In the marketing and sales world, the term “relationship based marketing” is often thrown out as a somewhat trite phrase. Many marketing and sales professionals think that what they are doing is relationship based when in actual fact it may only be based on the information in the database.
- What does relationship marketing really mean?
- How is it defined?
- How should it be defined?
- Does it really make a difference?
What does relationship marketing really mean? I suppose at its bedrock, it is knowing your audience. That will mean understanding the data set that is behind the name and address: birthdate, gender, wealth demographic, affiliated relationships, interests, etc. Based on that information, the organization begins to understand the person behind the record.
But is that information enough? It depends. Are you selling screwdrivers or are you selling a relationship with your organization? Selling screwdrivers is easy. You market to the dataset that will be most interested in the product. They buy the screwdriver and the transaction is done.
But why not take a longer term approach. That is where true relationship begins. It isn’t a one-way transaction – “what can our organization get from this individual”. It now becomes a two-way interaction – “how can I help the individual solve the issue that they are facing.” And if done well, with integrity, it becomes a relationship with a longer vision.
In a recent conversation I heard an individual comment – “nobody else would talk to us but (organization) came and met with my team and helped us put a plan in place to get to where we needed to be.” That is the essence of relationship. Ask yourself how you can help a customer/client/prospect solve an issue that they are dealing with. It stops being about closing the deal and becomes a mutually beneficial and satisfying interaction. And it is built on a long-term perspective.
Get past the numbers and focus on the individuals. It is a challenge that many managers wrestle with and takes a unique focus. General marketing will help to identify prospects. Relationship building will turn those prospects into lifetime members of your tribe.
There are two things (among others) to keep in mind when creating your communications piece. I’m making the assumption here that segmentation is not an option (for whatever reason) and we are dealing with print (physical or electronic) media that is delivered to the audience. However, these two items also pertain to other visual media as well.
- Audience – who are you communicating with? This can have great ramifications on the text and design of your piece. Age, gender, occupation, location, etc. All of this comes into play when writing your text, designing the graphics, and determining delivery methods.
If you are not segmenting, your group will potentially cross a number of demographics. This is fine as long as you keep #2 in mind.
- Purpose – what do you want this audience to do? If you want one particular action from them, don’t muddy the water by including extra details or offering other options. If it is purely informational, don’t ask them to do something (except maybe to share it with others). If part of your audience might be interested in some other aspect of your product or services, avoid the temptation to add those options. Leave that for another day and another communications opportunity.
Remembering these two items in particular will help you keep your communications clear and concise and will increase your effectiveness.
Knowing your donors is a major step in targeting your communications effectively. There are a number of ways to slice your donor list and evaluate how you might craft communication across segments or groups of donors. Maybe your list isn’t large so segmentation may not be very efficient but to the extent that you can understand who your donors are, the better you will be able to communicate with them.
One easy way to understand your donor is to gather age demographics. Including a birth date field (even just month and year can be effective) on every response device is a simple addition that can pay off in a number of ways:
- Knowing your donor’s birth dates can provide you an opportunity to add a high touch to your donor communication. Sending birthday cards lets your donors know you are paying attention to them.
- Knowing the age demographics provides necessary information when considering the launch of a planned giving program. If you have a large portion of your donor file that is over the age of 55, planned giving marketing can be provide donors with an additional way to support the organization that they love.
- Understanding the proportions of your donors in various age ranges will allow you to tailor your communication language and style to those groups. Language and idioms that young people use will not resonate with older populations. Preferred color palettes are also different.
- Want to generate volunteer opportunities? Different age groups will respond to different opportunities. For example, older adults may appreciate the opportunity to volunteer in your office while younger adults will want to do “field work”.
These two charts can be used to evaluate some basic statistics on your age demographics. Determine the range groupings that make the most sense for your organization. Organizations with larger donor files can probably slice their segments into smaller ranges than organizations with smaller files.
Understanding the age demographics of your donor file will provide you with strong information about the profitability and lifetime value of various segments and ranges. It will also provide you with some indicators of the health of your donor file based on the spread of donors across the age ranges.
