Managing Direct Debit Cancellations for Charities
Winning back cancelled donors
Once a donor has decided to cancel their Direct Debit, what can you do to win back these supporters?
Here’s our top tips on how to manage Direct Debit cancellations for charities:
1. Acknowledge the cancellation
Always acknowledge the cancellation as soon as possible in writing. This letter or email should go out within one week after the cancellation, at the most, and should thank the donor for their valued support.
Many charities still wait a significant length of time before sending these letters or, worse still, many don’t send one at all.
You seriously reduce your chances of bringing this donor back into the fold if you give the impression that you didn’t value their gift in the first place, and that you won’t miss them.
Remember, the process of reactivating a cancelled donor starts from the very moment they cancel.
2. Offer alternatives
The acknowledgement letter should offer alternatives to cancellation. Put giving into the context of the current economic climate and suggest alternatives such as a reduced monthly amount or a payment holiday.
Many people giving £5 a month, for example, may not be aware that they could give £3, £2, or even £1 a month instead.
You may also like to test suggesting an amount based on their current gift. For example, if a supporter is giving £10 per month you could set a field to calculate 50% of the current gift amount to suggest the supporter comes on board at £5.00, explaining what that amount still means to your organisation.
A payment holiday will allow the supporter to reinstate their Direct Debit in the future – up to 12 months from reactivating.
Whatever alternative you choose however, you must consider the language used – not all donors will be cancelling because they can no longer afford to give.
3. Online reactivation
Reactivation should be easy and simple for the donor. That means making sure it can be done easily and securely through your website, rather than the laborious option of sending a letter via post.
Just have a ‘reactivate’ button on your website or put an easily-remembered URL in your letter that links the supporter directly to the Direct Debit reactivation page. Make sure you include a tailored email, thanking the supporter for coming back on board immediately.
At some point, you should attempt to reactivate your lapsed donors.
Many charities feel they need to wait a ‘respectful length of time’ before asking a donor who has cancelled to give again – so as not to offend if they ask too soon. The result is that many fundraisers overcompensate and leave it too long.
We have many clients who have had very successful reactivation campaigns with donors who have cancelled only within the previous year, or even six months.
The key to their success is to test. For instance, calling 100 donors who cancel after six months, 100 after nine, and 100 after a year, to see which group has the better reactivation rate.
Or you could test calling 100 donors after you send them their acknowledgement letter, reiterating your thanks. Then try to reactivate them six months later and compare the results with those who don’t get a phone call.
There are so many permutations that could work. What’s important is to test them – not leave them.
5. Reactivation budget
We know that many, if not most, donors that are recruited will stop giving at some point. When they do it will cost money to reactivate them.
In fact it will cost some money just to enable them to stop giving. If there is a sudden jump in cancellations then it’s needs more – probably unexpected – money that charities must find for reactivation campaigns.
Charities could ring-fence within their budget a small amount for each live donor as a reactivation budget. For example, this proportion could be the expected attrition rate for the year, plus 15 % to cover unexpected blips.
This doesn’t need to be a huge amount of money – just enough to cover an acknowledgement letter or email, a thank you call and a reactivation call later down the line; perhaps no more than £15-£20 per donor.
There are several advantages to having reactivation funds:
* It means you start to think about how you would reactivate a donor – at the point you recruit them – because you are already budgeting for it
* It gives you the option to test different reactivation strategies because there is money available.
* It will mean cost savings, as the money is only for donors who cancel. But it doesn’t mean all of it will be spent – different test strategies cost different amounts, and not always the full amount budgeted for.
* Most importantly – because you budgeted for it there will always be money for reactivation, and you won’t be taken by surprise if there is a sudden increase in cancellations.
6. Retention working alongside acquisition
So how do you stop donors cancelling in the first place and reduce attrition rates?
This requires a culture shift for many charities. Many just focus on getting new donors, almost at the expense of looking after the donors they already have.
It costs more to recruit than retain and in fact, commercial companies spend huge amounts on customer retention – its vital that charities follow suit.
From our data, we can see that many Direct Debit cancellations for charities happen around two months after the first payment.
Charities could identify certain ‘trigger points’ where there is a high risk of cancellations and test different strategies to reduce levels at these points. For example, sending a postcard showing an aspect of project work, or making a non-ask call to thank the donor for support or talk about the work.