Customer Relationship Marketing: Customer Behaviors When It Comes to Giving as in Donations - Research Paper Example

Customer Relationship Marketing Introduction The concept of fund raising in non profit organizations like the Salvation Army is an aspect that has always been given a lot of consideration. It then becomes clear that the ability of such non profit organizations to achieve its goals and objectives highly depends on their implicated ability to generate funds through donations from various donors. This paper basically examines the motives and behaviors of customers when it comes to giving as in donations. This will further point to the understating of the factors that motivate customers in to giving with regard to the theory of relationship marketing. Customer loyalty and relationship marketing as implicated in the giving of donations to non profit organizations as in the case of the Salvation Army is such that can be best illustrated through examining various theoretical concepts. The Theoretical Concept of Giving in Donations In the Philanthropic perspective, individuals are mainly driven by the concept of altruism to make donations to various charitable organizations. With the case of the Salvation Army, it is highly argued that what various individuals experience when in settings put up by its charitable activities tends to foster a kind of sense that creates an obligation to give in donations towards its charitable activities. The concept of altruism is such that has emerged in to some form of loosely organized theory pointing to charitable giving. The implicated notion in giving with regard to this concept tends embrace a number of tenets derived from both volunteerism and a number of charitable economic literature elements. As much as this theoretical context offers to explain the implicated view with regard to the aspect that drive individuals in to giving donations, it is lacking in the sense that it does not offer an account of various other theories and how they drive the philanthropic notion of giving donations. A number of aspects especially the concept of altruism with regard to giving to non profit making organizations is such that can not be well understood within a single economic frame work. In an effort to best understand the various aspects that possibly drive individuals and organizations in to giving donations towards non profit making organizations, there is need to understand other possible elements that motivate the making of the donations. This possibly points to the need to foster a further inquest in to various elements that are common to both the voluntary sector and organizational behavior. When it comes to giving as in donations, individuals are such that can be driven by the desire to win some form of prestige, friendship alongside other objectives that may bear both social and psychological aspects. To some extend, some individuals are driven to give in donations for the purpose of avoiding the possibility of being scorned by their peers or possibly earning some social acclaim. There exists a very broad scope of literature that tends to examine the underlying aspects that possibly motivates individuals in to giving in donations. Philanthropy with regard to giving in donations is such that can not be possibly examined with respect to a single discipline. Relationship Marketing Theory With Regard to the Concept of Giving in Donations A very key objective of this theory is the identification of the key aspects that tend to influence vital outcomes within an organization. This then helps in the understanding of the of the implicated relationship between the aspects that drives the objectives and the outcomes. The main premise of this theory as based on the understanding that customers will tend to differ when it comes to their relationship with any organization. These differences are such that emerge from transactional relationships to very relational bonds (Buttle 185). Relationship marketing is such that can be described with reference to various forms of literature pointing to a number of terminologies that tend to illustrate the theory. Such terms include; strategic partnering, net work organizations and the formation of strategic alliances. Irrespective of the type of terminology that is used to refer to the theory of relationship marketing, the implicated concept is such that remains unchanged. The main focus of this theory is centered on the cultivation and sustaining of a positive form of relationship between any organization and the various constituent groups. In the case of a non profit organization like the Salvation Army, the various constituent groups would entail; church faithfuls, friends, various corporations and foundations. Relationship marketing in itself is such that is highly measured by the impact of the mode of communication. It emerges that with a great or an effective mode of communication between the implicated organization and its various customers or constituent groups, the stronger is the level of correlation with regard to the emergence of tighter relationships. This would then point to the full satisfaction of the needs of the various parties involved with the organization. With regard to a non profit making organization like the Salvation Army, the theory of relationship marketing and the various implicated activities are such that can only be evaluated on the basis of the implicated organizational profitability. In such non profit making organizations, the success of the theory of relationship marketing alongside the various implicated activities can be evaluated on the basis of first time giving, repeated forms of giving or possibly on the overall engagement in efforts geared at raising funds for the organization at various levels (Buttle 185). In all the aspects that the theory and its activities can be possibly evaluated, the outcomes of the theory of relationship marketing are such that can only be explained with regard to two possible constructs in marketing literature. The two possible constructs of the outcomes in this regard are: the implicated customer loyalty and the customer’s form of oral communication. The later refers to the type of communication also known as informal communication that is evident between customers and various other individuals regarding the evaluation of the type of goods and services being offered by an organization. This can point to the various pleasant experiences and recommendations earned from others. Such a type of communication is perceived as being very vital especially when it comes to influencing any buying decisions in the future. This is more