All businesses are unique, and each requires its own blend of strategic and operational competencies in order to be successful. However, every organization, regardless of industry, competitive, or environmental factors, has common basic needs. At its core, an organization cannot exist without the following:
Nonprofits tend to think of this list as these three things:
Is there anything that these two approaches can teach each other? If nonprofits were “run like a real business,” as we often snip in our office hallways, what would feel different? This article takes a look.
Comparing For-Profit and Nonprofit Organizations
While there are fundamental differences between the business models of nonprofits and for-profit organizations, there are many parallels that can be drawn between the strategic objectives of both types of organizations, particularly when it comes to marketing. And direct response marketing is becoming a larger part of fundraising efforts because of the advent of increasingly technical giving platforms, especially through the Internet.
The goal of a for-profit is to provide a product or service in exchange for money. A nonprofit’s aim is to create affinity for a cause to drive a philanthropic act. Although the end goals are different, both types of organizations depend upon their ability to appeal to and engage with an audience in order to achieve their objective, regardless of whether that objective is generating revenue for owners, shareholders, and employees, or garnering support around a charitable or activist cause.
Buyer vs. Donor Experience
While customer and donor experiences differ, the marketing methods by which we reach and communicate with a target audience are very similar. For-profits and nonprofits alike must be able to cut through the noise of channel and message saturation to create brand awareness, connect with their ideal buyers or donors in meaningful ways to influence their decisions, and generate loyalty through validation and nurturing.
Driving Brand Awareness and Engagement
The first step in building a following and driving a purchase or donation is increasing awareness and engagement. For-profits can have the most innovative product or service in the market and nonprofits can be doing groundbreaking work that drives impactful change, but neither will have any chance of fulfilling their mission if nobody knows who they are.
Even those nonprofits that have natural constituencies are competing heavily with other nonprofits. And, even though total giving in the U.S. in 2016 broke records for the third year in a row the considerable rise of new nonprofits is making fundraising harder. According to the 501c Agencies Trust, the nonprofit sector has grown 20 percent over the last 10 years. And, there are new competitors. For instance, a college now competes with the alumnus’s local organization more than before, and has to work harder to stay on top of the alumnus’s philanthropic priorities.
When it comes to driving brand awareness and engagement, nonprofit marketers can learn a lot from their for-profit counterparts to overcome the challenges of rising competition. Here’s how.
1 - Know Your Audience
Any successful marketing strategy begins with a very clear understanding of your target market. If you don’t have a firm grasp of who your prospective customers or donors are and what motivates them, then all subsequent marketing efforts are sure to fail.
For-profit businesses often conduct buyer persona and buyer journey exercises aimed at developing a well-rounded, in-depth profile of who their ideal customers are—where they shop, what motivates them, how they make decisions, common objections, and so on. Nonprofits can benefit from the same exercise when identifying their ideal donors. Tactics for conducting this research include:
It’s important to note that your target audience is always changing. Well, maybe the individuals themselves aren’t changing, but the general market of prospective donors is always shifting and evolving, and so must you.
Consider age groups. Perhaps your current ideal donor identifies with the Baby Boom generation and they have a high response rate through direct mail. It’s important to recognize that these donors won’t be around forever to support your cause. The longevity of your mission will depend on taking a proactive approach for marketing to new generations who will have different motivations and different methods by which they interact and give. Staying updated will keep you focused on a donor-centric marketing approach.
However, your assumptions about your audience need to be built by your audience, not by you. Taking action with your entire database based on your current reading about Millennials would miss the target of customizing the donor experience. Your marketing should always be based on your market and not on the national or international market (as told to you by vendors and consultants) or your assumptions about your market.
For instance, as fundraisers, we have for decades arranged our fundraising around our own schedule. We send our first mailing in September, push hard in December, and then stop asking over the summer. What if your organization’s constituency is made up of people who work in northern Alaska for the winter? They would not be able to read your message. As an example, Marianne’s graduate assistant once organized the phonathon program to call all accounting graduates in October and November, when they were least busy. That was the year that the annual fund increased in revenue by 50 percent.
2 - Define Your Brand and Be Consistent
When it comes to branding, most people conjure up images of iconic brand logos. But branding is so much more than a logo—it’s a style, a voice, a mission, a team—essentially, it’s your organization’s personality and definition of what you stand for. And perhaps more important than being an outward display of your organization, your brand must resonate with your target audience by communicating shared traits and beliefs. Your prospects need to get a feeling like, “Hey! That’s me!” when looking at your brand and your mission statement.
Driving brand awareness begins with organizational alignment, and makes its impact through consistency. Building brand recognition can take time, but the key is to stay the course, always remaining authentic to your brand and continuing to promote through the channels where your target market interacts.
