What is the ‘O’ Factor? The ‘O’ Factor is part of a model introduced by Itamar Simonson and Emanuel Rosen in their new book ‘Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information’. It is one of three components in the Influence Mix. The Influence Mix is a framework for marketers to better understand consumer-purchasing decisions. The authors assert that most purchasing decisions are made using a mix of three sources of input
Prior Preferences (P)
Other people (O)
In a simplified form, packaged goods and habitual purchases such as milk and cleaning products are typically driven by prior preferences (P) while marketers (M) greatly influence luxury goods, chain restaurant dining and automobile purchasing decisions. (Keep in mind that both of these assertions are influenced by the vagaries of consumer behavior such as Black Friday and one-day only, mega-blowout, doorbuster sale shopping).
So what of ‘O’ Factor, the influence that other people have on consumer behavior? This is where the theory gets interesting and has applications for nonprofit organizations seeking to improve their donor retention. Mr. Simonson and Mr. Rosen argue that the opinions of others-even if they are strangers- matter greatly when making many purchasing decisions. Sites such as Yelp and Trip Advisor aggregate customer reviews and provide opinions that help consumers make decisions. Illustration of the power of peer-to-peer communication is research that if peer-to-peer reviews are poor a compelling marketing and advertising campaign won’t sway consumer behavior. Further, studies by Google determined that shoppers consult an average of 10.4 sources of information before making a purchase. Conclusion-as consumers, we actively seek the input and experience of others before deciding for ourselves.
Many of the personal decisions that lead to donating to a nonprofit are governed by the same principles that dictate consumer-spending behavior. Why do we give to one nonprofit organization versus another? In a 2012 study by the Center on Philanthropy at Indiana University, “Understanding Donors’ Motivations,” the five most frequently occurring motivations for philanthropy were listed.
• To meet critical, basic needs
• To give back to society by making the community a better place
• A belief that those with more should help those with less
• To bring about a desired impact or result
• A request for money was made
As potential donors we determine which organizations meet these criteria by gathering information from third party sources and by seeking the input of others. Each of the motivations listed above is influenced by internal factors (I have a personal connection to the cause) and/or external factors (I learned about or discussed the organization with a friend or I know someone who works with the organization). Peer-to-peer opinions are powerful factors that influence our giving.
For individuals, giving is social. Giving includes the donor in a community of
like-minded people in support of a common cause. Although some donors wish to remain anonymous many more wish to be recognized. Organizations publish donor’s names in newsletters and recognize them at events to celebrate their support. We give, we work toward a goal and we celebrate success. Our choice of charities is a one way that we define ourselves as human beings.
As organizations we can help build our donor base by creating positive experiences for our donors so that they want to talk about our organization to others. Here are three areas to consider:
Clear, Consistent Communications
From logos to lips, every communication should be clear and consistent. There are 1.5 million nonprofits in the United States. Each is asking for donations. Creating clear communications will help your organization rise above the din. Look at your organization’s communications, are they sending a clear message? Do they accurately represent the organization and what the organization does?
Nelson Mandela said that ‘education is the most powerful weapon which you can use to change the world’. Educate your donors about your Mission, your programs, your clients and your dreams. Let them help you be successful. Celebrate the successes and clearly outline the issues still to be overcome.
Ask, Thank, Repeat
Make your donor recognition tactics as structured as your asks. When your organization receives a gift, recognize it within 48 hours and adhere to a schedule of continued communication with and recognition of the donor.
Being structured and clear in your donor communications will help build a consistent and positive impression of your organization. Your efforts to educate your donors will resonate and provide facts and stories for current donors to pass on to others. Recognizing the gifts and support of your donors in a structured and methodical way will engender positive feelings toward your organization and shift the tide from one of donor attrition to one of donor retention. Giving current donors the tools with which to begin a peer-to peer conversation will raise the profile of your organization and help to harness the power of the ‘O’ Factor.
(Note: A summary of Itamar Simonson and Emanuel Rosen in their new book ‘Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information’ can be found in the January- February 2014 issue of the Harvard Business Review. The book is scheduled to be in stores in February 2014).
Marti Fischer helps organizations and individuals communicate clearly and effectively. She can be reached through her website at www.mfgrants.com