Finding new donors will never be easy. That’s why, once you find them, you should work hard to keep them. This is the simple idea behind tracking the metric known as donor lifetime value, or LTV. The more an average donor gives over their lifetime, the more revenue you make without having to rely as much on new donors.
It’s easier revenue. Once someone gives, it’s easier to motivate them to give again, because the act of giving initiates the financial aspect of the relationship.
So it’s worth your time to develop some strategies to increase donor lifetime value for your nonprofit.
To give you a boost, start by using one or more of these six strategies if you’re not already doing them.
Increase Communication Relevance
Too much donor communication just gets sent out to the masses. While this sometimes might make sense, you’ll form stronger resonance with donors and supporters when you send communication that is relevant to them.
This is especially true with previous donors.
For example – do you ever send out a campaign and include the phrase “from donors like you”? Many nonprofits put this in campaigns that go to everyone – including people who have never given anything. It hits them as disingenuous, at best.
Begin your plan to increase donor lifetime value by creating campaigns that go exclusively to existing donors. Why do this? Because it allows you to speak on a deeper, more advanced level about your mission.
They have already donated. That means you can presume a degree of interest, care, and motivation for your cause. When your content is built around that, you can start off stronger and more direct.
You can talk about things like impact, needs, stories that end well, stories that still need an ending that the donor can help with, and other ways to get involved. You can talk about things donors have said they want to hear more about.
Pursue relevance, and more existing donors will continue to open, read, and engage with your fundraising content. As a result, more of them will give again.
Create a Separate Approach to Recurring Donors
You can achieve especially strong relevance for existing donors by categorizing them into smaller groups. One of your most valuable segments when it comes to average lifetime value is your recurring donors.
Consider the math:
If your average monthly donor gives for ten months, and you can increase that to, say, fifteen months, your average donor LTV will increase dramatically – especially if you have a lot of recurring donors.
Develop strategies for cultivating, nurturing, and retaining this special group of people. A few ways you can do that:
- Send a printed newsletter that goes only to them, and do the same with email
- Call each of them at least once per year to thank them
- Make special offers such as a discount for event seats or the chance to meet benefactors or other interesting people
- Invite them to special board meetings or places where decisions get made
- Invite them to lead temporary volunteer projects
- Survey them about important topics, and take their feedback seriously
Monthly donors are already invested in your cause. They care about it, or they wouldn’t be giving monthly. But things happen. Life gets in the way. People drop off, especially if neglected or taken for granted.
Don’t neglect or take for granted your monthly donors. Be proactive in pursuing and deepening your relationship with them.
Make them feel special, appreciated, valued, and important. Give them some influence. Give them some ownership. Connect them in tangible ways with the people or places affected by your mission.
Focus on Relationships First and Giving Second
Donors keep giving when they feel known, heard, and appreciated. If you want to increase donor lifetime value, focus first on the relationship with each donor – especially donors who already give larger amounts of money, or give monthly.
Express gratitude
Even with smaller donors – you never know who will become a bigger donor later. This is why gratitude is so important. The worst thing to do after someone gives money to your organization is to respond with silence.
Did they get my money? Did they even notice? Is anyone paying attention? Do I matter?
These are not the questions you want first-time donors asking themselves. But if you don’t follow through with the simple act of thanking them in a meaningful way that sounds more sincere than a giving receipt, that’s where they’ll end up.
Make it a top priority to ensure every donor is thanked, in every channel they give, and that it happens within 24 hours of the gift. Best case scenario is to thank them immediately via email or text, possibly a second time with an email that feels more personal, and then again through the mail a few days later. For larger donors, add a phone call too.
Make it personal
Look for ways to get donors involved in other ways beyond just giving. When they personally get involved and connected with your mission in meaningful ways, they’ll form a stronger bond than can be achieved through giving alone.
Make it communal
Donor lifetime value increases when donors meet other donors, supporters, and volunteers. While this works best in person, you can achieve a measure of this even with online tools like video conferencing calls and social media.
