Getting Lapsed Donors Back: An Empirical Investigation of Relationship Management in the Post-Termination Stage

Abstract

Firms lose customers for various reasons all the time, raising the question of whether to stop marketing to these customers or to try to win them back through sending more marketing instruments. The answer lies in knowing the probability of regaining a lapsed customer. However, since customers have various reasons for dropping out, identifying which customers are worth reviving becomes important. This article examines this issue in a donation context, using data from a large not-for-profit organization. Results suggest that sending marketing communications with an appropriate frequency has a positive influence on reviving lapsed donors but sending overly frequent communications may evoke resistance to appeals. Furthermore, the varied behavioral histories and characteristics of lapsed donors affect the probability of revival. The article provides a useful approach to fundraising managers in a not-for-profit industry.

KEYWORDS:

• lapsed donors
• relationship management
• not-for-profit marketing
• hazard model
• fundraising

ACKNOWLEDGEMENT

We thank the charity foundation that provided us with the data and the information on their decision-making processes and enabled us to do this research. We would also like to thank the two anonymous reviewers and the editor for their valuable comments, which have led to tremendous improvements in the paper.

Notes

1. While donors may donate monthly, quarterly, half-yearly, or yearly, most donors donate monthly. Donations in other frequencies have been converted to monthly amounts for consistency and to facilitate the comparison among donors.

2. Note that in this study, the frequency of revival mailings is assumed to be constant across time for each donor. This assumption implies that the mailing policy of the organization remains stable during the observation period.

3. The data analysis for this paper was generated using SAS software, Version 9.3 of the SAS System for Windows. Copyright © 2013 SAS Institute Inc. SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc., Cary, NC, USA.