Institute of Fundraising – Strategies for Supporter Retention

Direct Debits – The Golden Egg of Fundraising…

Direct Debits – The Golden Egg of Fundraising…

Introduction

Scott Gray, Managing Director,Rapidata Services plcsgray@rapidata.co.uk

Direct Debits – The Golden Egg of Fundraising…

Why am I here?

•Findings of our Direct Debit Tracking Report

•Impact of the Recession on DD donations

•How to turn the data to your advantage - what can you do to boost retention, prevent cancellations & re-activate donors

Direct Debits – The Golden Egg of Fundraising…

How has the recession affected you?

•Donations have fallen by 11% over the past year (source: UK Giving 2009, CAF/NCVO)

•50% of charities globally have reported a decrease in income over the past 12 months (source: The Management Centre)

•But, the good news is that regular giving through direct debits etc, is on the rise. 37% of donors now use regular giving (up from 34% in 2006/07) and these donations constitute 31% of total amount given (source: UK Giving 2009, CAF/NCVO

Direct Debits – The Golden Egg of Fundraising…

Rapidata’s Charity Direct Debit Tracking Report

Rapidata produced its first Direct Debit Tracking Report in January 2009.

Why track direct debit donations?

1. Best placed to see what the impact of the recession has had on direct debit cancellations

2. To raise the profile of direct debit in fundraising

Direct Debits – The Golden Egg of Fundraising…

Rapidata’s Charity Direct Debit Tracking Report

What the Tracking Report shows:

1. Direct Debit Cycle

2. Falling cancellation rates* prior to the onset of the credit crunch

3. Effect of the credit crunch and recession –cancellations rates of direct debits skyrocketed

*The cancellation rate is the number of direct debits cancelled in a calendar month as a percentage of total live direct debits.

Direct Debits – The Golden Egg of Fundraising…

Average monthly cancellation rates

YEAR AVERAGE (%)

2003-04 3.54

2004-05 3.45

2005-06 3.18

2006-07 3.05

2007-08 3.32

2008-09 4.62

Direct Debits – The Golden Egg of Fundraising…

Average monthly cancellation rates

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2.5

3

3.5

4

4.5

5

Average %

Direct Debits – The Golden Egg of Fundraising…

Direct Debit Annual Cycle

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2.5

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

4.3

Average Cancellation Rate for 2003-2009

Avg

Direct Debits – The Golden Egg of Fundraising…

What does the data tell us

•Direct debit cancellation rates follow an annual cycle

•Cancellations rise in the lead up to the Summer – peaking in August/September

•There is a sharp fall in cancellations for the latter part of the year, dropping to their lowest over Christmas

•Cancellations rise again in January, before dropping back down again through February and March

Direct Debits – The Golden Egg of Fundraising…

Direct Debit Annual Cycle

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar0

1

2

3

4

5

6

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

Direct Debits – The Golden Egg of Fundraising…

Direct Debit Annual Cycle

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar0

1

2

3

4

5

6

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

Direct Debits – The Golden Egg of Fundraising…

The impact of the recession

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar2

2.5

3

3.5

4

4.5

5

5.5

6

DD average monthly cancellations rates 2003-2009 (per cent)

Direct Debits – The Golden Egg of Fundraising…

The impact of the recession

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar2

2.5

3

3.5

4

4.5

5

5.5

6

DD average monthly cancellations rates 2003-2009 (per cent)

DD average monthly cancellations rates pre-credit crunch 2003-Sep 2007 (per cent)

Direct Debits – The Golden Egg of Fundraising…

The impact of the recession

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar2

2.5

3

3.5

4

4.5

5

5.5

6

DD average monthly cancellations rates 2003-2009 (per cent)

DD average monthly cancellations rates pre-credit crunch 2003-Sep 2007 (per cent)

DD cancellations rates 2008/09 (per cent)

Direct Debits – The Golden Egg of Fundraising…

The impact of the recession

• In September 2008…50% more people cancelled their DD than in the average pre-recession September

• In December 2008…Two thirds (67%) more people cancelled their DD than in the average pre-recession December

• In January 2009…54% more people cancelled their DD than in the pre-recession January

Direct Debits – The Golden Egg of Fundraising…

What has happened this year?