so when the type of service being delivered is such that is of any possible risk to the possible buyer or customer. For the implicated customer loyalty, the buying behavior is such that is highly determined by the prevailing marketer’s activities (McCort 60). Literature Review The concept of donor retention with regard to fund raising through donations in non profit making organizations is relatively complex. This paper examines a survey on the data pointing to a number of aspects that seem to influence donor retention. This is with regard to the implicated behavior of donor retention that has been observed for a period of over thirty five years. This is with regard to the direct marketing of various non profit making organizations. There are a number of issues that seem to affect the loyalty of donors in giving their donations to particular organizations. The implicated trust of the donors and their confidence in a certain charitable organization are aspects that highly determine their motive of giving in donations. A number of marketing concepts especially with regard to theory of relationship marketing highly determine the retention behaviours of donors when it comes to giving in charitable organizations. A number of organizations are lucky to be having multi year donors with some donors having a giving history of over ten years. The retention of donors is such a challenge to a number of charitable organizations. In the current age, the typical profile pointing to the retention of donors for a number of charitable organizations is limited to about 30% renewal rates for first time donors. The overall retention rate is rated between 70-75%. This implies that various charitable organizations are battling with the challenge of harnessing for new donors (Self, Wymer & Teri 224). The challenge is such that spreads to even efforts geared at the retention of first time donors. Acquiring any possible donors and their corporate support is such a challenge to all non profit making organizations involved in fund raising. Such organizations happen to have very few resources and therefore do not have the ability to achieve their laid out objectives. This explains why they must be good at securing additional funding through donations. This requires ideal marketing strategies and the theory of relationship marketing has greatly been applied in this regard. This is because the various donors are such that need to be convinced that indeed the concept of giving to charity is such that exceeds any implicated costs. Non profit making organizations are thus very peculiar when it comes to pursuing donors to help in the funding of their main goals and objectives (Self, Wymer & Teri 224). This implies that the implicated strategies geared at attracting and possibly retaining donors should put in to consideration the prevailing economic conditions. The types of donors currently in existence emerge from different spectrums. This implies that such donors have specific demands and thus have differing motivations when it comes to giving in donations. The implicated trends in the behaviours of donors with regard to their motives in giving is an aspect that tends to put a lot of pressure on various charitable organizations. This possibly explains why various non profit making organizations are actively involved in efforts that would foster their ability to attract more donors and effectively manage them through ways that would foster their retention. The recruitment of more donors is an aspect that every non profit organization involved with charitable work is actively involved in. The understanding of the targeted type of donors seems to be the most important aspect that these organizations have focused on. Knowing the segmentation of the donors or the targeted donors is thus a very vital concept when it comes to the pursuit for donors among non profit making organizations. The retention of any recruited donors in to an organization is an aspect that every non profit making organization should well understand (Connors 233). The understanding of implicated donor behaviours in the past thus becomes vital in ascertaining the satisfaction and the dissatisfaction of donors in their giving efforts. Common problems cited with regard to the satisfaction and the dissatisfaction of donors in charitable organizations point to their implicated expectations. The management of donors in an effort to foster their retention is such that can be very challenging to any organization especially if the organization is not adequately professional in this respect. A number of good donors have in the past shown a lot of commitment when it comes to giving donations even in the wake of minimal incentives. The acquisition of vital skills when it comes to the marketing and especially advertising of an organization remains to be a vital aspect when it comes to the recruitment of donors (Gruen 36). This explains why various non profit making organizations involved in charitable work are actively involved in seeking help that can enable them to create more public awareness of their activities and possibly attract more funding through donations. The understanding of the theory of relationship marketing when it comes to the pursuit for more donors in this type of organizations is thus a very vital aspect. Marketing relationship theory is a strategy in marketing derived from a very influential marketing campaign. This strategy is based on the retention of customers and the utmost satisfaction of their needs. It is a diversion from the basis of the point of sale type of transactions. This strategy is very distinct in the sense that it is based on the retention of potential customers for over a long period of time. It is unlike the direct venture or intrusion into the market whose basis lie in the attaining of new customers by simply focusing on the demographics. Such demographics are usually based on a number of prospective customer lists. This is basically the type of strategy that has been utilized in the pursuit of donors by leading charitable organizations like the Salvation Army. Stewardship in the Creation of a Culture of Giving among Donors It is very essential for charitable organizations to initiate the emergence of a culture of giving among its donors. The process entailed in the creation of such a culture basically points to stewardship. It emerges that for organizations with ideal donor attitude towards donating, the desire to incorporate the donors in to every aspect of the organization has been highly regarded. In a philanthropic culture, it is essential for every one to know that any form of development