Steep increase in direct debit donation cancellations in 2007-08
Howard Lake | 10 March 2009 | News
The number of donors cancelling their direct debit donations increased substantially following the collapse of Northern Rock in September 2007, according to analysis of six years’ worth of direct debit cancellations rates by direct debit specialist bureau Rapidata Services Plc.
Monthly cancellation rates, or the percentage of live direct debits that are cancelled each month, then ‘skyrocketed’ in the summer of 2008 as the UK economy headed towards recession, and rates are still increasing.
These increases followed four years of gradually reducing cancellation rates from April 2003.
Average monthly cancellation rates per year:
2003/04: 3.54%
2004/05: 3.45%
2005/06: 3.18%
2006/07: 3.05%
2007/08: 3.32%
2008/09: 4.64%
The findings are contained Rapidata’s new publication ‘Charity Direct Debit Tracking Report 2009′ and offer practical, data-based analysis of regular giving, in contrast to the many surveys that have sought donors’ attitudes to giving in the recession.
Scott Gray, managing director of Rapidata, said: “Cancellations rates skyrocketed last summer so that, for example, in July, 54% more people cancelled their direct debits than in the average July for the pre-recession period, while in December, there were 67% more cancellations than for the average pre-recession December”.
Indeed, for the first time, the financial year 2008/09 saw monthly cancellations rates exceed five per cent, on four separate occasions – July, September, October and January.
What can charities do to counter this trend? Rapidata offers some suggestions on winning back cancelled donors:
• Acknowledge the cancellation quickly, in writing, and thank the donor for their support
• Offer alternatives to cancellation, such as giving at a lower level or taking a payment holiday
• Make sure donors can reactivate easily and securely through the charity’s website
• Attempt reactivation sooner rather than later: try it within six months and don’t leave it 12 months or more
• Regularly test sample reactivations: for instance, try telephoning a sample of 100 donors who cancelled within six months to test for reactivations.
But Scott Gray adds that reactivation is not the key issue. Instead, fundraisers need to change their focus from acquiring new donors to looking after and stewarding the donors they already have.
He said: “The findings in this report point to the trend for more donors to cancel their direct debits, which will mean increased costs in acquiring new donors to replace those you have lost.
“Wouldn’t it be better to spend some of that money in trying to keep your existing donors? Commercial companies invest heavily on customer retention; charities need to follow suit”.
A full copy of the report can be obtained from
Scott Gray.
www.rapidataservices.com
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.