Ready for Some More Math?
Let’s use the example of a shoe salesman who finds more value in a second-time buyer than a first-time buyer. The logic is simple: a second-time buyer is much more likely to return for a third and fourth purchase than a first-time buyer is to make that crucial second purchase.
The same principle applies to your financial contributors. While just under half of first-time donors might give a second time, 80-90% of those who do will go on to give a third time, and 80-90% of those will give a fourth time.
These retention percentages are not unique to your organization—they tend to hold true across the board. But what if you could take special actions to improve the likelihood of that second gift?
The Impact of Improving Retention
Imagine this scenario:
- This year, 10,000 donors make their first $100 contribution to your organization.
- For comparison’s sake, let’s split these donors into two lists: List A and List B.
- List A follows the usual pattern: 45% of these donors give $100 again, 85% of those give a third time, and 85% of those give a fourth time.
- Now, let’s say you take some smart actions to boost retention, and 55% of List B gives $100 a second time, with the same 85% giving a third and fourth time.
Here’s where the math comes in:
- With List A, you would generate $578,400 in subsequent revenue.
- With List B, you would generate $707,500.
Did you catch that? By simply improving the retention rate from 45% to 55% for first-time contributors, you generate at least $125,000 more. That’s a significant increase, and it only becomes more impactful over the long run.
Why Retention Should Be Your Focus
By reallocating your resources to focus more on retention, you’re not just maintaining your donor base—you’re driving greater profitability. It’s a smart strategy that pays off in both the short and long term.
