A lot gets written about how people are not particularly rationale, we engage or belief all sorts of irrational things. And yet, when asked why we do certain things we often give very rationale answers. This seeming split between our rationale reports about why behave the way we do and our irrational acts provides ammunition to criticize the market research field – a business built on asking people what they do and why.
This critique is, often unknowingly, only focused on a particular brand of research – namely poorly conceived studies that rely on direct questions about the “why” and expect real, meaningful answers. The problem – at least for those of us in the field – is that the bad research studies become public and tend to tar us all with the same brush. We’ll continue to try to point out the differences in bad and good design , which lead to bad and good data. (You can find one such post here.)
We came across a great illustration of the kind of response one should expect if using direct questions about why people donate. This is an actual response from an actual donor, we’ll call her Stella, who offered this as an unsolicited comment though one can imagine her giving this same answer in response to a direct question on why she donates.
“I would hate to think that [organization x] wastes money making their donors feel good. Yes, we need enough info to be sure the money’s going to good use but I would stop giving if I thought they were buttering me up or trying to make me emotionally attached in some way. I give to [organization x] because of my objective observation that they are doing an excellent job…we don’t give so that we can feel good.”
Did Stella just lie? No, not really. She just gave an answer that aligns her belief that she is a rationale actor and not swayed by non-rationale ploys to make an emotional connection. This is the answer she would give if directly asked why she gives. It is categorically not the REAL reason. In fact, it is the exact opposite reason. She absolutely wants to feel good and the stronger the emotional bond the more she’ll give. People often have a very difficult time articulating or even knowing why they do certain things that are “irrational” – say for example buying a branded bottle of aspirin that is pharmacologically identical to the generic brand yet costs more. This is considered by some to be irrational. And yet, the branded product likely gives the buyer greater peace of mind, a greater sense of security and safety. Those things, while difficult to measure, have value.
That value adds up and offsets the greater price point.
The point being, giving for emotional reasons and to feel good is actually quite rationale but not easy – and often impossible – to faithfully report.
The market research cynic would stop the post here and write the postscript or eulogy . But, there are plenty of ways with more sophisticated, well crafted studies and methodologies to get at the real “why”, by focusing on asking what people are good at answering and deriving the rest with back-end analysis.
One great example, measuring personality types. The battery of questions used to discern personality type are indirect measures and multifaceted – meaning relying on multiple questions to measure a single construct (a tell tale sign of good design). You won’t see questions asking “are you a really assertive, type A person?” – too direct and too difficult to faithfully answer the question.
The same goes for measuring reasons for giving and the strength of the donor relationship. It can be done and done well but only with good design and analysis. We can also measure the level of emotional connection to an organization and determine what actions an organization takes positively impact that connection. We can’t do this by asking directly but we can do it.
Let’s not blame Stella for her rationale answers and throw the market research baby out with the bath water, let’s just do a better job of asking the questions. We owe it to Stella.
If you plot a donor file that relies mostly on monthly giving (think UK, not US) using a histogram with financial values given over last year or 2 years on the horizontal and counts on the y axis you get a plot that looks something like a mix between the “skewed right” distribution and the “symmetric” one. Do the same thing for the typical US file and you’re likely to get something closer to the “Right tail extreme” distribution.
What does this mean? It means the file that is largely comprised of monthly givers (again, think Europe, not US) is more “stable”, less variance in amounts with the US file having more extreme, upper dollar values AND far more smaller dollar values (i.e. lower than the average for the file)
It is almost certainly the case that the monthly giver model is the better alternative if one were to factor in lifetime values and retention rates. In the newspaper business publishers get an extra six months of subscriber tenure if they secure credit card payment versus check.
Sidebar: Recognize this has NOTHING to do with loyalty of greater commitment to the product or brand, merely the power of what we’d call hassle factor barriers to exist – namely taking the time to cancel. We make this observation only as a side note suggestion that organizations not mistake “good” behavior in the form of repeat monthly payments on credit card as a marker, necessarily, of attitudinal Commitment.
However, one unintended consequence of the monthly giver model is typically a far lower difference in the percentage difference in giving between High and Low Commitment donors compared to a cash/check revenue model. We know the average, annual difference in giving between High and Low Commitment donors (those who attitudinally love you or have little or no connection to the organization) the US is 131%. Let us stipulate, there SHOULD be a difference and a big one. Your best customers or donors are a small percentage of your file and they give a disproportionate amount of your revenue. The goal is to maximize this by treating them differently WHILE identifying the next best set of propects to build the relationship with to increase Commitment and in turn, lifetime values.