is based on ideal relationships. This implies that any one can participate in any type of development through such relationships that increase the available resources. They are a number of tools that can be used to foster stewardship. The use of email for instance is ideal at updating donors on any development status. Non profit organizations are benefiting from the use of internet soft wares to foster the loyalty and retention of donors through ideal recognition via more relevant and personal modes of communication (Sargeant & Elaine 47). The soft ware can now be integrated in to the donor data base system at a relatively cheap cost for the organization. The software has proven ideal donor retention rates and the customization of publishing systems that are geared at fostering stewardship. Stewardship is considered to be the most ideal culture for fostering development. This is because it helps in securing donors for any future projects through honoring their current contribution. This it does through demonstrating to the donors how great the contribution has been to any development projects in an organization. Allocation of the budget on the basis of the stewardship culture has a very positive impact on the cost of fundraising. Effective stewardship is credited for fostering donor retention and increasing the rate of giving in donations. The process of acquiring new donors is such that can only be possible on the basis of the existing donors. The Benefits of Donor Retention The ability to effectively foster donor loyalty and retention among non profit organizations would result in to an increase in the amount of contribution received from the donors. Organizations involved in charitable activities should strive to retain their donors since the process of acquiring any new donors is far much expensive than the retention of already existing donors (Macmillan, Money & Downing 813). The ability to best understand donors can only be fostered with the retention of existing donors. Donor retention is considered to be the most ideal way of growing in non profit making organizations. The figure below points to data derived from two different organizations with one retaining 90 percent of its donors and growing by 10 percent from new donors while the other retain about 95 percent of its donors annually and growing by 10 percent from new donors. Through the retention of donors non profit organizations will be able to gain insight in to the type of donors that seem to be at the risk of being lost and what can be done to maintain them. This will also help an organization in understanding the type of prospects to pursue (Kay 167). Methodology The current profile of charities and various advocacy groups indicate a 30 % renewal rate with regard to donors giving for the first time. The overall retention ranges from 70 to 75 %. A large number of donors interviewed indicate that they are or whish to be loyal in their donation. In this particular study about 59 percent of those interviewed claim to be highly loyal to the various charities that they are supporting. The type of loyalty pointed to is competitive across generations. Such loyalty exceeds the type of loyalty accorded to sports teams when compared. High level loyalty is determined by both the level of education and income. As indicated in the illustration beneath, loyalty in donations is also evident in multi year forms of donations. The data points to percentages of the number of respondents that agree with the question statements. Pre boomers are people born some time before the year 1946. Post boomers are people born some time after the year 1964 onwards. The data pointing to online and offline donors does not cover individuals who indicated to have given no contributions. The type of responses pointed to above indicate that for a large percentage of donors, the sense of loyalty or being comfortable with an organization is not evident. According to the data, loyalty to a charitable activity increases with the age of the donor. This is more common among pre- boomers. Post boomers on the other hand exhibit less loyalty. Online donors on the contrary are more prone to exhibiting loyalty unlike their offline counterparts. Gender aspects seem not to govern donor loyalty. Though a large percentage of women individuals seem to indicate their loyalty to charity than male individuals; 31% women compared to 18% men, the higher loyalty segment indicates other wise. This is with regard to those individuals who have been giving donations for over ages as compared to those who seem to give in favor of certain charities (Connors 123). Yet another number of respondents were interviewed with reference to two other statements in this regard: impulse giving in donations and shopping for the type of charity to give to. This implies that most donors perceive their donations as a deliberate move in giving. This point to an inclination that tends to discriminate groups and favor those that foster some emotional attachment. This then enables the development of a sense of connectivity to certain organizations (Macmillan, Money & Downing 810). Loyalty in giving in donations points to both the emotional and rational commitment and assessment. Donors seem to follow certain issues that they consider in their judgment on which organizations to give to. This then leads to the development of some sense of belonging to a certain charitable organization over others. The figure below points to yet another group of respondents and their responses in percentages with regard to a set of other statements. Findings The loyalty of donors with regard to giving to non profit organizations points to a combination of the enduring emotional commitment and the implicated rational assessment. With regard to specific cases of donor loyalty it could be expected that the evidence pointing to the fact that donors adhere to certain issues of concern with regard to certain organizations would emerge. The issues would possibly point to how the donors tend to judge some organizations with regard to how best they seem to be working towards the attaining of their commitments. This then tends to foster some form of commitment of the donors to a certain organization. Very few about 3 for every ten donors indicate that they will possibly limit their giving in donations to only issues that they seem to closely follow. Of those who think other wise, about 4 of every 10 donors have the perspective that they are very familiar with the type of organizations that seem to be involved in effective activity with regard issues of great concern. Yet a third of other donors indicate