Relationship Marketing and Development for Nonprofit Organizations - Research Paper Example

Effective Relationship marketing and development for nonprofit Organizations 0 Introduction: Relationship Management is an essential marketing truth for today’s organizations more than often we think that why should an organization get into managing its customers at all? Why CRM has become such a critical component for an organization? Customer Relationship is actually going back to the same principles of marketing which existed before the mass productions began. In the initial days before the industrial revolution and mass production began the customer service was highly customer oriented and focused. It was even customized to a large extent to suit the needs to the customer and design the product accordingly. Later with means of production becoming easy and fast, the focus changed to product from customer. Eventually while analyzing the returns on the businesses, organizations realized that making a first class product alone is not enough to make the customer happy. In fact it is essential to build a relationship and customer loyalty in order to retain the customer as business stands to benefit in the long run with the retention of the customer. Hence the focus today is on customer loyalty and marketing of customer relationships. Australian Wildlife Conservancy became a public charitable organization in the year 2001. It owns around 20 sanctuaries all over Australia. It protects at least 300 ecosystems, 100 threatened ecosystems, and 170 threatened animal species. AWC has a staff strength of 80 which works on the field on various ecology conservation projects. The functioning of AWC is as follows: 1. Acquiring land to establish sanctuaries for the conservation of threatened species and ecosystems. 2. Implementing practical, on-ground conservation programs such as the eradication of feral animals and the reintroduction of endangered species. 3. Conducting scientific research into key issues affecting biodiversity in Australia. 4. Undertaking public education programs to promote awareness of the plight of Australia’s wildlife. The mission of the Australian Wildlife Conservancy is the effective conservation of all Australian animal species and the habitats in which they live. It is interesting to note that AWC has various partnerships with the corporate and it runs effective programs both on corporate as well as individual level. Some of the corporate partners are, Optus, Exterra, Sydney Wildlife World, Skansen, Kathmandu, Ajilon etc. The reason to choose this particular nonprofit organization is it has relations in business to business as well business to customer both the segments. It is headed by the most competent board of directors who have considered environment conservation as the motto of their lives. Only when the top brass of an organization is so motivated to the cause, the organization gains respect in the public and is widely followed as an example. Customer relationship marketing model which has already been exercised by the organization has proven to be very effective so far. Any further efforts in the area of customer relationship marketing are definitely going to help the organization establish itself further. People can donate by various means and ways to AWC: 1. Making a Donation – Monthly or one time 2. Workplace giving – For Corporate Employees 3. Bequests – Individual Donors 4. Gifts of Property – Individual Donors 5. Volunteering – People who would prefer to give time more than the cash Let us analyze how can AWC market and build relationships through these methods. 2.0 Literature Review: “ Customers do not only look for goods or services, they demand a much more holistic offering including everything from information about how to best and safest use a product to delivering, installing, repairing, maintaining and updating solutions they have bought. And they demand all this, and much more, in a friendly, trustworthy and timely manner. Moreover, the core product is less seldom than the elements surrounding the core the reason for dissatisfaction.” (Pg-3. The Relationship Marketing Process: Communication, Interaction, Dialogue, Value - Christian Gro¨nroos) The statement above is the basis of building effective customer loyalty. It mentions several factors in itself. The customer who is a satisfied customer is not necessarily a loyal customer. Similarly customer who makes a repeat purchase is not necessarily a loyal customer. No organization can stop sourcing a new customer. But relationship marketing helps creating loyal customer who is far more fruitful to the organization. Levels of Loyalty Factors driving Loyalty Transactional Loyalty Recency, Frequency, Length of business, Customer share in transaction Emotional Loyalty Customers consider the product/ company as standard, pay premium product and recommend the company Satisfaction Level Product, Price, Brand image, Convenience, service, employees of supplier organizations and relationships Competition Level Industry and Level of competition. These are various levels of loyalty created for the customer in each transaction. These factors help smooth conversion of transaction to successful relationship creation and development. 