When donors feel like they’re part of a community, a team, a group of people fighting for a common cause, they’ll be more likely to stick around and give again.
Segment Your Communications by Giving Level
Another form of segmentation and relevance concerns giving levels. The Fundraising Report Card tracks data for every nonprofit that uploads it to our system (which is free). And when you do, your fundraising metrics will be broken down into five giving levels:
- Under $100
- $100 to $250
- $250 to $1000
- $1000 to $5000
- Above $5000
Why is this so valuable? Because you can create separate communication strategies for each type of donor. The donor who gives under $100 is very different from one giving $1000 to $5000.
You can make offers to each group that appeal to their giving level.
Volunteer requests
For example, anyone can potentially be a volunteer. But how you introduce this idea and how you phrase it might vary based on giving level. Wealthier donors are more likely to think about their ‘networks’ of friends and colleagues, for example. So you might use that word with higher value donors, but might use something like ‘family and friends’ with lower dollar donors.
Giving arrays
Asking for a second gift should also look different for each level. If you use giving arrays in your appeals – which you should in most cases – you can change the numbers of suggested giving amounts based on giving level.
This matters because if someone gave $250 with their last gift, you don’t want to send them a giving array with amounts like $20, $50, $100, $250, and $500. Four of those five amounts are the same or less than they gave last time. That person’s giving array should begin with a much higher number than the array you use in communication with a donor who gave $15.
Use Fundraising Automation
Segmenting your donors into more specific categories sounds great, but that means you have to develop even more communication every time you want to do something. Done inefficiently, it can increase your workload to unmanageable levels.
That’s where fundraising automation can pay big dividends.
With basic automation, you can eliminate the need to work hard on simple tasks like sending thank-you emails and texts. With advanced automation, you can create responsive communications that engage different donor segments in unique ways, and track their responses and engagement for even more effective follow-up.
For example, suppose you have donors categorized by the five giving levels used by the Fundraising Report Card, and you have an upcoming matching gift campaign.
With automation, you can create emails and texts that go out only to donors at each level who have engaged at or above a certain level of activity in the past six months. More broadly, automation enables you to engage more donors, more often, and in more personalized and relevant ways. This will result in higher donor lifetime value, because more donors are getting the attention they want that will sustain the relationship.
The personalized responsiveness of fundraising automation from MarketSmart goes far beyond any of these examples. It responds to each donor on a personal basis, depending on how they answer various survey questions and other email queries.
And with MarketSmart, you’ll identify and pre-qualify major donors you never would have otherwise found. Those big donors will give a huge boost to your donor lifetime value.
Reduce Caseload Size
The sixth strategy for increasing donor lifetime value concerns your major donors.
Many gift officer caseloads are simply too big to allow for the development of deep and rewarding relationships with each donor. Many nonprofits will assign as many as 150 major donor prospects to a single gift officer. This is madness. No one can sustain strong relationships with that many people at once.
All the strategies discussed so far ultimately come back to the quality of the donor relationship. With major donors, relationship is even more critical, and overly large caseloads make relational depth too difficult to achieve for all the donors.
By reducing the size, gift officers can devote more time to a smaller number of donors. This means they will also increase the relevance of all their communication and develop more personalized and effective strategies for connecting with each donor.
This will, in turn, result in more and bigger major gifts, and thus raise your donor lifetime value.
Your major donors represent the greatest potential for increasing donor lifetime value across the organization, since they already give by far the most money.
Utilize giving levels
This is once again why giving levels are so helpful. Because now, you can track the donor lifetime value metric for each giving level, and see how your efforts to increase donor LTV for each level are working.
After employing the strategies from this article for a year, you might find higher donor lifetime values for your mid-range giving levels as a result of your recurring donor efforts. But you might note no change or even a decline in donor LTV for your low-level donors and your major donors. This would indicate a different set of strategies for those types of donors is still needed.
Tracking data is how you know what’s working, with donor lifetime value and with a host of other insightful fundraising metrics that every nonprofit should be tracking.
Start using the Fundraising Report Card today – and start tracking your data.