This difference in value between High and Low Commitment monthly givers (it is a fundraising myth to assume all monthly givers are Committed) is far less. What does this suggest? It strongly suggests organizations with a large monthly giving segment are leaving money on the table since that difference SHOULD be there and it is only not there because of structural and procedural decisions – namely a “let it ride” mentality for folks secured by credit card. It is true that many monthly giving programs implement special appeals in an effort to create more “spread” in the value of the monthly givers segment. However, that does not appear, on average to maximize the “spread”.
Don’t mistake this as an argument against the monthly giver revenue model. It is categorically the better alternative to cash/check given the positive impact on retention and the soul crushingly bad retention realities of check giver models.
But, that isn’t the point. The point here is, can the monthly giver model be EVEN better?
What might be a way to make it better? In our view, more products to sell. Anecdotally, many charities in the US are starting to think this way and look for alternative revenue streams from their main one – e.g. a “catalog” charity wanting another “product”, a child sponsorship group creating a single-gift product/strategy.
In the commercial sector traditional product companies (think Apple) have different products meeting different needs but also, different versions/alternatives within a given product type – e.g. ipad versions, ipod versions. Much of this has to do with wanting to attract a larger swath of consumer with different ability to pay and price sensitivities.
More product, more choice, better chance of matching up with customer or donor need/ability to pay and price sensitivity – this, in a nutshell, is the better revenue model and to be fair, many groups are already on this track. The trade-off is having to manage all these products and that does have cost but this is really nothing more than a different way to segment the world – i.e. by donor type and need and then building the business around it.
Our friends at the Agitator picked up on a DonorVoice riff about donor experiences with a post making the point that the non-profit sector ignores the commercial sector obsession over customer experiences at their peril.
The lack of brick and mortar storefront is no reason to discount a focus on experiences being served up to donors. This range of experiences is far more diverse and frankly, similar to the commercial sector than might be obvious at first blush.
We’ll wrap up with a litany of experience examples but first it is probably worth a brief recap on why this latest buzzword has emerged.
There is data and plenty of it suggesting that service level experiences – versus “product” experiences – contribute as much as 50% of the decision to buy again or not. This means for a company selling tangible product – e.g. mobile phones, computers, cars – the actual thing being purchased is only driving half of the re-purchase decision. In this context, service level experiences include all manner of direct and indirect experiences with any and all customer facing staff, the in-store experience, the parking experience, the post purchase follow up (if any), the problem resolution experiences, the word of mouth about the product from friends, etc…
To translate this to non-profit requires only a slight shift re-orientation of terms. In our view, the product is the brand/organization. The brand is the mission (or should be) and all the “experiences” should either be serving up the brand/mission (e.g. the fundraising appeal) or supporting it (e.g. the call center).
In theory, the strategy/marketing/brand message delivered creatively can be as or more important than donor service level experiences that often occur in the call center, the merchandise fulfillment center, the walk/run event or the mail room.
However, there is data we’ve analyzed to suggest a complete lack of brand differentiation in many sectors. Having done work in the commercial world and in some very unsexy sectors like domain registrars, it is surprising to see even these commodity based sectors with more well defined brands among their customer set than what we’ve witnessed in many a non-profit sector.
This lack of brand differentiation is, we’d speculate, the result – at least in part – of a highly generic set of strategies/messages/brand/creative delivered to donors and potential donors. This is certainly not the only reason; many nonprofits are struggling with a clear articulation of mission and brand that is unique and different and therefore, burdening fundraising staff with an impossible task of creating a silk purse from a sow’s ear.
The larger point however is that if one accepts that brand and mission in the non-profit space are only partly responsible for the decision to stay or go then the other “stuff” has to be making up the difference (setting aside the rare, rare case of serious change in circumstance for the donor).
What is the other stuff you ask?
Here is just a sampling of the range of “boring” service areas that are ignored at your peril when it comes to donor retention and value.
- Donor Service centers (inbound calls and email response) – This is far more important than even Tom suggests. First off, most non-profits actually have a donor service/call center, either in-house or outsourced. Secondly, the volumes over time – especially when you add up phone PLUS email – are such that a sizeable minority actually experience this part of the organization (by the way, an important sub-point here, is donors don’t consider this a different, separate part of the organization.)
A small smattering of the service level experiences include first call/email resolution or failure, knowledge of agent, friendliness of agent, helpfulness…Again, the volumes in these inbound centers are such that many organizations wind up having large chunks of the donorbase exposed to great, good, or bad experiences.
- Events. Walks/runs/galas. The number of “service level” experiences here are almost too many to count – registration process, ease of donating process, event day parking, event day logistics, event day experiences, post event follow up. A veritable parade of potential opportunities – or disasters.