2.1 Creating Value for the customer: “If customer satisfaction depends on value, then it must depend on the total costs or sacrifice, too. We must keep in mind that buyers in most buying situations use reference prices (Monroe, 1991) and even reference values (Berkowitz et al., 1994) when they evaluate the attractiveness of an offering. Even though the price sensitivity may decrease by time in a supplier relationship, the price as well as the total costs will have an impact on the customer’s evaluation of alternative offerings. Monroe (1991) also claims that customers value a reduction in costs more than a responding increase in the benefits. Emanating from the above, new approaches are needed in order to create customer loyalty. Instead of just putting the focus on how to enhance customer satisfaction by improving the perceived quality, the discussion has to be widened so that the customer’s need of this quality and his willingness to pay for it are also included. So, we cannot just consider what we give the customer; rather we must concentrate on the sacrifice the customer has to make.” (Pg 2. The value concept and relationship marketing, Annika Ravald and Christian Grönroos European Journal of Marketing, Vol. 30 No. 2, 1996, pp. 19-30 MCB University Press, 0309-0566) As per the statement above the organization needs to create a value based alternative for the customers or donors. The donors to the organization would not stay loyal or would be inclined to build a relationship with the organization if they do not perceive any value in the relationship. Value is created in not one time transaction but it is created over a period of time and more than often after the first purchase has been made. In case of a charitable organization one time donation would give a “feel good” factor to the organization. But creation of values such as trust, honesty, transparency, clarity in communication would make the customer “feel better “and a loyal customer. Relationship marketing to such customer then is not a very complicated job. Value to the transaction is as important as value given to the customer during the customer. For successful relationship marketing it is necessary that the customer feels he is important to the organization. It is not necessary that the organization has to butter the customer, but to increase the frequency of the transactions, and to be the preferred organization for the customers, good customer value programs need to be designed. On a trial and error basis the customer would be interested in buying a product or a service, but next transaction the purchase may not be on his priority list even when he has got money to spare. Hence creating and marketing sustained value based relationship to the customer is far more required and important. “In a long-term relationship with the supplier the benefit concept takes on a deeper meaning. We talk about safety, credibility, security, continuity, etc, that together increase the trust for the supplier and thereby support and encourage customer loyalty. After a few successful transactions (the customer is satisfied) the customer starts to feel safe with the supplier – a trust is developing. The customer knows that this company is able to fulfill his needs and wants and is assured that the company will take care of the commitments it has made. For many companies these fundamental aspects of having a relationship with a customer are not always considered, even though this is something every company should pursue in order to retain the customers. Safety, credibility and security contribute to a reduction of the sacrifice for the customer and this is something we believe that the customer finds essential and very valuable.” (pg 6. The value concept and relationship marketing - Annika Ravald and Christian Grönroos) 2.2 Benefits and sacrifices: Benefits: Benefits are simply defined as what the customer would get from the product or the transaction. Usually the product details are given to the customer however most marketers make the mistake of not mentioning the benefits to the customer. The customer can see the physical product with his eyes and need not be told about the product features to a great detail. However it is important that the customer gets to know the benefit he derives from the product, which will bring him back for the second purchase. Benefits thus enhance the chances of marketing and developing of relationships. Sacrifices: In accountancy language it is known as “opportunity cost” what the customer is letting go off to make a particular purchase of product or service, is the sacrifice. Customer satisfaction and the sacrifice he makes are in fact different. For example: if a customer goes to a good hotel to have food, he will expect good quality food, available at a reasonable price, good service, good ambience and cheerful and welcoming employees. This is what a customer would minimum expect from the hotel because these are the features he is willing to pay for. Any of these feature is missing he actually sacrifices the pleasure of doing business with that particular hotel. Hence in simple language, “what the customer has to put up for making a particular transaction” is known as sacrifice. 