Do you use your phones to reactivate lapsed subscribers, appeal to your high-end donors or upgrade giving levels?
If you do, you are one of an increasing number of non-profit organizations that have realized that telefundraising can play a key role in donor fundraising. But while all of the above are good reasons to fundraise by phone, you may – like most organizations – be neglecting to use the phones where they are truly most valuable: building your monthly donor program.
Do you have a monthly donor program? If you don’t, then you should.
Monthly pre-authorized chequing or credit card programs (PACs) are easy to set up. And once they’re up and running, they provide a stable, year-round source of significant funding – at a low cost to your organization. If you want to build your PAC program quickly and effectively the phone is often your best tool. You can use it to:
- Convert regular donors to monthly givers
- Upgrade existing monthly donors to higher levels of giving
- Reactivate lapsed monthly givers
- Improve donor relations with monthly givers (by sending thank you’s, special updates, and actively involving your donors in campaigns).
Let’s look at these one by one:
1. Converting regular donors to monthly givers
Once you start converting your donors to PAC givers, you’ll find that people want to give in this way for many reasons: To received less mail, to use less paper, to lower administrative costs, and to make it easier to contribute. An enthusiastic and well-informed caller can convincingly outline these advantages, showing donors just how important, easy and efficient PAC programs are.
Of course, converting donors to PAC is an excellent way to overcome one of the biggest problems in all telefundraising programs: People pledge money over the phone and don’t always send it later. They don’t get around to it, they change their minds, or perhaps they weren’t sincere about their pledge to begin with.
By using the phone to get monthly donations, these problems don’t usually arise. Contributions are almost always confirmed while donors are still on the phone. The donor simply reads the caller a credit card number or the transit and account numbers that appear at the bottom of his/her cheques. With the permission of the donor, the monthly donation is then processed and donors are sent a confirmation that thanks them and offers them a chance to change their minds. If they do nothing more, the withdrawals begin. It’s as simple as that. Once donors give their numbers over the phone, there’s nothing more for them to do.
While the vast majority of PAC donors follow this procedure, a small percentage prefer to complete the transaction by mail. In this case the usual pledge fulfillment rates apply – generally, about 50-60% of those who say they’ll send a contribution actually do.
Most of all, though, callers should emphasize that monthly giving offers donors a chance to do more for the organizations they support. Studies by Strategic Communications and other fundraising experts confirm that the main reason people become monthly givers is to establish a closer relationship with their favourite organizations and to be considered an “insider”. People naturally want to feel that they are important, even vital to the causes they believe in; they join monthly giving programs to show their commitment and enlarge their involvement with these organizations.
This feeling of closeness, of being in the “inner circle”, can be enhanced through a good phone call. The phone call will convey the sense that this is an exclusive person-to-person invitation, giving the donor a warm feeling about his/her personal involvement and importance to the organization.
Another reason converting single gift donors to monthly donors by phone works so well is that many organizations have often not promoted their monthly programs them as well as they might have. Donors need to understand how PAC works, how to join, how to cancel, or what kind of notice they receive when the automatic deductions are made. A conversation with a trained caller will help explain these technical aspects and show donors how simple and straightforward the process really is.
But the most convincing reason of all for PAC conversion is, of course, a financial one. Our firm has found that phoning regular donors and asking them to become monthly contributors is always more successful then just writing them.
The best strategy is a combined approach – writing, then phoning – but that can be expensive. So if your budget forces you to choose, you should phone.
Here’s how it can work in practice.
We had a client with a large list but an underdeveloped monthly donor program. So we began our work with them by mailing a direct mail package that was focused entirely on getting their regular donors to become monthly donors. The result? Approximately 1% of these donors joined the monthly program and a further 1.5% sent single donations instead. The mailing added 1,000 new monthly donors representing about $10 000 revenue per month. The net immediate cost of the mailing was $60,000 so it took six months to recoup the investment. But we know this $60,000 was well spent, since the vast majority of these monthly donors would keep giving for much longer than one year.
After the mailing we began a phone solicitation also aimed at converting regular donors to PAC. That program added another approximately $65,000 per month to their PAC plan – more than 6 times what the mail alone achieved.
Best of all, the telefundraising program was run at no cost to the organization. Those donors who declined to join the monthly plan were asked to make a single donation – and the revenue generated through single donations covered the direct telefundraising costs. That left all the ongoing PAC revenues as the net proceeds of the program.
A strong advantage of phoning is that its costs are highly controllable. Most telefundraising programs can be measured on a daily, or even hourly, basis. If the results are poor, or fall below an acceptable level, the program can be terminated almost immediately without great costs (depending of course on the arrangement you have with your telefundraising service bureau, if you’re using one). For a cautious organization, this route is more comfortable than mailing, where you usually need to invest much more before you can determine if the program is successful.
If you’re not already running a telefundraising program to convert your donors to PAC, you should be!
2. Upgrading monthly givers
Upgrading – increasing the monthly contribution – of PAC donors by phone can be one of the easiest and most lucrative fundraising activities you undertake. At least once a year you should phone all your monthly donors, updating them on your work and asking for an increase n their monthly donation. Your monthly donors – already believers in the PAC concept – will often very much appreciate the phone call and happily upgrade.