- Premiums. If a nonprofit gives away or ‘sells’ premiums for upgrade or incentive purposes it is in the merchandise business. This opens the nonprofit up to product quality experiences, selection or variety experiences, delivery experiences, order accuracy experiences, order resolution experiences…
- Advocacy events. See walk/run/gala opportunities and challenges above.
- In-person fundraising. It’s not all power lunches, breakfasts and tea and crumpets. Don’t forget the follow-up moves to chase down a pledge, the need for accurate gift processing and the acknowledgement/recognition experience to name but a few.
Listing all these out is a worthwhile exercise for any nonprofit. But don’t stop there. The other “non-service” level experiences like all the fundraising and stewardship “touches” should be included too.
The next task is to determine which of these matter ( (and trust us, they don’t all matter and those that do, don’t matter equally).
You’ll find for yourself that these boring service level dimensions contribute plenty to the donor’s decision to stay or go – as much and in most cases, more than your next appeal or newsletter.
A few weeks ago we wrote a post, “Fundraisers are brand marketers and vice versa”, making the case for how fundraising and branding support each other. Perhaps what we should have written about is how brand is everything and if organizations were smart they’d view statements like the following (from a well read blog in the non-profit space) with skepticism.
There are basic flaws in the very structure of branding that hurt fundraising. It’s a misapplied discipline from the commercial marketing world that simply doesn’t work in our (read: “nonprofit”) context.
If this sort of view holds in the world of fundraising then it is only because the definition of brand suggested in this statement is so misguided and off-base.
Consider this definition of brand by Al Ries, a branding guru in the commercial sector,
“A brand is a singular idea or concept that you own inside the mind of a prospect.”
What fundraiser responsible for acquisition wouldn’t want this?
Direct marketing fundraisers are correct to point out, as is done in this post by Future Fundraising Now, that branding needs to support fundraising. The author suggests branding exercises too often “slaughter fundraising results”. The issue is not what is said in this post but what is not said (ever); namely that the fundraising needs to also support the brand, just as much as brand needs to support fundraising.
We’d wager fundraising has done more to undermine brand than the brand efforts so lambasted by at least some fundraisers have done to undermine fundraising. In part, our wager is safe because many of the brand efforts rarely go anywhere for the world to see – they sit on a shelf collecting expensive dust. And if the brand exercise is an internal machination with no connection to donor/constituent perceptions, needs and further triangulated with organization mission and goals then it is a good thing these efforts never see the light of day.
However, branding done wrong (and wrongly criticized) is not really the point. The larger concern for every non profit is that they do have a brand, whether they spend time and money defining, internalizing and living it or not. That brand is the singular concept Ries mentions and many times, the biggest failure is actually having too many “singular” concepts floating around in the minds of constituents. This is where fundraising comes in as a likely contributor and culprit – suggesting a certain idea or concept on one appeal only to have the next communication or appeal be completely or partially disjointed. This is not only bad branding (and bad marketing) but we know from our work in measuring and building strong donor relationships that step 1 is delivering a reliable, consistent experience. Fail to do this and fail, period.
The worlds of retail and media are two analogues for what is likely playing out in non-profit too. The retail direct mail offer, which is mostly about discounting, has created a well documented – see NYT article here – consumer who simply won’t buy unless it is on sale. This conditioning has happened over time but it is entrenched and it is a massive problem for many retailers whose brand has been subjugated to 2nd class citizen with price as the only lever that matters. Or more likely, price is brand. That is works well for Wal-Mart but there can be only one Wal-Mart.
In media – newspaper specifically – the industry successfully conditioned consumers to believe the product, which we used to pay for (in print form), should now be free (online) and further reinforced this by putting direct marketing offers in market that had nothing to do with content, substance or value, just pricing gimmicks. Both direct marketing efforts have destroyed massive brand equity (which is real, just ask Facebook with still no revenue to speak of but massive brand equity in form of market cap)
We focus on understanding the donor mindset and motivation. From this work and experience we wager that non-profit direct mail has had a similar impact on the complete lack of brand differentiation in, for example, the environmental space. The brand “bible” that collects dust at each environmental group actually has differentiation articulated inside of it. The fundraising pieces are however, as a whole, completely interchangeable with no differentiation, going after the same “customer” segment and often selling based on the lowest common denominator of price or a “goodie in the bag”. This screams commodity in a world where only strong brands prosper.
Fundraising of course isn’t the only thing destroying brands since there are much more fundamental issues going on with many a non-profit. Consider some of the very large, mile wide, inch deep brands in the non-profit space — you know who they are. Fundraising could also be a salvation for these groups and others who struggle for a clearly articulated and singular concept in the minds of their prospects since fundraising is the principal way the organization gets defined and “branded” in the market. Our guess is that no such salvation is occurring at the moment.