2.3: Benefits derived by a nonprofit organization from donor retention: Donor retention is extremely beneficial for a nonprofit organization. When a donor approaches AWC and donates some money the objective every time is not necessary tax saving. As stated earlier the “feel good” factor plays a major role in the transaction and carries forward even when the transaction is over. Donor retention enables the organization to have a steady stream of donations and makes forecasting and budgeting of funds easy. If the organization is an environment conservation firm like AWC then the donation given creates a high value of self esteem and pride. This can further be enhanced with the membership programs, eco-touring of the sanctuaries which consolidate his affection towards the cause, making relationship development smoother and easier. For effective relationship development it is also required that the organization educates its customers. The extent and frequency of education helps the customer think about the relationship with the organization more positively. Customer relationship starts from the first point of contact in the organization till the last person who is involved in the transaction and in large many cases even the after sales service staff. Hence relationship marketing and management is not the job of sales people alone but is of the entire organization. In short for better relationship building and marketing the entire organization should be customer centric. 3.0 Methodology: 3.1 Hypothesis: So far we have studied what does it mean by customer retention and loyalty and why it is necessary for an organization. As we have dealt with all profit making organizations, actual product or service delivered makes for the physical evidence of customer loyalty and retention. However a further research needs to be done regarding the actual benefit received by a nonprofit organization by way of customer retention and relationship marketing. Hence the hypothesis would be to prove or otherwise if customer retention may or may not benefit a nonprofit organization. Customer loyalty should be and is the focuses of many organizations today as, firms have come to realize that benefits are far more in customer retention and loyalty rather than seeking new customer. 3.2 Survey Design: This survey is designed for to explore the relationship between the nonprofit organization and the customer loyalty. It also tries to gauge the customer’s involvement in the organization. The questions have been designed on the basis of requirement to prove or otherwise the hypothesis. The questions are also designed as close-ended questions so that the answers are as objective as possible. The questions evaluate AWC’s donation program structure, the frequency of donations of the donor to AWC, regarding his knowledge about AWC etc. 3.3 Data collection: The survey was conducted among 20 people vide emails and face to face interviews. The random method of selection of the data is used so that reliability of the data is more and is unbiased. This also counts the number of people who have expressed their willingness to work with AWC and donate their time instead of money. 3.4 Data Analysis: Out of the 13 people who have responded to the survey are 8 have replied through email and 5 have responded in person. All of the 13 respondents have heard about AWC and the work it does. 5 have expressed a desire to be anonymous with the charity or donation but would like to come back and donate for the cause of AWC. 7 out of 13 are working in large scale corporate and have come to know about AWC thorough their workplace giving programs. Balance 6 are individuals who range from a non working category like students or housewives but have heard about AWC and the work it has put up. 4 have expressed their desire to work as a volunteer and were in fact extremely thrilled about working in a sanctuary. 11 suggested that AWC should add more value in terms of concessional eco touring of the sanctuaries for the donors who have donated above a certain sum say for ex: $A250.00. This would add as a memorable experience and can also give an insight as to how the money is put to use by the firm. 4.1 Findings: 1. People are aware of AWC and the work it has been doing for the conservation of environment in Australia. 2. The value associated with various donation methods needs to be explained and educated about, especially how they could be simplified if at all further. 3. Donors are willing to contribute towards the organization on a repetitive basis as they see it as an act of compassion towards animals that are unable to express or are on the verge of extinction. 4. Pleasantly the feeling of ownership is observed while discussing the cause with the people. People have expressed strong desire to participate and make these programs work. 5. AWC is successful in creating the value not only in one time donation but also towards building relationships with its donors for the long run. 6. The members and the top authority of AWC is highly respected by the general public. They would want to know more about the people who have put the organization together. 5.1 Conclusion and Recommendations: Based on the observations above following are the conclusions and recommendations of the survey conducted: 1. AWC is known to the general public as well as corporate. In order to increase the visibility the organization should go ahead and market the cause more effectively. 2. For relationship building along with gifts and magazines that are given additional measures should be taken such as eco touring of sanctuaries, printing of the donors list in the in house publications, souvenirs such as t-shirts, coffee mugs, bags, caps could be given and even made available for sale at a moderate price. 3. Conducting campaigns in school children and students in order to create awareness and educate the children. As these are the ones who are going to carry forward the cause they have to be aware from a very young age. 4. For relationship marketing database should be managed for the donors. Although the donor is aware that the greeting card sent to him on his birthday is a relationship marketing effort he nevertheless appreciates receiving the card. Such small deeds go a long way in building long term relationships. 