UK data shows regular/monthly gift cancellations on the rise: so here's what to do...

Data just released from Rapidata Services in the UK shows that the number of people cancelling their direct debits each month has increased substantially over the past six months.

Scott Gray, managing director of Rapidata says:

“Cancellations rates skyrocketed last summer so that, for example, in July, 54 per cent more people cancelled their direct debits than in the average July for the pre-recession period, while in December, there were 67 per cent more cancellations than for the average pre-recession December.

“We’ve looked very closely at these figures and what they suggest is that the monthly cancellations rates during 2008 were so high that they were not likely to have been subject to the same factors influencing cancellations before the credit crunch hit. There have been a lot of surveys suggesting how donors intend to revise their giving during the recession but this tells us what they actually are doing.”

The monthly cancellations rate is the percentage of live direct debits that are cancelled each month. Average monthly cancellations rates for each year are:

2003/04 3.54%

2004/05 3.45%

2005/06 3.18%

2006/07 3.05%

2007/08 3.32%

2008/09 4.64%

For the first time, the financial year 2008/09 saw monthly cancellations rates exceed five per cent, on four separate occasions – July, September, October and January.

The report released by Rapidata, the Charity Direct Debit Tracking Report 2009 sets out several recommendations to win back cancelled donors, including:

• Acknowledge the cancellation quickly, in writing, and thank the donor for their support
• Offer alternatives to cancellation, such as giving at a lower level or taking a payment holiday
• Make sure donors can reactivate easily and securely through the charity’s website
• Attempt reactivation sooner rather than later: try it within six months and don’t leave it 12 months or more
• Regularly test sample reactivations: for instance, try telephoning a sample of 100 donors who cancelled within six months to test for reactivations.

Gray goes on to say there is a need for a “culture shift” away from an emphasis on acquiring new donors to looking after and stewarding the donors you already have.

“The findings in this report point to trend for more donors to cancel their direct debits, which will mean increased costs in acquiring new donors to replace those you have lost.

“Wouldn’t it be better to spend some of that money in trying to keep your existing donors? Commercial companies invest heavily on customer retention; charities need to follow suit."

I agree that we need to spend more time on donor care, although I am not convinced it's at the expense of acquisition. Refer my earlier post about smarter and no less acquisition.

But Scott's point about stewarding donors is spot on. Over the past seven years having mystery shopped hundreds of British, Canadian, Australian and Asian charities, I have witnessed the same fundamental flaws appear in the way we service donors, which are contributing to their ongoing loyalty and subsequently the figures that are now surfacing in the UK.

Lack of thanking, not responding at all, or in a tardy fashion, not acknowledging the donors type of support. Fortunately, all really easy things to fix.

So as well as the reactionary measures Scott refers to, I'd suggest the following steps:

- Mystery shop yourselves and others and see what you find. Rip off what works well, but as importantly, do something about the things that aren't working in your organization.

- Review your acknowledgement and thanking strategy. It shouldn't and can't take 4 weeks to thank someone who ahs made a gift. My experience is this is always down to systems rather than a conscious decision to do so. Don't allow donors to question why they have supported you: thank and reaffirm within a week after they come on board.

- Review your outgoing communications (particularly your thank you and welcome materials) and ensure that each piece uses personal and engaging copy, talks to the donor as an individual, focuses on the donor and the beneficiaries (not your organization) and talks about real impact.

- Ensure your communication cycle continues to ask appropriately (and for monthly donors attempts to upgrade at least once a year - for this is an attrition buster as well as being revenue generating).

The outlook could be grim if you don't get back to basics and do the things we know we should be doing. The evidence from Rapidata is actually in contrast to what we are seeing with our clients at Pareto Fundraising particularly in Australia and Canada, where we see monthly (regular) giving continuing to grow. But that's not to say things won't take a turn for the worse if charities don't practice proper supporter relationship management.

We'd love to hear your experiences with your monthly/regular giving program. Please post here or email me at jonathon.grapsas@paretofundraising.com

If you would like a full copy of the report mentioned above, please email Rapidata's Managing Director, Scott Gray at sgray@rapidata.co.uk .

Jonathon