Donors today want to know where their gift was used and what impact it had. The days where donors simply trust an organization to use their gifts where it knows best are rapidly disappearing. Organizations like Charity Water that do such a fantastic job of tracking donation to project have set the bar high. Child sponsorship organizations like Compassion International and World Vision have demonstrated the ability to show the direct impact of an individual’s gifts to a beneficiary.
Tracking individual gifts to a specific project is often problematic. Interestingly, larger organizations seem to struggle with this more than smaller organizations – usually due to the sheer volume of transactions that the larger organization is handling – both income (gifts) and expenditure (projects). The volume results in the organization struggling to effectively say, “your contribution was used on XYZ project and provided services to this many people”.
There are three options for linking donor contributions directly to a project:
- Acknowledge the realities of your organizational dynamics and set a minimum gift amount for which you will link projects to donations. This means that your chart of accounts will cover the general categories (e.g. medical services in Africa) but not specifics (e.g. Hospital Construction in Liberia) unless the project is large enough to warrant its own restricted account. A major donor who funds a significant project would then be linked manually or through the restricted account.
- Set up your chart of accounts so that specific projects can be tracked within major segments. This allows donors to give to a specific well or to a specific farm, etc. This takes a little more thought and planning ahead of time but in the end, the results can be powerful. Without care though, the chart of accounts can become unwieldy and difficult to manage.
- Configure your donor management software to provide you with a sponsorship system. This then allows your field team to work with finance and development to specify projects that can be “sponsored” by an individual or groups of donors. Reporting and tracking becomes simplified as your donors sponsor a project and the project is removed from inventory.
Since few donors will be able to travel to see your projects first hand (especially in the case of international non-profits), effectively creating systems to link donors to projects enhances the connection the donor has with your organization. Segmenting the communication about missional projects becomes more efficient and effective. The greater detail you can provide increases the chance the donor will be a vocal ambassador for you. It also improves the trust level that donors have as they can see how their gift was used and the impact that they were able to have.
Most of us are well aware of the 80/20 rule of fundraising – 80% of your income will come from 20% of your donors. Major donor programs are built to focus on the 20% of donors who can and do supply that high level of giving. This is good. But how do you increase the number of donors that fit in that 20%?
The logic would lead us to understand that if you add a donor to the 20% group then that will increase the dollar amount that makes up the 80% of income. The goal of moves management in development is to move donors from their current involvement to a higher level involvement. However, the majority of your donors, those in the lower tier, will be resistant to moving. And in general, their annual giving is so low that it probably isn’t efficient to invest a lot of resources to move them up. Does that mean you ignore them? Certainly not. However, you also should not overly invest in efforts to increase their participation. But monitor them along the way and watch for natural movement.
I would contend that there is an optimum zone of opportunity to move donors upwards into increased giving. Often referred to as mid-level donors, these donors are giving at high levels but not enough to be counted in that top tier. They are often overlooked as they fall between the major donors and the “direct mail” responders. If your organization provides opportunities to support specific program areas, these donors will likely take that opportunity rather than support the general fund. “Unknown” major donors will often test an organization by giving an initial gift that falls in this tier. They have heard good things about the organization and think they may want to support the mission at significant levels but want to make sure that the organization is capable of responding to them appropriately.
Larger organizations often have sophisticated donor groups (President’s Circle, Insider’s Round Table, etc) but smaller organizations can also gain from just a little bit of extra effort. Here are some simple steps you might consider to steward this group in particular:
- Watch for first time gifts that fall in this tier. Establish an acknowledgement process for that first gift that is similar to what you typically do for the top tier.
- Consider special insider reports that are different from that which major donors receive but are higher quality or more detailed than the standard direct mail or newsletter that the lower tier receives.
- If you have created recognition societies, consider an annual invite to upgrade their membership.
- Monitor this group in particular for lapsing donors. If their giving pattern changes, consider a special contact to re-engage them.
- Consider special planned giving/legacy giving communications to this group of donors, especially if you have donors who have given in this tier for a significant length of time.
