In early 2015 the Lotteries Council of Great Britain commissioned Decaid Consulting to carry out a benchmarking exercise among its members, to identify attrition levels in lottery campaigns. The aim was to permit members better to plan, manage and advocate for their lottery product within their own organisation, and also to enable the Lotteries Council to strengthen its advocacy of charitable lotteries at a national level.
The study broke lottery entrants down by payment method – cash, direct debit, cheque, standing order and credit card. Anonymised data was provided by Lotteries Council members for the period 2010 – 2014. The measurement used was based on weekly draws, this being the most easily measured and accurate data recorded by charities. The results were weighted to take into account the vastly differing numbers of players participating in individual campaigns. Players who did not make their first payment were removed from the calculation, and recorded as “no-shows”: thus the attrition results were based only on players who paid for their first draw.
The results need to be considered in light of the fact that the respondent pool was relatively small: in total, 25 charities responded to the call to participate; however 4 did not submit any data ultimately, and 3 submitted data that was unusable. This left a pool of 18 participants. Of the total usable campaigns, 49% of entries were by direct debit, 39% by standing order, 7% by credit card and cheque and 5% by cash.
The study was keen to monitor the “no-show” rate for direct debit and standing order players, largely because a further contact with the player is often enough to prompt restoration of their instruction to their bank. The results, perhaps unsurprisingly, showed that standing orders perform rather better than direct debits in terms of player retention, with an overall decrease of 3.5% between 2010 and 2014, compared to an increase of 5% for direct debits.
Cash campaigns showed a relatively high attrition rate, but this is closely related to the success of the particular campaign. For example, of 8 campaigns, one showed an attrition level of 25% over 2 years, with another experiencing 45%. This has served to demonstrate the importance of charitable lotteries’ strategy, advertising and “message”, when seeking to attract cash players.
The results of the research demonstrate a completely different pattern for credit card and cheque players, by comparison with those who pay cash. Attrition rates for credit card and cheque appear to relate to quarters, 6 monthly periods and annual periods. Decaid conclude that this could be attributable to the fact that these players commit to a certain number of draws and then do not renew, or are not asked to renew. This finding clearly highlights an opportunity that is currently being missed by some charities, since by diarising the expiry of fixed periods and contacting the supporter again at the relevant time, support could be significantly enhanced. One charity lost 56% of lottery revenue between 2013 and 2014 as a result of the expiry of fixed periods. Hopefully the results of the research will focus minds in this respect.
The pattern for standing orders and direct debits is different, again, to cash, credit card and cheque, in that it reveals a very clear step-up in attrition after every 4 draws. Decaid explain this as representing players considering whether or not to renew every month. Again, the results should prompt charities to maintain regular contact with players, whilst all the time remaining aware of the current negative publicity surrounding overt “pushiness” and respecting the Institute of Fundraising Code of Practice.
The research also broke the results down by cause: air ambulances, hospices, other health initiatives and sporting bodies. Credit card and cheque payments markedly provided the most reliable source of income for air ambulances in terms of attrition. Across the board, standing order and direct debit players were observed as requiring less hands-on management, however.
The study also looked at payment methods by location. Here, the striking finding was that credit card and cheque payments work well in semi-rural areas, but appear to fail after 4 months in urban areas.
There is much to be learned from the detail of the report, but the gist is equally important: lotteries are undoubtedly an excellent stream of income for charities, and increasingly so, with a lot of new charities, particularly the larger national ones, entering the market. This report demonstrates the widely differing performance of various charitable lotteries and highlights opportunities for those encountering significant attrition rates to improve, including a better acquisition strategy and more attentive ongoing player stewardship.
Regardless of the performance of individual charitable lotteries, the report is clear on one thing: direct debit lotteries perform much better in terms of fundraising and attrition than door to door and face to face campaigns, run at the same time. Clive Mollett, Chair of the Lotteries Council, told me: “one of the benefits of this research is that it demonstrates the value of lotteries in fundraising for charities. It provides hard evidence that lotteries perform vastly better than other fundraising methods, in terms of attrition. For example, on-street canvassing, which some call “chugging”, has an attrition rate of 95% over 5 years – and it can take that time to recover the associated costs. There are still massive unexplored fundraising opportunities for charities in the lottery market.”
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