Using the phone to reduce donor attrition and drive loyalty

International Journal of Nonprofit and Voluntary Sector MarketingInt. J. Nonprofit Volunt. Sect. Mark. 18: 31–35 (2013)Published online 13 February 2013 in Wiley Online Library(wileyonlinelibrary.com) DOI: 10.1002/nvsm.1461

Using the phone to reduce donor attritionand drive loyaltyBethan Holloway*,†Pell & Bales, London, UK

� Donor attrition is a major issue for fundraisers. With 40% of new monthly givers lapsing within a

year of sign up, new techniques are urgently needed to slow the rate at which donors stop giving.

Drawing on the commercial world’s long-established loyalty programmes, telephone fundraising

agency, Pell & Bales, designed a programme of pure loyalty calls that reduced donor attrition by

more than 10% over a year. These calls contain no ‘ask’; instead, they harness the power of the

telephone by talking with and listening to supporters, building real and lasting relationships.

Copyright © 2013 John Wiley & Sons, Ltd.

The problem of attrition

In the last decade, attrition—when donors stopdonating—has become a major issue for fundraisers,in part driven by changes to the methods andchannels used to sign donors up. Charities are facing

*Correspondence to: BethanHolloway, Pell andBales 211Old Street,London, EC1V 9NR, UK.E-mail: [email protected]†Bethan Holloway is client services director at Pell & Bales, aleading telephone fundraising agency with offices in the UKand Canada. www.pellandbales.co.uk.

1The Fundraising Effectiveness Project is run in partnershipwith AFP, the Urban Institute and AFP’s Donor Software Work-group. http://www.afpnet.org/Audiences/ReportsResearchDe-tail.cfm?ItemNumber=3113The 2012 FEP survey report, published 28 August 2012 incorpo-rates data from the 3184 responses with 2010–2011 results. As agroup, the organizations raised $2,048,749,231 in 2009 and$2,049,794,709 in 2011 for an overall increase of $1,045,478 foran overall, bottom-line, year-to-year growth in giving ratio of 0.1%.Further, gains of $1.1bn in gifts were offset by losses of $1.1bnthrough gift attrition. This means that every $100 gained in 2011was offset by $100 in losses through gift attrition. Growth in thenumber of donors showed a negative gain/loss patternwhere gainsof 1.3 million donors were offset by losses of �1.4 million donors.This means that there was a negative net decrease of (86,437) indonors, and every 100 donors gained in 2011 was offset by 107in lost donors through attrition.


the very real threat that their donor numbers willshrink—simply because they are not able to recruitdonors as quickly as they are losing them.In the USA, there is evidence to suggest that this is

already happening. According to the recent 2012Fundraising Effectiveness Survey Report, whichsurveyed over 3000 members of the Association ofFundraising Professionals (AFP), 107 donors are lostfor every 100 new gained.1

Even regular givers signed up to direct debits areleaving in droves. In 2000, fewer than one in 10people, who signed up for monthly giving, stoppedmaking donations within a year, according to clientdata collated by telephone fundraising agency Pell& Bales. By 2005, nearly one third stopped withina year, and by 2011, the proportion had risen tonearly half—41% (Pell & Bales, 2005). Attrition isat an all-time high—no doubt exacerbated by thedifficult global economic climate.Combine this with donor recruitment becoming

ever more challenging and expensive, and manycharities will find their incomes beginning to shrink,too. In the USA, there is evidence to suggestthat incomes are already flatlining. In 2011, every$100 dollars gained from new and upgraded donorswas offset by $100 in losses from downgraded and

Int. J. Nonprofit Volunt. Sect. Mark., February 2013

DOI: 10.1002/nvsm

http://www.afpnet.org/Audiences/ReportsResearchDetail.cfm?ItemNumber=3113

http://www.afpnet.org/Audiences/ReportsResearchDetail.cfm?ItemNumber=3113

32 Bethan Holloway

departing donors, according to the 2012 FundraisingEffectiveness Survey Report (Pell & Bales, 2011).At the same time, the UK’s top 500 charities suf-fered a £70m real term fall in fundraising incomein the years 2009–2010, a decline of 1.1%, accord-ing to the Charity Market Monitor (2011).It can cost up to 10 times as much to recruit a

new donor as it does to retain an existing one and,therefore, the sector must work harder to hang onto existing supporters. In this climate, it is up tothe sector to stop talking about ‘driving loyalty’and start doing it.

