By Nicole Nakoneshny, Vice President of Ketchum Canada Inc. and Editor of Philanthropic Trends Quarterly
What do an 86-year-old grandmother, a 44-year-old father of two and a young professional in her 20’s have in common?
Give up?
Not surprising, as the best answer is likely “not much.”
For many charities though, the simple fact that these different types of people make gifts to their organizations is often reason enough to lump them together and treat them in the same way.
Mass marketing, which is the attempt to appeal to an entire market with one marketing strategy, has long been the standard outside of major gifts programs. Also called undifferentiated marketing, it is no longer sufficient to build loyalty and retain donors in today’s world of increasing competition for the charitable dollar. And generation and gender are only two of myriad differentiating characteristics of donors, which can include geographic location, ethnicity and, perhaps of utmost importance when it comes to charities, motivation for giving.
Donors are People First
While mass market donors should not be thought of as one homogeneous grouping, neither can they be given the level of individualized attention that we provide our major gift donors. As a result, this is not about creating segments of one, but rather about clustering donors into groups based on certain dimensions of common uniqueness.
Segmentation is already being used in our high-volume fundraising programs, but the tendency has been to segment donors based on internal programmatic dimensions¾ gift size, solicitation channel (e.g. events, direct mail), renewing donor, lapsed donor, etc. Not many people, if anyone, would identify or define themselves in this way, so why does it feel like an appropriate way to think about our donors?
“Donors are people first, something that is far too easy to forget. And I believe that treating them as people first is critical to retaining their support,” says Richard Shapiro, Founder and President of The Center For Client Retention, an organization that provides research, training and consulting services to Fortune 500 companies on how to improve the customer experience and increase loyalty. “Charities also need to understand that donor satisfaction is not the same thing as donor retention,” Shapiro goes on to observe. “Donors can be completely satisfied with your organization and their interactions with it, but that doesn’t mean they will give again. I believe the gap between satisfying a donor and being able to retain them is filled through the creation of a more authentically personalized relationship with them.”
So how does a charity create more authentically personalized relationships with thousands, or in some cases tens of thousands, of donors?
The place to start is by grouping these donors into what Dean Hughes, Head of Alumni Relations and Development Sheffield Hallam University in Sheffield, England, calls “intelligent segments.” We create intelligent segments by paying attention to what donors give to, how often they give, how they respond to you,” says Hughes. “All things that provide critical information about what is important to them¾if only we are prepared to listen.”
Sick Kids Foundation in Toronto is in the midst of creating a more segmented approach to its mass market donor group. And Foundation President and CEO, Ted Garrard, notes that to create segments that are truly meaningful and donor-centred, it is critical to break down the silo of the channel. “To create a meaningful and appropriate value proposition for donors within a particular segment requires looking not only from the basis of the revenue channel through which the donors enter the organization, but where they cut across different channels as well. And so, while our segmentation work is led by the direct marketing group, we put together a cross functional team to ensure that our thinking was not restricted by the silo of the giving channels.”
Insight Driven
According to Paula Roberts, Executive Vice President, Marketing and Development at Plan Canada, segmentation should be insight-driven and undertaking some form of market research is critical to generating those insights. Recognizing that research can be expensive, she notes that there are a variety of options open to charities, from simply getting a few questions out into the marketplace all the way to a sophisticated market research program that can involve surveys, focus groups and interviews. “Regardless of the approach you take, the key is to get out into the marketplace to hear what people think¾and not simply base decisions on what you think they think,” says Roberts.
Adopting a more segmented and targeted approach is about creating an effective and efficient means to encourage donor loyalty and retention by getting to know them better, personalizing the relationship and meeting their needs. And if the experience of Winnipeg’s Siloam Mission is any indication, engaging with donors in a more personalized way and meeting their needs is very effective at achieving this objective.
A Christian humanitarian organization that alleviates hardship and provides opportunity for change for those affected by homelessness, Siloam Mission realized several years ago that they had a donor retention problem. “We had seen significant growth in our database over the years, increasing the number of donors who had given to us from the low 20,000’s to more than 40,000 donors,” says Judy Richichi, Director of Major Gifts and Corporate Relations. “But when we took a closer look, we saw that we were losing donors as quickly as we were bringing them in.”
So, the organization, supported by its team of volunteers, began calling donors to thank them for their gifts and engage in conversations that helped get to know them better. One piece of feedback they heard regularly from donors related to receiving too much mail. And so, Siloam Mission began to ask donors how often they would like to hear from the organization and customized their touch points to reflect the donor’s wishes. They even took the bold and courageous step of asking donors which solicitation mailing they wanted to receive (e.g. Christmas, Easter, Thanksgiving etc.).
Since undertaking this strategy, Siloam Mission has seen a tremendous increase in its donor retention rates as well as much improved response rates to their mailings¾in some instances three times as high as previous rates. “All of our response rates are now at least 10%, some up to 25% and the amounts we are raising are far greater than past achievements,” says Richichi.
Authenticity is Key
Why did the simple act of asking donors which mailing they would like to receive prove to be so powerful?
Healthy, long standing relationships are ones in which both parties have mutual interest in meeting each others needs and are, by definition, two-way not one-way. Richichi and others agree that by giving the donor some control and showing a genuine interest in meeting their needs is not only a strong signal of respect, it also demonstrates that the charity cares.
Perhaps somewhat unwittingly, it also taps into the powerful principle of reciprocity, which in social psychology refers to responding to a positive action with another positive action. As a social construct, reciprocity means that in response to friendly actions, people are much more likely to respond in a positive and cooperative way than they might have otherwise.
And finally, by saying to the charity “send me the Easter mailing” the donor is far more likely to respond positively when they receive that mailing, not only because they appreciate having had the opportunity to choose, but also because they have already made a verbal commitment to support that mailing.
It’s critical that any effort to build a closer relationship be authentic on the part of the charity…and feel that way to the donor. Even things like thank you calls, which many charities consider important in building relationships, can have a transactional feel to them¾like ticking something off a checklist. As a result, the mindset surrounding these types of activities must be authentically rooted in an intention to build deeper relationships.
Ultimately, giving is voluntary and loyalty is a choice. And so we must do all that we can to create authentic, two-way relationships that meet donors’ needs as well as our own.
For the full article, please visit our website www.kciphilanthropy.com.
