Three Lessons from For-Profit Marketers

In June I attended the IMW 15 Conference (#IMW15) in New York, a gathering of marketers from for-profit organizations. I wanted to see how different things were on that side and to learn about the hot topics burning with our for-profit counterparts.

I was struck more by the similarities than the differences. For-profit marketers and their companies are struggling with many of the same issues facing non-profit organizations:

  1. Engagement/Conversion

They call them customers, we call them donors. Either way, companies are looking to better engage their constituents with their brands and products, particularly through social media and mobile tools. Stronger engagement leads to faster and greater sales.  T.G.I. Fridays, for example, has developed a wonderful loyalty program (Give Me More Stripes) that invites members to weigh in on menu options and talk about their restaurant experience on an online social room.  Of course, all of that information and activity is used to hone in on customer preferences and a more personalized relationship.

  1. Loyalty/Retention

Stop talking so much and listen – and do more research and analysis of your core supporters. When you do, you can tailor messages in a more relevant way, leading to improved retention and greater loyalty.  Ernan Ronan, a true guru of direct response marketing, has conducted what he terms “Voice of the Customer” research to dig deeper into customer interests and collect “human data.”  This has led to his reciprocity of value equation in which marketers can determine how much data and information a consumer will give and what they expect from the company in return.  The point is that prospects will give detailed business and personal information in exchange for personalized offers, communications and EXPERIENCES! For nonprofits, this means it’s not just about acquiring donors, it’s about the quality of those donors and the nature of the relationship.

  1. Customer Experience/Value

A positive experience throughout the entire process and with the entire organization is a major factor in improving long-term value growth.  IKEA, long an innovator in their sector, is reviewing both the ordering and delivery experience to find ways to use technology and new business models to maximize customer satisfaction and ensure repeat buyers.

Marketers are developing decision-based customer journey roadmaps based on test results, past behavior and research. These roadmaps lay out a personalized experience for each customer, allowing them to come in and out of certain campaigns based on their own actions and wishes. The goal of these designs is to enhance the value of the relationship with customers over the long haul.

Enough with the similarities. The big difference is that for-profit companies have bigger budgets and better toys. They’re better equipped for customer acquisition, analytics and research, engagement and relationship building, and execution of their marketing and sales strategies.  Or they have just invested in these areas more wisely than most nonprofits because it is critical to their bottom line.

They continue to build out data-driven strategies and execute through marketing automation platforms.  What are they?  Stay tuned for a full post on marketing automation technology coming soon to PS.

Is Fundraising Ready for Behavioral Economics?

In its April issue, The Chronicle of Philanthropy heralded the arrival of behavioral economics with the cover tease, “Science Unblocks the Secrets of Giving.” In a sidebar, Professor John List who is chairman of the economics department at the University of Chicago explains that he’s bringing the science of behavioral economics to fundraising. Whether fundraising brings itself to the science of behavioral economics is another matter entirely.

The first mention of behavioral economics in my library is in the fun and fascinating Predictably Irrational[1]  published in 2008 and written by Dan Ariely who is – aha! – the James B. Duke Professor of Psychology and Behavioral Sciences at Duke University.

I found much in Ariely’s book that piqued my interest with respect to the applicability of behavioral sciences to fundraising, although I don’t recall even one of the dozens of intriguing experiments he describes as having anything to do with fundraising.

For example, Ariely describes experiments and their findings that would cause one to reconsider the use of premiums and many benefits in fundraising and how to set out ask strings in solicitations. He also has much to say about how people plan their finances which, if not directly relevant to fundraising, is getting closer.

Then there’s The Moment of Clarity[2] published in 2014 and containing this useful definition of behavioral economics: “A field within economics that includes social and psychological factors in models of economic decision making, with particular focus on the differences between rational and irrational decisions.”

The two books are quite different, yet complementary. They differ on perspective. Predictably Irrational thinks tactically, which is where the rubber of behavioral economics meets the road of marketing, sales, and fundraising. The Moment of Clarity, while not devoid of tactical ideas, takes a strategic perspective. It tells four illuminating stories about the marketers of LEGO kits, Coloplast colostomy bags, Intel chips, and Adidas footwear. But it’s really about how the influences of behavioral economics affected company management by introducing them to moments of clarity.

Not only could I see those stories as metaphors of the situations of major nonprofit sectors or organizations, I could see how this perspective on behavioral economics would work much more effectively at ensuring its ultimate applications to fundraising.

The Chronicle article accepts the difficulty most nonprofit organizations – specifically fundraising decision makers – will have with behavioral economics. The nonprofit sector is in a heart-of-darkness jungle of tactical tangles. There isn’t the time, resources or C-level support within fundraising to make the seismic changes outlined in The Moment of Clarity.

Nonprofit fundraising will only get harder if it doesn’t take full advantage of behavioral economics. But it’s already harder than it needs to be in most places. It operates without the invested support of C-level management (let alone the board!) and careful integration of financial, program, marketing, and funding strategies.

[1] Ariely, Dan, Predictably Irrational, Harper Perennial, HarperCollins Publishers, New York, 2010

[2] Madsbjerg, Christian and Rasmussen, Mikkel B., The Moment of Clarity, Harvard Business Review Press, Boston, 2014