How is that blog headline for a man bites dog storyline? This seemingly ridiculous claim becomes more credible if you consider,
- Customer (or Donor) satisfaction programs are mostly about remediating bad experiences. Most corporate entities use customer satisfaction to evaluate a given, isolated experience – e.g. a shopping trip, a call center interaction, an in-person service call, a hotel stay. The better programs will trigger – in some automated fashion – alerts to follow up with customers/donors who give bad scores. The idea is that the company wants to make it right. For those who give “good” scores nothing happens since there is nothing to “make right”. This leads to the following corollary:
- Your “top box” or very satisfied customers/donors are considered safe when in fact, there is a very high defection rate. The problem is that customer/donor satisfaction scores are not very good predictors of future behavior – especially among the “top-box” folks, those giving 8 to 10s on a 10pt scale. This means there are many of those “very satisfied” who will defect next time. In other words, many of your 8 to 10 folks are as “at risk” of defection as the 1 to 3 folks who complained about their last experience.
The solution is a single measurement system that captures historical, transaction based (i.e. customer satisfaction) AND leading indicator ratings. A good leading indicator must,
1) Capture the donor or customer’s level of commitment, or passive agreement, to buy the brand or donate, which translates into latent or future cash flows for the organization.
2) Be predictive of actual giving/spend or other key behaviors.
3) Be parsimonious. If it takes 10, 20 or more questions than any notion of more frequent measurement as an indicator goes away because it is too cumbersome and expensive
The analysis from such a system can be simplified for management into a 2×2 matrix of Hi/Lo donor/customer satisfaction scores and Hi/Lo Leading Indicator scores (our measure for this is called Donor Commitment). This puts every donor into 1 of 4 segments ranging from truly “SAFE” (Hi Commitment and satisfaction) to “MAJOR RISK” (Low Commitment, Low Satisfaction). Business rules can be applied to each of these segments to trigger a course of action ranging from automated to high-touch with goals ranging from remediation (bad, recent experiences) to referral solicitations (for high commitment, high satisfaction segments).
DonorVoice has an automated, feedback widget for non-profit websites that employs this framework to solicit feedback from website visitors and close the loop with appropriate, automated responses. It is just one example of how this sort of approach can be simply and easily deployed to avoid the pitfalls of a satisfaction only framework.
Word of mouth is, especially these days, considered the best form of advertising and promotion. It is inexpensive (not free) and often reported by peers as the most trusted, most acted on form of referral.
Social media of course has elevated word of mouth or peer influence to rock star status.
It is often useful, if painful, to review academic literature on marketing topics that seem new since we often find ourselves adding further credence to the adage, there is nothing new under the sun; and word of mouth is no different. Consider, two academics, Katz and Lazarsfeld, found, OVER 50 YEARS AGO, that WOM influenced brand switching purchases seven times more effectively than newspapers and magazines, four times more effectively than personal selling, and two times more effectively than radio advertising.
WOM has only increased in importance due to the increasing complexity and variety of products, the growth in the amount of available product information, and the decrease in perceived reliability of traditional media. And of course, online social network platforms have taken our connectedness and reach to steroid inducing levels.
There are at least three important, global findings about WOM that every nonprofit marketer should become more familiar with – and quickly.
Who Does it?
In 1987 two other academics, Feick and Price, introduced the term “market maven” to describe the type of person who engages in word of mouth promotion. This person has very specific traits including knowledge of the product/company and an internal desire to share the knowledge.
Consider this definition, they have knowledge and like to talk. You can, should and need to provide the former. Yes, this can be conversational and simplified but you still need to educate. The latter, “like to talk”, is clearly beyond your control to make more of these folks but certainly not beyond it to identify them – i.e. target.
It is worth noting, the percentage of folks who fit this profile tends to be very small. Those that do are NOT necessarily more committed to your cause then those who do not engage in word of mouth. The difference is the characteristic or trait, which many do NOT have, of “liking to talk”.
It is however, true that those who do engage in WOM (and not, necessarily, just positive!) are likely very committed to your cause.
Benefits of WOM
If you read “Benefits of WOM” and instantly thought about the benefits to the organization then it probably typifies why non-profits, relative to commercial sector, are so bad at retention and customer/donor centric approaches to marketing.
The latter is motivated by a variety of factors,
1) sense of obligation to share
2) a feeling of pleasure from telling others about products or companies
3) a desire to achieve social status and power
4) affirmation of one’s own decisions about products or companies based on approval from others
A few important sub-points; these are measurable things – i.e. one can identify these folks. This can be done either through direct, primary research (and specific batteries of questions) OR indirect analysis of word of mouth conversations, a VERY findable data set these days with social media (think Twitter feeds) and company sponsored online communities.
Do you know who your market mavens (or “influencers” if that term seems outdated) are?
This is reporting on the benefits to the person engaging in the word of mouth. Understand this dynamic and foster it among your market mavens and the benefits to the organization will come in spades. Fail to do so and fail, period.
Consequences of WOM
Again, this is not about the overly obsessed about consequences of losing control over the message – that horse is out of the barn and as this post highlights, has been for a long time…not just since the advent of Facebook.
Can there be any downside for the word of mouth promoter? It turns out, yes. There is a measurable continuum called “desire for uniqueness” that all folks fall on somewhere. Those high in desire or need for uniqueness are quite different than those lower on the continuum in lots of consumer related ways, fashion for example. It turns out; they are also different in how they view participation in word of mouth activities. Those higher in the need for uniqueness are less likely to engage in word of mouth than lower on the scale…in certain situations. The “certain situations” include when the “product” is used in a public setting – think clothing, cars, etc…In the case of non-profit donors, that affiliation likely falls more into the private than public setting, meaning one does not typically “wear” their nonprofit affiliations on their sleeve (literally or figuratively).
