November 3, 2017

The Importance of Lapsed Donor Reactivation

Wondering what to do with your lapsed donor file? You need a strategy for these donors who haven’t made a gift to your organization in 25+ months. Some charities will ignore their former donors, incorrectly believing that a donor who has stopped giving is unlikely to give again. Did you know that some donors don’t even realize they’ve lapsed? A solid WIN strategy should include new donor acquisition, warm prospect conversion, and deeply lapsed reactivation. You should invest in both lapsed reactivation and new donor acquisition.

What to Expect From Your Lapsed Donors

In building an active donor file and working on WIN strategies, we expect the lapsed reactivation records to perform as well as or better than the acquisition pool. For example, if new donor acquisition results in a 0.5 ROI, we would expect at least a 0.5 ROI for reactivation. And we optimize the acquisition and reactivation campaigns by comparing the results of both audiences.

However, most of the time, reactivation donors perform better than new donors. Here’s why:

When you appeal to a lapsed donor, you already have their contact information, so you aren’t paying to rent lists like you might be doing for donor acquisition. This cost savings will show up in your ROI.
Contrary to common belief, lapsed donors have given before, so they are likely to give again.
Lapsed reactivated donors give a higher gift than newly acquired donors.
The retention and second gift conversion is greater for reactivated donors than newly acquired donors.

All of this adds up to better net long-term value than new donor acquisition!

How to Find the Donors Most Likely to Reactivate

To identify the lapsed donors most likely to give again, RFM is the most effective method. Recency: months since their last gift; Frequency: the total number of gifts they made to your organization; Monetary: past cumulative giving amount or last gift amount.

The more recent, more frequent, and higher-dollar donors will respond at the best ROIs.

It is important to note that the lapsed donor group at each nonprofit performs differently. It's important to analyze how deep into the lapsed donor pool you should solicit to optimize the ROI. How deep an organization should or could solicit will be dependent on the overall acquisition and reactivation budget, short-term or long-term active donor goals — comparing the reactivation ROI to the acquisition ROI and refining from there.

Sometimes, additional modeling may be necessary to optimize the reactivation program. Modeling is recommended when optimization at the RFM level isn’t producing needed results and when budgets are limited and the universe is large.

We’ve had the most success in utilizing from coops such as Target Analytics, Wiland, and Abacus. To participate in this additional modeling, your charity must be a member of the coop. This additional modeling and scoring is advantageous to identify your lapsed donors most likely to give again because coops use the coop data to identify your lapsed donors that are currently giving to other organizations.

You Can (and Should) Reactivate Donors Through Multiple Channels

Donors are becoming more multichannel. In fact, it is common for donors to switch channels throughout their relationship with your charity. While most of our reactivation efforts are through direct mail, we have seen great success with multichannel campaigns integrating phone and digital efforts.

Telephone Fundraising

Telephone fundraising can be a great option once you consider the allowable investment for the value of the donors. We recommend lapsed donor telephone fundraising for higher-value lapsed donors. Here are 4 reasons to use telephone fundraising for lapsed donor reactivation:

Using telephone in combination with direct mail typically yields 3 times the ROI of single-channel efforts.
Donors acquired through the phone by calling into the charity from a DRTV or radio ad are very likely to reactivate over the phone.
Telephone is a very effective option for donors with historical gifts at the $50+ level. With good data quality, a telephone lapsed recovery effort should at worst break even, and many times actually generates net revenue.
Using a sustainer ask when reactivating lapsed donors can increase their long-term value.

Digital Fundraising

Digital marketing is a fairly inexpensive way to get your message in front of lapsed donors. Like all other fundraising efforts, a multichannel, integrated approach performs the best. We have had success with Facebook advertising and First-Party CRM (Google Customer Match is just one example.) targeting lapsed donors at the same time a direct-mail piece is in market. The ability to track with analytics and tag management informs the effectiveness of lapsed donor reactivation campaigns.

As an example, one of our clients, a national community services organization, reactivated 116 lapsed donors — in addition to retaining over 800 current donors and acquiring nearly 500 brand new donors – through first-party CRM digital marketing efforts. The campaign generated positive ROIs for each donor segment. The lapsed donor reactivation first-party CRM digital marketing efforts produced a 5:1 ROI with a $4,800 spend.