In nonprofit marketing, a great deal of the time and effort goes into finding new donors, volunteers and supporters. This is not surprising, considering how the economic downturn has impacted Canadian nonprofits, especially charities. There are simply fewer donors and volunteers and more competition than ever.

One result is that many nonprofits ignore their existing stakeholders. This is a critical mistake because research shows that while you are out looking for new donors and supporters, your existing ones are slipping away.

In a study for the Association of Fundraising Professionals, Adrian Sargeant, a professor of fundraising at Indiana University and Bristol Business School in the UK, pegged annual donor “churn” at 20%-30%. That means that in a typical charity the entire donor base could turn over in just five years. In reality, donor churn never gets to 100%, but the numbers are very clear. Most nonprofits regularly shed stakeholders, and Sargeant says the situation is getting worse.

Why is this important? First, it is expensive. “Seek-and-find” marketing costs significantly more than marketing aimed at stakeholder loyalty. Your existing donors know you, they understand you. You don’t have to tell them who you are all over again, just remind them why they gave. That makes them a better prospect than trying to find someone off the street.

Second, dealing with stakeholder churn can add tremendous value to your organization. Sargeant says that improving donor attrition by 10% could wind up adding 200% to the donor base overall through increased lifetime giving and positive word of mouth.

Third, having a strong stakeholder base means you don’t have to spend as much money on public awareness of your cause — your stakeholders will carry some of that message for you.

So, what can you do? The place to start is to get an understanding of your attrition rate. For those who fundraise, the situation should be a bit easier because of giving cycles and databases. Look for trends — when people stop giving, when they stop answering emails, when they change addresses and don’t tell you. Then track the numbers over time. Is the churn rate increasing?

Now, take a minute and think about what loyalty really means. In my consulting work I often ask nonprofit leaders a simple question about their stakeholders: “What do your stakeholders want from you and are you giving it to them?” The answer will tell you a lot about loyalty. Your stakeholders stay with you because they believe in you and what you do. You need to ask what that belief is, because that is what drives their relationship with you. And then you have to ask whether or not you are keeping that belief alive, because without it the stakeholder has no reason to stay with you.There is some research that proves this. Sargeant says that some donors contribute because it adds to their self-identity. Strengthening that bond will increase loyalty.

Sargeant suggests a number of activities you can do to enhance loyalty. The first is to offer quality customer service. The research shows there is a very strong tie between the customer service your frontline people deliver and levels of fundraising. Take steps to monitor and improve how you deal with stakeholders. A no-brainer that Sargeant also recommends is thanking donors and stakeholders. This is what he calls “labelling”. It gives the donor something positive to think about themselves because of your organization. He also says fostering trust is critically important. That means explaining what you believe in and the standards you follow. It also means demonstrating good judgement, and success.

To me, the most important thing Sargeant says is about the need for continued communication. I know too many nonprofits who only communicate with their stakeholders when something really good or really bad happens. This usually means large gaps where the stakeholder doesn’t hear from them at all.

Not communicating enough to an existing stakeholder has the net effect of turning them back into a stranger. Sargeant says that you need to find the balance between keeping in touch and annoying them by sending them too much information. I agree. You don’t have to send them an email or a print newsletter every day, but you should consider sending them something once a month. How can you tell how much is too much? Look at your metrics. If you send emails, how many people open them and click-through?

The other answer is to simply ask your stakeholders what they want. You’ll find that getting their input will not only help you, it’ll also make them feel like you’re listening to them.

For more information on the study referenced in the article, click here.

John Suart is a marketing and communications expert with an MBA who specializes in nonprofits. His blog, the Nonprofit Marketer, has a host of useful tips and advice on everything from budgeting to branding.