisfying. By keeping in contact with the gambler, you are providing him with an option to play again, to be entertained again.  Therefore establishing a relationship management program with the gambler can possibly result in an even a stronger relationship than the one with the donor. I'm not saying the donor doesn't get something out of the relationship.  They may get that warm fuzzy feeling of giving but it isn't necessarily as strong as the gamblers desire to gamble.   If retention is your goal then it is even more important to maintain a relationship with these "gamblers."

With regards to raffles, obviously most people do not win.  The "gamblers" however can rationalize their loss as a contribution to a worthy cause. It is better than contributing their losses to financing another roller coaster for a casino.  This rationalization can lead to a higher propensity to play in future raffles….which is the name of the game.

 

 

Sean O'Hagan has a number of degrees in business and economics with an MBA from Trinity College Dublin in International Business and Strategic Management. He obtained his PMP designation from the Project Management Institute in 2011. For more information contact sean@tap5050.com.

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