The 45% Percent Solution and Other Ideas for Improvement

30 Jan The 45% Percent Solution and Other Ideas for Improvement

By David Allen, Development for Conservation

I started last week’s post with a request. In preparation for a possible Rally presentation, I asked you about the value of your membership using one simple calculation:

• First, isolate the members and donors you have who made a first gift to your organization at some point – any point – during the calendar year 2013 (five years ago).
• Now add up what that group has given to your organization – as a group – since then.
• Send those two numbers to me – the number of donors and the total amount they have given. The email address is David (at) DevelopmentForConservation (dot) com.

That’s it. Pretty simple. By the way, I’m still looking for data, so it’s not too late to send me yours!

I used the two numbers in each case to calculate the five-year “value” of new members. Here are the unfiltered responses I got:

Quite a range!

So what’s the difference between a group getting $153 and a group getting $666 from each new member? And more importantly, what can we do to improve our own number, whatever it is?

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I am working with a client right now who is “ecstatic” (her word) that she is getting better than a 60% renewal rate. She is happy because she learned from another consultant that “anything over 40% is great.”

I beg to differ.

First of all, renewal rates in general are highly dependent on how long your members have been around. I’m working with another client that regularly renews 90% of his members – but his membership has almost no new members in it. That same group with lots of new members might have a renewal rate in the 50’s or 60’s.

So overall, I have considered a “healthy” organization to be one that is regularly renewing 70-75% of its members. New members should renew at a 40-45% rate, and everyone else should be 75-80% or better.

It is new members that are the problem. Most organizations lose more than half of their new members between the first gift and the first renewal. (Perhaps this was the number the other consultant was actually referring to.)

For more information, see The Importance of Recruiting First Renewals.

So the first thing you can do to improve your five-year value of new members is to improve your first year renewal rate.

In my blog post from November 2016, I offered several strategies for improving this first renewal rate. They included:

• Phone call thank you’s for joining.
• Sending a special newsletter right after they join jammed with information about how land trusts work and how they can plug in.
• Focusing some proportion of the social media and emailed communications to people who have just recently joined and may not understand the significance of what they are seeing and reading.
• Hosting special new member events such as information meetings or field trips especially for new members.
• Checking in with them using a postcard at the three, six, and nine-month marks to remind them of the difference their contributions make in your programs. Mention especially any leverage their giving made possible, for example, as match for federal or state funding.

All of this costs time and money, of course, and everyone has a lot to do already, but if you can document that the results over five years include an increase in giving worth hundreds of dollars per member…..

And you heard it from this consultant, you are looking for 45% from your first-year renewals. If you’re getting that or more – great! If not, dig a little and see what you might do to improve this number. It might be the lowest hanging fruit there is for raising more money five years from now.

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So what else can we do to increase the 5-year value?

• Don’t give up on lapsed members. Members lapse because they forget. They lapse because the project they were interested in is no longer in play. They lapse because they get distracted by some other philanthropic priority. Some also lapse because they hate you or they die, but this is not normally the case. So why not go with the “they probably just forgot” theory? Send lapsed members three or four special letters – we miss you so much, or similar – each year – for the next four or five years. I guarantee that this will be cheaper for your land trust than replacing them with new member recruitment.
• Ask for more money. When you ask for specific amounts of money, you increase the chance that members will respond, period. And when you ask for larger amounts than they have given before, some will respond with larger gifts. Assuming you send multiple renewal letters, I have no problem asking for $100 in the first letter (that is, for everyone who is not giving at that level, or higher, to begin with).
• Use paper and use the mail. Some organizations are not getting good renewal results because they have discontinued their quarterly paper newsletter. This is nearly always a mistake. Others are only using email for renewal notices. This might be OK, but if you’re losing half of your members each year as a result, it may be costing you more than it is saving you.
• Space your electronic and paper communications throughout the year. And time at least one paper communication for 2-3 weeks right before the first renewals go out.

OK – your turn. What are you doing to increase your 5-year value of membership?

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Want more of this fun?

• Repeat the exercise for members whose first gift was in 2008 and calculate the 10-year value of membership.
• Include the cost of recruiting and sustaining the members you recruit each year. How many years did it take to break even?
• Calculate your overall membership renewal rate, your first-year renewal rate, and your “everybody else” renewal rate.
• Isolate members who were recruited in different ways – through events for example, through the mail, through email or social media, or through any number of other marketing strategies. What strategies are working best for you?

Release your inner nerd!

Again, I am interested in preparing all this information for a Rally session this year in Pittsburgh. Any insights you glean from your data mining will be appreciated.

I can smell Spring around the corner!

Cheers,

-da

Photo by Robert Nelson courtesy of Stocksnap.io.