Donor Relationship Management: An Overview

Some years back, businesses began to realize that they could greatly improve their results by viewing a sale as more than a one-time transaction. This requires understanding customers’ preferences, living up to expectations, and communicating appropriately. Building customer loyalty is the goal. “Customer Relationship Management,” or CRM, is the term used to describe this activity.

The same principles apply to nonprofits, but rather than customers, we have donors and talk about Donor Relationship Management or DRM. This blog will outline steps you can take to improve your donor relationship management process. 

Donor Relationship Management Benefits

Now that we have an idea of what donor relationship management is, it’s important to highlight the benefits. Why should your organization focus on cultivating relationships with donors?

First and foremost, you want to ensure that your donors continue to give to your organization year after year. Just as a business wants you to come back again, you want your donors to be loyal to your cause. But more than that, by building good relationships, you can encourage your donors not just to give again, but also to give more. By keeping track of each donor’s history, you can target those most likely to move up the giving pyramid.

Businesses often go beyond just asking you to buy more of the same. They may also entice you to diversify your purchases. In the same way, you can use your relationship with donors to encourage them to consider other ways to support you. Perhaps they might attend an event for the first time. They might make a planned gift, become a major donor to a campaign, or be interested in volunteering. The more ways your donors are connected to you, the more likely they are to be loyal and ready to step up when called upon.

So how can you build the kind of donor loyalty that will lead to better fundraising results? The key is optimizing your donor relationship management process through understanding donor preferences, living up to expectations, and communicating appropriately.

Understanding Preferences

This can be as simple as paying attention to how people wish to be addressed. If I prefer “James”, please don’t call me “Jim.” Would they rather receive a written acknowledgment or an email?

It can be as complex as building a deep understanding of why a donor is interested in your work. Do they care mostly about a particular aspect of your program? A certain population you serve? Do they want to dig into the numbers and learn the details of the impact of your work? Or are they more moved by the human story?

It can be about how a donor wishes to be involved. Would they like to volunteer? Serve on a committee? Set up an online fundraiser on your behalf? Do they love to come to events or dread the idea of a gala they feel obligated to attend?

Some of these preferences may be hard to decipher without a personal conversation, which is unrealistic for every donor. But there are ways to determine many preferences. For example, what kind of appeal did someone respond to when making a gift? Are their gifts generally directed at a particular aspect of your work? Do they respond better to the analytical approach or the emotional one?

Another route to learning preferences is through prospect research. These systems can help identify other organizations that your donors also support. By seeing the full range of their philanthropy, you might get a better understanding of why they support you.

Living up to Expectations

Next is expectations. Of course, no matter how well a business understands your preferences, you won’t be a loyal customer if they send you the wrong order, shoddy goods, or mess up the billing. How does that translate to fundraising?

First, send a heartfelt thank you promptly after receiving a gift. Make sure the information in the letter is accurate. Strive to understand and comply with the tax laws that apply to donations. For events or in-kind gifts, for example, include the deductible amount as well as the total.

Respect people’s personal information. Follow established protocols for protecting privacy. Understand privacy laws in your state, and make sure you can comply if asked to purge data from your system.

Try to be open and honest about your work. The nonprofit sector devotes itself to solving tough problems. Not everything works. Donors understand that. Share your successes, of course, but also your challenges. When something does not turn out as hoped, explain the reasons and how you are modifying your approach. This can make your donors feel like insiders and ready to take the journey with you.

When a donor sends a gift, they expect the money to be spent as advertised. This means that you need to coordinate your fundraising appeals with the needs of your organization. Even if an appeal for a specific cause generates great results, only use it if you plan to spend most of the money on that specific thing. If for some reason you cannot spend the donations as advertised, you need to communicate that and, for a major donor, even offer to send the money back. Demonstrating this kind of integrity will build donor loyalty that will endure through the highs and lows.

Communicating Appropriately

In this day and age, we are all subjected to a constant stream of emails and texts from businesses hoping to make us repeat and loyal customers. Sometimes these are useful special offers or reminders. Sometimes they just drive us crazy.

What are some of the ways you can use donors’ preferences to communicate appropriately and build that loyalty we all desire?

At a minimum, address each donor by the right name and send communications to the preferred address, using the preferred medium. Respect preferences about the frequency of communications. Track opt-out requests and act accordingly. There are special rules about texting. Make sure you comply.

Tell your stories from a variety of viewpoints: the human side of your work, the analytical side of your outcomes, stories of volunteers, reports from fun events, and fundraising success stories. Segment your donors, if possible, by interest, and target your communications accordingly.

If you haven’t already, consider expanding beyond your email newsletter and leverage social media as a communication tool. There are many obvious reasons to go this route: a potential for a much wider reach, an opportunity to be constantly in front of your donors and prospects, and a way to communicate with audiences with a variety of interests.

When the term CRM appeared, it was associated with software – systems that allow businesses to closely manage their customers, stay in communication and remember important characteristics to encourage repeat business.

Closing Thoughts

The nonprofit sector was using DRM software long before the idea became widespread in the business world. Fundraising has always been about building and maintaining relationships. That’s not to say the nonprofit sector can’t use some ideas from the CRM world, especially around building business intelligence and tracking individual preferences. But building and maintaining relationships, Donor Relationship Management, is the heart of what every fundraiser should be doing.

For a free fundraising consultation and donor relationship management, demo click here.