Etude

Member loyalty in non-profit organizations

Membership cancellations during tough times pose a serious financing threat to non-profits.

Par Eduardo Giménez, Teresa Martín-Retortillo and André Pires de Carvalho

First published on avril 01, 2010
min


Today, there are close to 2 million regular contributors to non-profit organizations in Spain. In the past few years this number has been growing consistently, but due to the economic downturn there has recently been an alarming increase in the number of subscription cancellations. Since for some organizations' regular subscription contributions can account for more than 80% of the total income, this recent trend represents a serious financing problem. In May 2009 Bain & Company decided to implement customer loyalty and retention strategies in the non-profit sector to drive success in member loyalty achievement. Under the coordination of the Spanish Fundraising Association, Bain & Company launched a pilot project together with the nine main non-profit organizations working in Spain which account for more than 70% of the non-profit sector's members and income. These organizations were Acción contra el Hambre, ACNUR, Amnistía Internacional, Cruz Roja, Greenpeace, Médicos Sin Fronteras, Plan España, Unicef and World Vision. The first task to be done was to group all the organizations membership data in order to identify common patterns in donors' behavior. There were over 1.5 million donors in Spain. At the same time, more than 5 million surveys were carried out among current and past donors in order to understand their motivation and affinity to the different organizations. The most relevant data identified is the following: The average exit rate is 18%, which means that, on average, 18 out of 100 members quit the organizations annually. However, this rate reaches 34% in some cases while in others stays under 10%. In total, 160,000 members leave each year the participating organizations, representing an over $17 million loss in potential annual contribution. This case, a pioneer collaborating experience between the private sector and the non-profit sector, was led by a Bain & Company pro bono team with wide loyalty expertise in the private sector (telecoms, financial services, consumer goods, etc.). The participating non-profit organizations shared their data bases, expertise and best practices. To read more, download the PDF.

Today, there are close to 2 million regular contributors to non-profit organizations in Spain. In the past few years this number has been growing consistently, but due to the economic downturn there has recently been an alarming increase in the number of subscription cancellations. Since for some organizations' regular subscription contributions can account for more than 80% of the total income, this recent trend represents a serious financing problem.

In May 2009 Bain & Company decided to implement customer loyalty and retention strategies in the non-profit sector to drive success in member loyalty achievement. Under the coordination of the Spanish Fundraising Association, Bain & Company launched a pilot project together with the nine main non-profit organizations working in Spain which account for more than 70% of the non-profit sector's members and income. These organizations were Acción contra el Hambre, ACNUR, Amnistía Internacional, Cruz Roja, Greenpeace, Médicos Sin Fronteras, Plan España, Unicef and World Vision.

The first task to be done was to group all the organizations membership data in order to identify common patterns in donors' behavior. There were over 1.5 million donors in Spain. At the same time, more than 5 million surveys were carried out among current and past donors in order to understand their motivation and affinity to the different organizations.

The most relevant data identified is the following:

The average exit rate is 18%, which means that, on average, 18 out of 100 members quit the organizations annually. However, this rate reaches 34% in some cases while in others stays under 10%. In total, 160,000 members leave each year the participating organizations, representing an over $17 million loss in potential annual contribution.

This case, a pioneer collaborating experience between the private sector and the non-profit sector, was led by a Bain & Company pro bono team with wide loyalty expertise in the private sector (telecoms, financial services, consumer goods, etc.). The participating non-profit organizations shared their data bases, expertise and best practices.

To read more, download the PDF.