The ‘O’ Factor in Donor Retention

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)

Marketers (M)

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?

Create Advocates

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

Personal/ Professional Development- THE VALUE OF VALUES

2014 Resolution: Let’s Define and Brand Ourselves

(Part 1 of 3)

The Value of Values

In addition to developing a personal Mission statement (Part 2)- an action plan for guiding our business and our life, consider a developing and articulating a set of Values.

Values are operating principles. They are the ‘go to’ statements that test the efficacy of a situation or an idea. Values guide the decision-making process and help us to safely test the waters in new territory.

What are Values?

Quite simply, they are the statements that define the way in which we want to conduct our lives.  Writing down and living with a set of values helps create the picture we want others to judge us by. Values help us make decisions and choices. They guide us when the going gets rough.

Personal Values

One of my favorite examples of Values is from Zappos. Zappos has created a vibrant culture around 10 core principles. In my opinion they walk the talk.

Zappos Values:

1. Deliver WOW Through Service

2. Embrace and Drive Change

3. Create Fun and A Little Weirdness

4. Be Adventurous, Creative, and Open-Minded

5. Pursue Growth and Learning

6. Build Open and Honest Relationships With Communication

7. Build a Positive Team and Family Spirit

8. Do More With Less

9. Be Passionate and Determined

10. Be Humble

Values are uniquely our own. They can be fun, serious or a combination of the two. Values define how we want to world to view our actions.

Values for Groups

Values also help us as we create collaborative groups.  When we are forming a group to address a task, consider the first order of business to write a Mission statement and a set of Values. These statements will drive and define the group’s task and the way in which it is accomplished. The Values decided upon by the group create consensus and provide parameters for decision-making. Values also create a ‘fair witness’, an agnostic platform to test decisions.

For Organizations:

Personally, when considering interacting with an organization, the first thing I do is look for their Values statement.  It tells me about the culture the organization fosters and the principles by which it operates.

Most businesses and non profit organizations have a Mission statement on the ‘About Us’ page of their website. Many fewer have an articulated set of Values.

Why? Mission statements are common because it is the centerpiece of communication about the organization. Mission statements define the action plan of the organization. Mission statements are also an element that funders require in a grant proposal. In my opinion, funders should also ask for an articulated set of Values. It would help them to understand the culture in which they are investing.

Creating Personal Values

When we consider articulating a set of Values, let’s consider the legacy we want to leave.

-How do we want to be perceived and remembered?

-What Values do we admire in others?

-What principles do we employ when we make decisions?

-When are we most proud of ourselves?

 From these inquiries we can develop and articulate a set of Values. Mine? On my website www.mfgrants.com

The Doritos Factor

Know how much a 30 second commercial costs in the Super Bowl? $4,000,000. Yes, that’s right- supply and demand at work. 

Leading up to the game there seems to be as much discussion about offensive and defensive strategy as which advertisers will air commercials. Advertisers clamor for the eyeballs that watch this yearly sporting event because those eyeballs are connected to wallets that spend money and buy products. But even at $4,000,00 for a 30 second slot, it is a crowded landscape. How do advertisers stand out and get recognized?

Frito-Lay’s Doritos brand has taken a page from the nonprofit playbook (continuing the sports metaphor) by engaging the public in a crowdsourcing campaign called ‘Crash the Super Bowl’. The campaign is getting a lot of PR buzz both in traditional and social media. The premise is that ordinary citizens can produce and submit executions of commercials to sell Doritos. Many entered and the final five have been selected for voting

(See the 5 semi finalists http://mashable.com/2014/01/02/doritos-super-bowl-2014/).  

Two winners will be chosen, one by the public and another by the Doritos marketing team. Both ads will be telecast in this year’s Super Bowl.

What can we in the nonprofit sector learn from this campaign? We can learn that the opportunity for our stakeholders and donors to actively participate with an organization and to lend their voice is incredibly appealing.

Folks, we in the nonprofit sector have been doing this for years with ‘peek behind the curtain’ activities (the Museum of Modern Art in New York is currently offering a tour of its storage facilities for a mere $25- after, of course, you become a member) and donorcentric events and communications.

But now the importance of active engagement has been quantified. Cygnus Applied Research, thought leader Penelope Burke’s research company, quantified the impact of crowd engagement in a recent survey. The following are highlights of the study from The Chronicle of Philanthropy

‘Free gatherings that recognize donors’ contributions and educate people about a charity’s work spur donors to give generously, the survey found, far more than conventional approaches like publicizing a donor’s name.

Of those donors (surveyed), 87 percent said the events had a positive influence on their decision to support the charities hosting them.

And since attending their most recent event, 31 percent said it motivated them to give again without being asked,

Another 36 percent said they contributed when asked,

And 20 percent more said they had not yet been asked but would give again.

“There is a huge tangible connection between being invited to an event and the good feelings a donor has about a nonprofit,” says Ms. Burk. Events, she adds, “take a lot of time and effort to organize, but when you get results like this, they are worth it.”

Other tactics used by fundraisers did less well. For instance just 12 percent of donors were motivated to give because a charity publicly listed their names, 11 percent because the group invited them to join a giving club, and 7 percent because the charity sent them token gifts such as address labels or greeting cards.

So as we work toward increasing donor retention let’s consider engaging our donors in participatory activities that educate, allowing them to lend their voice and become an advocate for your organization’s mission.

If Doritos can get people excited about snack chips, we can work to actively share our missions and get people excited about making the world a better place.

Let’s think differently