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  • Writer's pictureTeam TouchPoints

Why Donor Retention is Greater than Donor Acquisition

Did you know that it can cost up to five times as much to acquire a new donor than it does to keep an existing one happy? Yet despite this dramatic and costly difference, only 18% of organizations actually bother to focus on retention.

Think about it. How many times have you attended a board or fundraising committee meeting and sat through presentation after presentation, all focused on acquiring new donors? Any mention of how to retain those donors once you’ve landed them? Probably not.

The truth is, there is a hidden gem in long-term fundraising and it’s something that the most successful consultants and nonprofits are already taking advantage of. Still not convinced? Here are three compelling reasons why retention should be your highest priority.

The 5-Year Rule

According to a recent study, it can take anywhere from 18 to 24 personalized touch points before a donor considers making a major gift. This places average time frame for reaching that number of touchpoints at around five years. In other words, only by retaining your current donors for a period of five years or longer will you successfully be able to generate major gifts.

Now, consider the fact that a single major gift, particularly one totaling six figures or higher, can equal out to more than the total of all gifts from newly acquired donors for the whole year and it’s pretty clear why retention is so important.

Lifetime Value Adds Up

The lifetime value of a donor is essentially the total amount that is contributed throughout the course of his or her lifetime. Even in the case of smaller donors, this can equate to thousands of dollars each – provided they remain with you for numerous years. Now, multiply this lifetime value by the many smaller donors in your portfolio, and you’ll see how quickly and significantly the overall value of client retention can truly add up.

Acquisition = Higher Costs

How much does it realistically cost to acquire a new donor? Recent calculations put this cost at anywhere from 50% to 100% more than the money you’ll collect from them. As such, it can take several years before a non-profit actually breaks even on fundraising, let alone pulls ahead. Putting real numbers on acquisitions and then comparing those numbers to lifetime value and major gifts can really drive home the long-term advantages a focus on retention can have for your organization.

The Power of Automation

For most charities, taking some or most of what’s being spent on acquisition and investing it instead on creating meaningful touch points with existing clients can generate much higher returns. The problem for many, however, is finding the time to be able to nurture those relationships. That’s where technology can play a pivotal role.

With a tool like Always Accurate constantly monitoring your client records and proactively notifying you of any changes, you can stay on top of what’s happening with all of your donors without having to do any heavy lifting. By leveraging technology like this to your advantage, you’ll be able to make those all-important touches that will provide your non-profit with a stable and sustainable financial future.

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