This uniqueness trait plays out in other ways too. For example, those high in their need for uniqueness are less likely to be swayed by word of mouth. In fact, it can result in the opposite outcome – i.e. not giving to a charity with a lot of positive word of mouth. This can be mitigated by the presence of an existing opinion among those with high desire for uniqueness – namely, they will be ok with others sharing their product or company preferences and be ok with accepting referrals if they already like the product or company.
Bottom line, word of mouth, who does it, why and why not and what to measure and understand about those you engage in social media or other referral based programs is a complicated, nuanced exercise. Fortunately, it ain’t new, has been studied extensively and as a result, is largely understood.
P.S. To come full circle with our other postings, we do know that Donor Commitment is a big driver not just of financial giving but also word of mouth behavior. Specifically, donors high in Commitment to the organization engage in 3 times more word of mouth activity than those low in Commitment.
We’ve written about the massive inefficiencies with the way direct mail testing is done today. The high points are covered here. One particularly odious problem is throwing out the baby with the bath water when the organization mails a test package with many (or more than 1 for that matter) test element – i.e. a whole bunch of stuff is changed.
The mail results for the package are a very crude measuring stick for performance, only giving thumbs up or thumbs down for the entire package with zero guidance as to whether individual components were well received (i.e. the “baby”) even if the bath water needs to be changed.
This happens all the time and the only alternative, which as a general rule, NEVER happens, is to deconstruct the totally new package into a series of A/B tests with each test panel only including a single change. Even if this were done, it would take forever and a day to execute. And certainly some groups may try to read the tea leaves and infer or guess based on years of experience and past testing about why a package did poorly and what might be salvageable but that is a process fraught with layers of personal bias.
There is a better, empirical way. Our commercial brethren in product development have used a survey based methodology for the last 30 plus years to identify and ferret out the baby from the bath water. This process can be done in weeks versus months, costs a fraction of what traditional testing costs and like a recent client told us, is “like doing 18 months of testing in a day”. (To learn more about the methodology, click here.)
Here is a recent example of saving the baby. Client X mails a totally new package – different OE, letter format, letter copy, inserts – against the control. New package performs poorly. Money is lost. Time is lost. New package is thrown out.
Back up….New package is never mailed because the client pre-tested it (and hundreds of other package combinations) and determined it would not perform well, as constructed, against the control. Thousands of dollars are saved, many insights are gained that would have taken years to accumulate and the cost of the pre-test is more than covered. And, a “baby” is potentially discovered with two components of the new package testing quite well (as determined by an actual score assigned to every single element). New elements are now live tested in the control package and replace elements of the control that are identified as weak.
New bath water (i.e. poor performing test elements) is unfortunately easy to come by; baby elements (i.e. winning package elements) are much more difficult.
Isn’t it time to start identifying and saving more “babies”?
Does anyone believe good donors are born versus created? That some are inherently and fatalistically destined for philanthropic greatness while others are naturally predisposed against it? Before you dismiss out of hand, there is some evidence that there is distribution for empathy and most folks have an “average” amount while other, smaller groups are at the upper or lower ranges. But, unless we are getting into the genetic testing business and are able to target based on those at the upper ranges this “is what it is” – a constant that we cannot impact.
Nevertheless, one might think most believed good donors are simply born – i.e. nature is the root cause of good donor behavior – given the near exclusive reliance on behavior based analysis in the nonprofit world. This in contrast to the commercial sector that spends a boatload on data mining and predictive modeling with behavior (and socioeconomic and geodemopgraphic) variables while ALSO spending equal boatloads on survey research and advertising, presumably to understand and affect consumer behavior – i.e. nurture.
We believe firmly in the need for the fundraising industry to get far more sophisticated in its targeting efforts, using predictive models, external data and affinity markers or proxies. However, we also believe the industry had better get much more serious about MAKING more good donors to augment more sophisticated targeting. Predictive modelers are not concerned with causation. They deal with the world as it is served up to them and what non-profits need more focus on is changing that world.
Good donors are not born, they are created but behavior based approaches alone will NEVER do a good job at CREATION, hence the dreadful retention rates.
Today’s 0 to 12 month donor is tomorrow’s 13 plus. Using affinity markers or other behavior based proxies (beyond RFM variables) to get better at targeting those in the 13 plus who are “worthy” of being pulling back into 0 to 12 “status” is worthwhile but it is also a losing battle if not seriously bolstered with far more understanding of the CAUSE of the behavior being observed through the rearview mirror.
In addition to spending more money on modeling and data mining (which we support), nonprofits need to spend more (and smarter) on brand building, donor service and relationship building.
We know that targeting is the number one “variable” to dictate response on appeals – more so than the message. So yes, better targeting equals better response and more effort should be focused there. However, you simply CANNOT target your way to long term fiscal prosperity. The vast majority of donors attrite, they have negative lifetime values and the leaky bucket gets leakier and leakier all the time. This industry has been taking in its own dirty laundry for too long and the tipping point is already upon us.
Let us also be clear, the case for putting resources towards “making more good donors” (i.e. educating, persuading, motivating and relationship building) need not be some soft, fuzzy, just-believe concept. It can be done with financial projections and metrics just as rigorous as the campaign and behavior based ones we are so familiar with in the lead generation business now called fundraising.
If however, you believe good donors are born then you have a very simple option; continue waiting for those “good” donors to reveal themselves with their behaviors and along the way, either ignore or grossly “over-service” those who do not show you their good behavior.