Month Pre-rec’n avge (%)

2009 Canc’n rate (%)

% abovepre-rec’n avge

Feb-09 3.06 4.43 44.77

Mar-09 3.14 4.33 34.59

Apr-09 3.04 4.16 36.84

May-09 3.13 4.25 35.78

Jun-09 3.18 4.09 28.62

Direct Debits – The Golden Egg of Fundraising…

A plateau in cancellation rates?

Aug-03

Sep-03

Oct-03

Nov-03

Dec-03

Jan-04

Feb-04

Mar-04

Apr-04

May-04

Jun-04

Jul-04

Aug-04

Sep-04

Oct-04

Nov-04

Dec-04

Jan-05

Feb-05

Mar-05

Apr-05

May-05

-10

0

10

20

30

40

50

60

70

80

Variations in DD cancellations compared to pre-recession ...

Direct Debits – The Golden Egg of Fundraising…

A plateau in cancellation rates?

Not yet!

For cancellation rates to return to their pre-recession levels this year, we would need to see a reversal of the Annual Direct Debit Cycle. Cancellations would need to have fallen this summer

They have not!

Direct Debits – The Golden Egg of Fundraising…

A plateau in cancellation rates?

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar0

1

2

3

4

5

6

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

Direct Debits – The Golden Egg of Fundraising…

Implications for 2009/10

In summary:

•People are still cancelling their charity direct debits in significantly higher numbers than they were doing before the onset of the recession in August 2007.

•Cancellations are now starting to decrease, which might be the first sign that cancellations might – we stress might – be beginning to plateau

•2009/10 will still be a year of higher than average direct debit cancellations

Direct Debits – The Golden Egg of Fundraising…

How to use this data to your advantage

While we can’t prevent a recession, there are ways to use this data to your advantage:

•To aid donor retention

•To prevent cancellations

•To re-activate donors

Direct Debits – The Golden Egg of Fundraising…

How to use this data to your advantage

•See if the direct debit cycle matches your direct debit cancellation rates. Is it higher or lower? •Before a high cancellation month, contact your donors to reinforce your cause:

• Thank donors & communicate what the charity has been able to achieve

• Issue a newsletter•Use this knowledge to consider when to run your next DM campaign or a reactivation / upgrade campaign

Direct Debits – The Golden Egg of Fundraising…

What to do?

1) Acknowledge any direct debit cancellation, thanking donors for their support and act fast!

“The most important thing to remember is that the process of reactivating a cancelled donor starts from the very moment they cancel”

Direct Debits – The Golden Egg of Fundraising…

What to do?

2) Offer alternatives

• Reduced amount• Payment holiday• Change in

frequency

Direct Debits – The Golden Egg of Fundraising…

What to do?

3) Ask for feedback - questionnaire

Direct Debits – The Golden Egg of Fundraising…

What to do?

4) Online Reactivation

Direct Debits – The Golden Egg of Fundraising…

What to do?

5) Regularly test sample reactivations

Direct Debits – The Golden Egg of Fundraising…

What to do?

6) Attempt to reactivate sooner rather than later

Direct Debits – The Golden Egg of Fundraising…

What to do?

7) Reactivation Budget

Direct Debits – The Golden Egg of Fundraising…

What to do?

In summary…

1) Acknowledge2) Offer Alternatives3) Ask for feedback4) Online Reactivation5) Test reactivations6) Reactivate sooner7) Budget

Direct Debits – The Golden Egg of Fundraising…

THANK YOU – Questions?

www.rapidataservices.com

“The most important thing to remember is that the process of reactivating a cancelled donor starts from the very moment they cancel”