In our experience, as many as two in five contacted by phone will upgrade their monthly pledge, and the amount of increase can often be quite high. A $5-per-month donor can often be convinced to go to $10, and a $10-per-month donor often goes to $15 or $20. Even seemingly small upgrades or $2 or $3 per month can produce a significant amount of extra revenue for an organization. The average percentage upgrade is often 30% to 40% — or more. (This, by the way, is an argument for signing up PAC donors at any level, even beginning as low as $3 per month: The chances are very good that they will upgrade in later appeals.)
We have also had considerable success using the PAC donor base as a starting point for special large donor clubs or projects. If the case for joining a “large donor club” is put strongly, large upgrades from PAC donors are possible. Getting $10-per-month donors to go to $40 or $50-per-month or more is certainly not out of the question, and at these levels donors can receive the benefits of a $500-per-year giving club membership, if your organization has one.
As with PAC conversion by phone, PAC upgrading by phone avoids one of the significant weaknesses in phone programs – unfulfilled pledges. Monthly donor upgrades taken by phone can begin almost immediately and no further confirmation from the donor is required. Although all donors are sent a confirmation, giving them the opportunity to cancel or change their upgrade, they rarely do.
PAC upgrades are often done by mailing a letter or series of letters, followed by a phoning. In many cases, phoning first and mailing second (to those you don’t reach by phone) is a better strategy. One of the advantages of telefundraising is that a trained caller, through the process of discussion, persuasion and negotiation with a donor, can usually get a higher average upgrade than a mail piece on its own. A mail piece could generate a $2 or $3 monthly upgrade, cutting off the possibility of a phone getting up to $5 or $10 – several times more.
3. Reactivating lapsed monthly givers
Every organization with a PAC program will have donors who’ve dropped out. Don’t ignore this file, and keep it in good order – it may well be a goldmine!
Many people stop giving on PAC because of changed financial circumstances. Their circumstances could change back, and since you already know they are predisposed to PAC giving in general and your organization in particular, asking them again after a period of time may give them an opportunity to rejoin your PAC program.
Some PAC cancellations are simply the result of technical oversight. Expired credit cards or closed bank accounts are two very common reasons. Organizations that process their PACs using post-dated cheques can have drop-offs due to nothing more than running out of cheques. While donors sometimes leave PAC due to lack of funds or loss of faith in your organization, more often than not it has nothing to do with these things.
Some organizations report as much as a 50% re-activation rate when they call former monthly givers whose contributions ended more than a year before the phone call. So drop-offs can and should be encouraged to return.
4. Improving donor relations
The telephone can be used as a highly effective device to improve your relationship with your donors and involve them in your work.
Thanking new PAC donors by phone, and periodically updating them on how their money is helping your organization, can pay large dividends in the months and years to come. This increased investment in donor relations makes real sense when you consider how much funding your organization receives over time from monthly donors.
If yours is an advocacy group involved in grass roots mobilization, public education or lobbying work, telefundraising is an excellent way to involve your membership in mass participation activities. And the best people to start with are your PAC donors – the donors with a proven dedication to your organization, and also the most likely to act on letter writing, signing petitions, and attending events.
Conducting a monthly donor program by phone
Our company has helped a number of organizations set up in-house telefundraising programs. We’ve also arranged programs for clients using our company’s own telefundraising centre. We’ve found that, because of the complications in large-volume systems (which most telefundraising efforts are), outsourced programs generally do better. While the gross costs of these programs can be high, in-house set-ups are often not much cheaper when all your costs are considered. Of course there are other factors to consider, and in some cases going in-house makes sense, especially if you have an established phone canvass you’re using for other purposes.
The key to all good telefundraising, and especially PAC programs, is good callers. It is essential that, however you choose to call your donors, the callers be well-informed, motivated and believer in what your organization is doing. PAC donors are generally more knowledgeable and active than your average donor. They will respond better to someone they feel is also well-informed and sincere in their efforts to upgrade or convert them to a higher level of giving.
If you are going with an out-of-house program, choose your telefundraising service bureau carefully. Beware of companies that ask for longer-term contracts, or that require significant financial investment up front. Telefundraising programs are highly controllable, and should be discontinued when results drop below an acceptable level. If your telefundraising company won’t cancel a program at your request, look elsewhere. The most common reason for a failed program is a mismatch between your organization and the telefundraising company you’ve hired.
If you go the in-house route, find an experienced phone canvass manager to run your program, and make sure you get complete financial and statistical reports on a daily and weekly basis. These reports should track costs and revenues on both an overall and a per-phone-hour basis. Pay special attention to your pledge fulfillment rate, making sure it meets your estimates.
As with all fundraising programs, you find out what works best for your organization by testing and trying new programs. Ongoing testing and evaluation is essential. Since the return on investment in successful PAC telefundraising programs is extremely high, focusing your development energies in this area is always warranted.
This article first appeared in Strategic Briefings, the periodic newsletter of Strategic Communications Inc., a consulting firm specializing in campaigns, communications and fundraising for non-profit organizations. It is reprinted with permission.