5. AWC can start a project like “Adopt an animal” and encourage families especially with children for adoption. Children are very possessive and caring about the pet they adopt which automatically brings the parents to AWC office. 6. Donors definitely do see the value in donating for a cause like AWC. Even when it comes to perceiving benefits from the donation, it is perceived as a “good deed” and boosts the morale so as to treat the donation as “worth the sacrifice”. 7. The board of directors of AWC should interact with people on more often basis as this will also boost the relationship building effort. Hence the conclusion is donor retention is feasible for AWC and if careful efforts are taken then it would result into long term fruitful relationship for the organization. 5.2 Limitation: As this survey is very basic it would give a tentative idea about the willingness of the donor to continue the relationship. For further improvements a more detailed survey needs to be carried and with the consideration of competition as well. 5.3 Further Research: For specific segmentation of donors and segment specific donor retention strategies a further survey is required to be carried out. Usually for a donor spare cash is not the only reason why he would donate the money. In fact the appropriate segmentation for this kind of organization is the psychographic and behavioral segmentation in which attitude and overall thinking pattern of the customer dominates the decision making capacity. Further research could be carried out in these two specific segments and results could be used effectively for retention of the customers. Similarly a further research could be carried out in income segments to determine the value of donation a customer is willing to donate towards a cause. This would also give an insight to the relationship marketing plan. 6.1 References: 7. The relationship marketing process: communication, interaction, dialogue, value Christian Gronroos. The Journal of Business & Industrial Marketing. Santa Barbara: 2004. Vol. 19, Iss. 2; p. 99 8. - The explanatory foundations of relationship marketing theory Shelby D. Hunt, Dennis B. Arnett, Sreedhar Madhavaram. The Journal of Business & Industrial Marketing. Santa Barbara: 2006. Vol. 21, Iss. 2; p. 72 9. Conceptualising, delineating and analysing business networks Frans Prenkert, Lars Hall??n. European Journal of Marketing. Bradford: 2006. Vol. 40, Iss. 3/4; p. 384 10. - No business is an island: The network concept of business strategy Ha?? kan Ha?? Kansson, Ivan Snehota Scandinavian Journal of Management Volume 22, Issue 3, September 2006, Pages 256-270 11. - Business-to-business relationship quality: an IMP interaction-based conceptualization and measurement Ka-shing Woo, Christine T Ennew. European Journal of Marketing. Bradford: 2004. Vol. 38, Iss. 9/10; p. 1252 12. Making CRM technology work Julian Johnson. The British Journal of Administrative Management. Orpington: Jan/Feb 2004. p. 22 13. - Business partnering - a driving force for innovation Klaus Wucherer. Industrial Marketing Management. New York: Jan 2006. Vol. 35, Iss. 1; p. 91 14. The value concept and relationship marketing Ravald, Annika, Gronroos, Christian. European Journal of Marketing. Bradford: 1996. Vol. 30, Iss. 2; p. 19 15. - Relationship marketing in organizational markets - assessing its costs and benefits 713775492_content[1].pdf (181.285 Kb) K. J. Blois, Journal of Strategic Marketing, Volume 4, Issue 3 September 1996 , pages 181 - 191 16. Marketing Management – Philip Kotler and Kevin Keller 13th edition chp 5 Creating Customer value, satisfaction and loyalty, Prentice Hall 17. The Ultimate CRM Handbook – John Freeland Chp 2, 3, 4 2004 Edition Tata McGraw Hill Publication 18. Customer Relationship management – Kristin Anderson and Carol Kerr Chp 3, 4 112002 edition Tata McGraw Hill Publication 19. http://www.australianwildlife.org/ accessed on 25.04.2010 20. Understanding business marketing and purchasing: an interaction approach – David Ford 3rd Edition, ISBN – 1-86152 – 769 – 1 Thomson Learning 2002 7.1 Appendix: Questionnaire regarding awareness and loyalty programs of AWC 1. Name: 2. Address 3. Office Address 4. Email ID (Please also mention if you would like to receive mails from us or not) a. Send me the mails b. Do not disturb 5. Have you heard about Australian Wildlife Conservancy? a. If yes how and from whom? b. No, I haven’t heard about them 6. If yes have you donated to AWC? a. Yes b. No 7. If you have heard of AWC and you haven’t donated would you please state the reason for us? 8. Are you aware of the following ways of supporting AWC? a. Making a donation b. Workplace giving c. Bequests d. Gifts of Property e. Volunteering f. Corporate partnerships. 9. Do you think the formats for these donations are simple to follow and easy to understand? a. Yes b. No 10. Which among the mentioned is the most difficult to understand and follow? a. Making a donation b. Workplace giving c. Bequests d. Gifts of Property e. Volunteering f. Corporate partnerships. 11. Would you like to participate as a volunteer in various programs AWC conducts? a. Yes b. No 12. What value added benefits would you like to receive from AWC? ________________________________________________________________________________________________________________________________________________ Read More