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How to use the charity Direct Debit cancellation cycle to your advantage

Every charity will see supporters come, and unfortunately, a certain proportion go. But while some attrition is inevitable, not every donation cancellation is necessary and there is a great deal charities can do to reduce these losses…

First of all, you need an understanding of when and why people commonly tend to withdraw their support.

Providing usable insight in this area is the Direct Debit Cancellation Cycle, which typically runs to the same trend pattern across all regular giving, regardless of charity cause or size.

Understanding the Direct Debit Cancellation Cycle

Essentially, Direct Debit cancellation rates (meaning the number of Direct Debits cancelled in a calendar month as a percentage of total live Direct Debits in that month) follow an annual cycle. Each year the trend line tends to follow the same pattern, albeit slightly higher or lower than previous years. 

The cycle trend line shows cancellations rise throughout the summer to reach a highs across July, August, September and October when people are focused on funding their summer holidays, before falling back to peak lows during the months leading up to Christmas and then rising again in January as people once more tighten their belts post-Christmas spending. They then return to lower levels until the build up to summer begins once again.

  The Direct Debit Cancellation Cycle:

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Understanding this cycle of monthly peaks and troughs is key for your charity’s forecasting and supporter retention. It can predict and explain variances in income levels across the year, helping you to anticipate when supporters might fall away and why, and, armed with this knowledge, how to plan a programme of activity that helps to minimise unnecessary attrition.  

Top tips for taking affirmative action

Knowing when peaks typically occur means you can take action, perhaps scheduling re-engagement campaigns ahead of these months.  A thank you to donors that communicates what your charity has been able to achieve with their support and reiterating how valued they are, can help to prevent likely cancellations. Likewise, you can also plan reactivation campaigns for the following months to help bring some supporters back.

And keeping track of the cancellation cycle enables you to be more sophisticated in your revenue recognition for reporting and forecasting, as well as in your supporter care programmes – scheduling trigger communications at relevant points throughout the supporter journey for example. This could be a thank you after a first donation, impact reporting at key journey stages and messages acknowledging important dates for individual supporters such as the anniversary of their first gift. These can help to keep donors warm to the cause and encourage their ongoing support through those more difficult times of the year.

Once you know the general cycle pattern and overlay those against your own charity’s results you can be better informed in your planning. The summer hotspot for cancellations, for example, is also when charity staff tend to be on holiday with less fundraising activity traditionally taking place during this period. Understanding the cycle means charities can set up materials for donor care and trigger communications in advance, before autumn and Christmas fundraising campaigns kick off, and ensuring there is no gap in communications during this critical time.

Knowing the ebbs and flows of the year also enables you to test different approaches across known periods of the cycle to see what works best with your supporter base. By testing you are able to gather valuable information, and whether these tests succeed or fail the outcomes should be seen as positive insight that can feed back into your regular giving programmes.

Positive responses to cancellations

Of course, nothing will ever completely eliminate attrition, but when regular supporters do cancel, there is still action to take that can make all the difference both in terms of reactivation activity, and future stewardship and retention work.

Recording the reasons for cancelling provides valuable information that can be used to develop proactive attrition prevention measures, such as offering payment holidays, or the option to donate at a lower gift level as an alternative to cancellation. It’s important too to acknowledge cancellations quickly, in writing, with not just a thank you for their support but an opportunity to return, and to make sure donors can reactivate easily and securely at any time through your website. All of these measures can help to keep warm or even reignite a relationship.

Staying ahead of the curve

With supporter retention, good stewardship is critical, and this is something understanding the trigger points for Direct Debit cancellations can only improve. Understanding the cycle enables you to anticipate the peak periods for cancellations and engage with supporters in ways – not just before and after the danger points, but throughout their entire journey with you – that will help to mitigate the effects of those external pressures on giving, deepening engagement for long-lasting relationships, and reducing unnecessary attrition.

Written by Scott Gray, Head of Payments,the Access Group. Scott leads on Rapidata’s long-term regular giving study that has tracked charitable giving via Direct Debit since 2003. To find our more about the Regular Giving Direct Debit Cancellation Cycle download the Charity Direct Debit Tracking Report 2019, for free.

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