The need to drive loyalty

Research has shown that increasing loyalty notonly reduces attrition but also drives life time value:increasing response rates, average donor values,legacy income and engagement in fundraising activi-ties (P&B, 2011). Professor Adrian Sargeant calculatedthat a 10% increase in donor loyaltywould significantlyenhance the lifetime value of a charity’s fundraisingdatabase by up to 200% (Sargeant and Jay, 2004).With this in mind, it seems clear that charities

need to rethink the tendency to plough more andmore funds into recruiting each new donor and allo-cate more time and resources into loyalty marketing.Basic stewardship—whether that is sending athank you or circulating a newsletter—is no longerenough; charities need to develop comprehensiveloyalty programmes (Charities Aid Foundation,2011). But how to instil loyalty effectively and whattools to use?

Why the phone

For conveying the emotional impact of a charity’scause or campaign message, the telephone stillreigns supreme, despite the emergence over the lastdecade of an increasingly wide range of media andcommunication channels. The telephone allowsfundraisers to have a real two-way conversationwith donors—a truly interactive experience that isdifficult to replicate through a computer screen,mobile phone or tablet. Effective use of the tele-phone, however, means thinking beyond puttingincome generation at the heart of every call. Itshould also mean looking after donors—and remem-bering to say thank you.


Charities should learn a lesson from the commer-cial sector in this respect. The commercial sectorsaw a shift of focus from single transactions torelationship and loyalty marketing as far back asthe 1980s. If we are to take another lesson fromthe commercial world, it might be its use of thetelephone for this.In telemarketing, 38% of all outbound calls

made by the commercial sector are either loyaltyor customer satisfaction calls. In the not-for-profitsector, such calls account for less than 1% ofoutbound activity. Are not-for-profit organizationsmissing a trick?Research conducted by the UK’s Third Sector

magazine, entitled ‘Giving Trends’ (2011) suggestedthat the telephone is the most effective way tosolicit donations. Research into ‘loyalty calls’ con-ducted at telephone fundraising agency Pell & Baleswould suggest that it is also an effective way to nurtureand instil commitment in donors.When measuring the impact of phone calls on

loyalty, Pell & Bales consistently see evidence thatspeaking with donors on the phone increasesloyalty. Even in fundraising calls, where the donormight be asked for additional financial support butdeclines to increase their support, you will find thatthey go on to have healthier retention rates thanthose that are not called at all.Over the last 2 years, Pell & Bales has taken this

a step further and designed calls purely focusedon loyalty—calls containing no ‘fundraising ask’whatsoever. The key finding is that one loyalty call,lasting on average 3min, increases long term loyaltyby at least 10%. In the short term—the first3months when attrition is at its highest—a loyaltycall consistently reduces attrition by over 30% [Pell& Bales, IoF presentation 2011].

The results

Pell & Bales has now run many loyalty campaignsand has studied the results closely, taking datafrom different sources and working with differentcharities. The impact of the calls is clear whencomparing attrition rates of those that had receivedthe call with those in the control groups thatdid not receive the call—regardless of charity orrecruitment source of the donors, the reduction


DOI: 10.1002/nvsm

33Using the phone to reduce donor attrition and drive loyalty

in attrition seems consistent, proportionally ataround 30% in those first 3months after the callFigure 1.In addition to the attrition savings, the increased

loyalty levels should drive additional benefits andfurther drive lifetime value of donors. It is relativelyearly days and more research is needed, but somecharities are already reporting increased donor satis-faction, and increased likelihood that a donor willupgrade their donation or engage in other activitiessuch as fundraising, attending an event or leaving alegacy. One client reported a 50% increase in signup to an ‘event’ from those who had received theloyalty call, and another charity reported a 30%increase in response to an upgrade ask.

How to design a loyalty call

1. Who to call

Charities should start by calling any donor groupwhere a drop in attrition of 10% would yield a signif-icant return—high-attrition groups and mid to highvalue donors, for example.When looking at cashdonors it is not as easy to measure attrition; here,we need to measure life time value and the impactthe call has on response rates to subsequent appealsfor example. Again, one might start with higher-valuedonor groups where a 10% increase in response rate

Figure 1. Impact on attrition of ‘Welcome’ loyalty call to new rec


to the next appeal would result in a significantincrease in income.

2. When to call

Mapping the attrition peaks in your donor journeysand targeting loyalty calls around them is the key.With the most significant attrition happening withinthe first 4months of a donor signing-up, it is advisableto place a loyalty call before a donor’s first direct debitpayment has been made. Alternatively, if donors havebeen recently reactivated—renewing a direct debitfor instance—a call at this time is advisable. Onemight call this a ‘welcome back’ call. Other oppor-tune moments may include charity milestones oranniversaries, the launch of a new campaign, or whenthe charity has something to offer or ask—excludingfundraising asks.