Some long standing nonprofits are very successful at this part of branding. For instance, if you see the Red Cross logo, you know exactly what it stands for. And because you’ve seen it in old war movies, at disaster sites, and in other crisis locations, you know what the Red Cross does.
What is the core image of your nonprofit? When you see your logo, do you feel a sense of pride and affinity? Does your organization have a short sentence to describe what you do? Here are some examples:
3 - Create Connections and Brand Affinity
We stated earlier that a nonprofit’s aim is to create affinity for a cause to drive a philanthropic act. Well, influence begins with connection. When you think of your target audience, it’s easy to get caught up in generalizations. However, in order to really connect with people, particularly for nonprofits, you must connect with them on a human level.
With over 1.5 million nonprofits in the US alone, prospective donors are bombarded with countless giving opportunities. Too many nonprofits make the mistake of trying to be everything to everyone in order to reach their fundraising targets. Just as businesses develop strategic, targeted marketing plans to reach customers who are more likely to buy their product or service, so must nonprofits focus their efforts on identifying, reaching, and connecting with potential donors with a higher propensity to give.
For nonprofits, attracting new donors is crucial, but ongoing engagement is what determines a donor’s lifetime value. Part of appealing to a donor’s giving potential is transparently communicating evidence-based proof of the impact of donations. In other words, organizations must step out of the annual report model and share clear information and imagery of their activities and of donor impact. That’s why asks for an amount to support a specific program (such as the Back a Kid program that the Nashua, NH, Boys and Girls Club had in the 1990s) have more impact than a general ask.
Organizations that are able to capitalize on the need for this validation, through the use of advanced analytics, consistently see better results than their counterparts who have fallen behind the data curve. Advanced analytics provides sentiment analysis, which shows what kind of sentiments touch an audience.
For example, a college can show for its ask,
Or make an ask that relates to the donor,
4 - Measure and Optimize
For nonprofits and for-profits alike, ongoing benchmarking, measurement, and optimization are critical to achieving an organization’s long-term strategic vision and continued growth. With the vast repositories of data that exist, it can be difficult to know which metrics serve as the best performance indicators. While each organization has their own unique combination of data that contribute to their ongoing optimization efforts, there are four main categories for nonprofits to consider when establishing benchmarking criteria:
Sentiment Analysis and Brand Awareness
Keeping a pulse on your brand image can be a daunting task, but new technologies are enabling more powerful qualitative analysis. Through the use of natural language processing, text analysis, computational linguistics, and biometrics, organizations are increasingly able to systematically identify, extract, quantify, and study affective states and subjective information (read more here). The tools help find the right words to touch the hearts of your prospects.
If these sophisticated methods sound out of reach, you can start on a smaller scale by monitoring social media channels and community forums. Social media management tools such as HootSuite and Mention allow you to monitor activity around your brand name and associated keywords. Being an active participant in the conversations around your brand and cause is a great way to increase awareness for your cause and organization and then drive engagement.
Once you’ve identified the channels for your marketing outreach and defined measurable objectives, you must put quantitative measurements in place to regularly track the progress of your efforts.
RFM (Recency, Frequency, and Monetary Value)
Recency, frequency, and monetary value is a collection of measurements used by data mining firms to assess a customer’s potential revenue. Called RFM, this tool looks for a company’s highest value clients.
Recency refers to how recent the prospect’s latest gift arrived. Frequency refers to how many gifts or pledges have been given by the prospect over a period of time, usually five years. Monetary value if the total value of each gift or pledge.
Put together as a 3-number score, RFM shows the pattern of donor behavior. All of the values for each of these 3 segments are sorted into 5 bins, resulting in scores that range from 111 (lowest of all 3 scores) to 555. The resulting segments are often used to sort prospects into the annual giving, planned giving, and major gift programs.
Wrap Up: The Goal Is Engagement
We’ve touched on a variety of terms that can be new to a nonprofit manager, but these core concepts are as old as the profession. Really, when it comes down to it, you are looking for your audience to take these steps with your organization:
For-profit organizations want the same thing, and can, at times, take more risk than nonprofits when trying out new ways to bring in customers. Through this article, we hope to inspire you to take new risks as well with your branding, donor knowledge, and outreach.
Looking for guidance on your nonprofit data strategy? Contact us to set up a time to get expert insight from Marianne Pelletier and Gary Robinson.
Lityx helps business and technical users easily leverage the power of advanced analytics on big data to achieve deeper insights and increased ROI in a short time. We deliver enterprise grade analytics through LityxIQ, our cloud-based platform that enables data scientists and business users to integrate and automate complex tasks easily, such as data blending, business intelligence, predictive modeling, and constrained optimization. You can do it yourself, or our experienced team can help create and deliver analytics solutions to achieve quick ROI.