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