3. What to say

Large scale research by Sargeant and Woodliffe(2007) found that there are certain key drivers fordonor loyalty. These drivers should be identifiedand woven into the content and structure of thecall [http://www.studyfundraising.info/page52.php].Create a checklist to ensure they are not missed.The first and single biggest driver of loyalty

towards an organization is donor satisfaction with

ruits giving 0-4 weeks. Pell & Bales analysis 2012.


DOI: 10.1002/nvsm

http://www.studyfundraising.info/page52.php

34 Bethan Holloway

the service. Pell & Bales advises designing the call,so that is more about the donor and less about thecharity’s needs and fundraising. This might includegiving the donor a range of options for engagingwith the charity, its beneficiaries and supportersthat do not involve giving money. It might alsoinclude flexible service options—even paymentholidays or downgrades where appropriate. The aimis to make giving feel good, unpressured, rewarding,involving and impactful. What better way to set thetone for a long-lasting relationship than to makedirect contact with new donors to welcome them,check their preferences and listen to their motivationand needs?Donors are also more likely to be satisfied with

the call, if the caller has been adequately trainedand engaged with the cause themselves. Fundraiserengagement is a big part of this—ensuring fundrai-sers get the opportunity to meet the charity’s staffand beneficiaries, or regularly briefing the fundrai-sers about the charity and its latest work would bea good start.The call also needs to reinforce a second key

driver of loyalty—commitment. Callers need toinspire in the donor a genuine passion and beliefin what the organization is trying to achieve.Commitment is a complex area, and Pell &

Bales turns to research carried out by Sargeant andWoodliffe (2007), to understand the key drivers indonor commitment and to shape their calls. These‘drivers’ include risk, shared beliefs, learning, per-sonal links and multiple engagements.Risk for example, is conveyed when the donor

feels that someone will notice if they cancel theirgift, or someone or something may suffer as aconsequence of them cancelling their donation.There is an obvious place for this in goodfundraising—although donors do not likecharities to use guilt—so, be careful. Risk (andreward) has been used in the commercial sectorfor some time—‘if I don’t use my air miles bySeptember 2013, I will lose them’ or ‘if I shopwith x supermarket again before next Monday, Iwill get $10 off my weekly shop.’ Pell & Bales’advice is to balance the messaging withreward—the reward being the feel-good factorinstilled by the fundraising team and the rein-forcement of how valuable their gift is and theimpact that it has.


‘Shared Beliefs’—another driver of loyalty—canbe addressed by reminding the donor of thevalues and beliefs that they share in commonwith the charity, their sympathy for the charity’smission and understanding of how that mission iscarried out.Donors should come away from the conversation

feeling like they have learnt more about the organi-zation and its work. Any personal links betweenthe donor and the cause will have been identified,perhaps by soliciting their opinion. The donorshould be reassured that the organization is doingwhat it says it does with donated money. It is notso much about what is said, more about howdonors are made to feel, by listening to what theyhave to say, letting them visualize and contextualizethe impact of their gift, making them feel part of thebigger picture and solution, and reinforcing thattheir vision is the charity’s vision, that the latter willdeliver on its promises.

Why it works

No other channel, other than perhaps face-to-facefundraising, offers the level of personal human inter-action of the telephone. If loyalty is about relation-ship building, the phone allows a supporter todiscuss with the fundraiser what is important tothem, to ask questions and to build a rapport in away just not possible with a direct mail or a video,which is perhaps why Pell & Bales finds that it keepsdonors donating. Pell & Bales’ research has beenlargely case study and insight led, but the resultsare promising for a charities who face shrinkingdonor bases and incomes in free-fall at the sametime as more demand for their services. Morelarge-scale research and matured results are neededin order to better understand beyond reducingattrition, the impact these calls have on life timevalue. And for the sector, whether it is via thephone or not, more investment and time must betaken to talk with supporters, to listen to themand to appreciate them if we are to see loyaltyincrease and attrition arrested.This is a great lesson in looking to the commercial

world and learning from some of their successfulmethods, tactics, and habits while also applyingsolid fundraising principles and insight to see a realimpact on a largely unaddressed issue.


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35Using the phone to reduce donor attrition and drive loyalty

References

Charities Aid Foundation. 2011.Charity Market Monitor. 2011. Compiled by Caritas Dataand Cass Business School.

P&B. 2011. IoF presentation. Source needed.P&B. 2012. Client data.


Pell & Bales. 2005. Pell & Bales collated client data, IoFpresentation, graph, slide 4.

Pell & Bales. 2011. Pell & Bales collated client data, IoFpresentation, graph, slide 4.

Sargeant A, Jay E. 2004. Building Donor Loyalty:

The Fundraiser’s Guide to Increasing Lifetime Value.Jossey-Bass Routledge: London.


DOI: 10.1002/nvsm

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Using the phone to reduce donor attrition and drive loyalty