Each of these are suggestions and are contextual to your organization in the sense that the giving levels for each organization may be significantly different. I have seen organizations that don’t quite match the 80/20 principle (they might be 80/10 or even 90/10) so you will also need to analyze your database to determine how many donors you have in each tier and how close your organization matches the 80/20 rule. Find the zone of opportunity within your particular organization.
If you have any questions about how to proceed with the analysis of your database or establishing a special program for acknowledging your mid-level donors, feel free to contact me and let’s start a dialog about how I can help.
I had an experience recently with an online services provider that illustrated the point about providing choice to your client base.
The company supplies a service to charitable organizations that facilitates third-party fundraising – allowing constituents to raise money for charity. We pay the company for an account with branded landing pages and then there is also a charge assessed to each transaction. We have been generally happy with the service though it is maybe not as robust as it could be. We have a large number of individuals who use it to raise money for us while participating in athletic events in particular – including myself.
They recently implemented a change to the way that donations are displayed on the fundraisers’ pages. The page now displays only the “intended donation” rather than the full donation. And here lies the challenge. When a donor makes a gift on a page, they are provided with the option of covering the fee that the company normally charges to the transaction. If the donor chooses to cover that amount, then the only amount shown is the gift amount. So for example, if I make a gift of $25 and chose to cover the fee, the additional $1.92 is not shown on the page. It does however come across to the charity as part of the gift when we download the weekly gift report.
Here is where I think they made the mistake:
- They assumed that every charity wanted the exact same thing from the software.
- They assumed that the fee charged to a gift when the donor covers the fee is less of a gift than when the amount is not covered by the donor.
- They assumed that all charities calculate their fundraising campaigns the same way.
- In applying the change to active pages (rather than just new pages) they placed the onus on the fundraiser to have to explain to donors why their totals changed.
In today’s world, it is about options and choice. If you don’t make your systems flexible, you lose the ability to effectively serve. You may retain customers who can’t afford to leave but those who can won’t put up with less than effective systems.
Needless to say, we are looking at making a major change.
Overcoming inertia in a nonprofit can be particularly difficult. This stems from many sources but is most often expressed in the sentiment, “We’ve always done it this way.” As a good friend of mine often says, “The definition of insanity is doing the same things over and over expecting different results.”
Starting small with some test runs can be a great way to get past the initial ‘disbelief’ that making use of new tools will have value for the organization. Here are some thoughts to consider:
- Recognize that you will likely make a mistake along the way. The initial run may not be perfect. That’s okay. Learn from it, remember it, move on.
- At the same time, remember that quality is still important. You can’t have a poor appearance and expect great results.
- Determine what you want to measure to determine success. Dollars raised may not be the correct measurement. Especially with your first few attempts.
- Remember, your audience is going to be different (probably) than your organizational website. That’s why you are doing this. Expanding your reach.
- Because of #5, don’t just repeat your website. Provide something different, in a different tone, different appearance, etc.
- “Build it and they will come” is not necessarily true. You will need to promote your applications. Expand your reach. Think outside of the box.
Plan on building slowly. Once you have established your metrics, go wider. Determining who in the organization will be ‘responsible’ for the ongoing development and management of the interaction will come with experience. Successful 2.0 applications will likely develop conversations with your constituency. You need to be prepared to respond so somebody should be the designated communicator.
Hope that helps.
Michelle Martin over at Bamboo Project has written a great post about the “Wired Fundraiser.”
Point #2 – Not Every Wired Fundraiser Is A Champion – is important to note. However, I would add a correlary that additional storytelling in the marketplace is a good thing. No matter if one person or 50 people hear it. And the advantage to the ‘wired process’ is its cost effectiveness. In the end, what has it truly cost the organization to have someone tell the story for them?
She hits the nail on the head with point 4. Smart Charities Embrace the Wired Fundraiser. Many charities struggle with the issue of control of the message. It is difficult to lay your message in the hands of others and let them tell your story. But done correctly, this can be a huge gain for your organization, more than offsetting any potential minimal damage that might be done.
Check it out.