Read time: 4 minutes
If you’re a fundraiser (or read Benchmarks!), you already know that monthly donors are pure gold. They retain better, give longer, and require less effort and expense to keep engaged. What’s not to love? The time you spend on them is well worth it!
Chances are pretty good, though, that you’re spending a lot less time on that other potential sustainer group: annual donors. As a result, you might be missing out on a lot of revenue and better retention from supporters who are ready to give annually, just not monthly.
We recently conducted a study for longtime M+R client Union of Concerned Scientists on the relative value of prioritizing monthly vs. annual giving. The results didn’t shock us, but they did surprise us. Let’s dive in:
Our study showed that switching from monthly asks in favor of annual asks has the potential to increase 12-month value for Lapsed Donors by 78%; for Prospects, the change could be as large as 65%. At the same time, we found that sticking to monthly asks for Current Donors is best, since switching to annual asks could lead to a 6% decrease in 12-month value.
So, what did we study in detail? Since you can’t simply a/b test your way into these results, let me explain:
Since 2015, in two campaigns per year, UCS has replaced the monthly giving option on donation forms with an annual giving option, providing us years of actual UCS annual donor behavior to analyze. Over that period, UCS recruited thousands of monthly and annual donors — a rich data set.
We’ve always known that the upsell rate (new recurring gifts divided by new recurring plus one-time gifts) was higher for annual vs. monthly gifts, and that makes sense, right? Having your membership gift automatically renew each year is an easier ask to say yes to than having money come out of your bank account every single month.
What we didn’t know is whether a combination of different upsell rates by audience — and different giving behavior from donors once they converted to monthly or annual donors — would shake out to show that monthly is always the better option to promote for all supporters.
To get the data we needed to conduct this study:
- First, we ran an a/b test in an email campaign, where half of each segment landed on control forms defaulting to monthly giving, and the other half landed on test forms defaulting to annual giving. Both had one-time giving as an option. This gave us precise upsell rates by gift type and audience.
- We then secured data on UCS supporters who had become monthly or annual donors over a two-year period. Our time frame allowed for at least one full year to have passed for each of these donors after the start of their recurring gift, so we could also pull data on their giving behavior for an additional year. Finally, we figured out what their supporter status had been before starting a recurring gift — Current Donor, Lapsed Donor, or Prospect.
- Having all of that data handy allowed us to estimate annualized revenue per recipient at the segment level for those who saw the monthly vs. annual treatment in our a/b test — factoring in one-time gifts from supporters who didn’t choose a recurring option, the initial value of recurring gifts from those that did, plus the likely retention of those gifts, plus the value of additional one-time gifts recurring donors were likely to make — all rooted in UCS’s own historical data (no big industry-level assumptions here!).
This study has already changed our approach to what audiences see on donation forms, when we can control for such things. We’re also exploring ways to carry these results through to website giving, where segmentation is harder to control.
Of course, a/b testing and using your own data to predict the future for you is the gold standard, but given that few organizations have a multi-year history of recruiting monthly and annual donors, it may be hard for a lot of you to run a similar test / study combo. However, our estimate that Lapsed Donors seeing the annual option will have a 77% higher value a year later than those seeing monthly, and 65% higher for Prospects, gives us some confidence in the generalizability of these results.
Now, hanging onto those annual donors does take some work — as does getting them to make additional one-time gifts. Want help with that? Reach out!
———
Dustin Kight is a Senior Vice President in M+R’s Digital Fundraising and Advocacy practice area, based in Portland, Oregon. When not strategizing about how to break down fundraising silos and get people to focus more on reaching big picture goals (who cares if email is up if everything else is down?!), you can find him trying to tame his dogs or his latest sewing project.