how difficult it is for them to categorize the charitable organization with regard to how effective they might be when it comes to addressing issues of great concern. This then points to the difficulty of a very informed form of judgment that may determine the loyalty of the donor (Kay 167). There appears to be a very big number of donors who seem to give in donations with possibly not a single form of judgment that may be emotional or informed. There is a possible indication that about 33% of all the donors would wish to identify themselves with a strong connection contrary to being termed as just contributors. This then indicates how difficult it becomes for various charitable organizations to foster the loyalty of donors. The commitment of certain individuals towards giving in donations is such that is influenced by various aspects. Only about 35 % of those who give in donations will end up urging others to make a similar contribution . This implies that the basis of referral with regard to the immediate donation that an individual gives is such a strong indicator of an individual’s commitment towards giving in donation. The figures pointed to in this regard points to a type of profile whereby only about a third of all the donors exhibit some form of loyalty towards giving to certain organizations. Yet another third of donors seem to exhibit very minimal consideration to the implicated bondage to an organization. The rest of the donors are thus categorized in the middle of the two. This implies that there exists a likelihood of a 70 % retention rate of donors to a certain organization for every year. There also exists a relatively high possibility that yet a good number of donors are such that are not motivated by preconditions when it comes to their form of giving in donation (Butscher 20). This implies that the retention of such donors towards the funding of the activity of a particular chartitable organization is relatively hard. It emerges that when a good number of one time donors are asked on what possibly makes them not to donate any more, majority are bound to end up indicating that they are no longer in a position to do so. It may be true for a good percentage of those who possibly stop donating after having donated for sometime. But for yet another large fraction of those who also claim to be in the same position, the setting of priorities seems to be the main reason as to why they possibly stopped donating. The question of whether an individual wishes to give has the resources and the ability to give and whom exactly to give to seems to determine the loyalty of the donor (Hedrick 14). Recommendations on Mechanisms of Donor Retention In order for non profit making organizations to effectively foster the retention of their donors, they need to consider the adoption of the following strategies; The need to address donors in a manner that is caring. This point to the use of their preferred titles. Asking the donors on the most preferred mode of contact that should be used to reach them. Communicating to the donors the impact of their donation to the development project at hand. This would remind them that their support through giving has beared some good fruits Be able to frequently communicate with donors when not necessarily in need of money. In the event of seeking for any other funding, donors should be reminded that they have been loyal in giving and that their giving has been highly appreciated. Only donors with a long history of giving are ideal for retention Consider seeking volunteers to make notes to solicit and emphasize on the fact that each donor is considered as part of the project being undertaken. Conclusion From the literature gained above, it thus becomes vital for any organization to understand the various aspects that tend to drive individuals in to giving in donations. An effective donation strategy is such that can be best grounded on an ideal theoretical foundation. A connect ion between the donation strategy and the underlying theoretical ground is such that can possibly help the top leadership of an organization in to setting its targets. Responding to the question of whether individuals and foundations are motivated by the implicated experience with the charitable activities of any non profit organization like the salvation army is such that can only be addressed with regard to the theoretical ground that possibly motivates giving in donations in the philanthropic aspect. Most activities in non profit making organizations like the Salvation Army heavily rely on fund raising in an effort to raise enough funds that can help in meeting its budgetary obligations. It emerges that there exists a very stiff form of competition as various non profit making organizations seek to earn donations through various fund raising strategies. This is because the numbers of non profit making organizations seeking to raise funds through donations from the public have increased. The high increase in the number of non profit organizations seeking to raise funds through donations is as a result of the increase in the number of calamities around the globe that call for the need of these organizations to act in support of the needy. This then explains why the various non profit making organizations have to devise mechanisms and strategies that would help them in motivating individuals and foundations to give in support of their charitable activities. Work Cited Butscher Stephen. Customer Loyalty Programmes and Clubs. New Jersey: Gower Publishing Company, 2002. Buttle Francis. Relationship Marketing: Theory and Practice. Washington: Sage, 1996. Connors Tracy Daniel. The Nonprofit Handbook: Management. Michigan: Wiley, 2001. Gruen Summers et al .Relationship Marketing Activities, Commitment and Membership Behaviors in Professional Associations. Journal of Marketing, 64 (2000): 34-49. Hedrick Janet. Effective Donor Relations.Washington: John Wiley & Sons, 2009. Kay Sprinkel Grace. Beyond Fundraising: New Strategies for Nonprofit Innovation and Investment. Washington: John Wiley & Sons. 2005. Macmillan Keith, Money Arthur & Downing Steve. Relationship Marketing in the Not-For- Profit Sector: An Extension and Application of the Commitment–Trust Theory. Journal of Business Research, 58.6 (2005): 806-818. McCort Daniel. A Framework for Evaluating the Relational Extent of a Relationship Marketing Strategy: The Case of Nonprofit Organizations. Journal of Direct Marketing, 8.2 (2006): 53-65. Sargeant Adrian & Jay Elaine. Building Donor Loyalty: The Fundraiser's Guide to Increasing Lifetime Value. Washington: John Wiley & Sons, 2004. Self Donald, Wymer Walter &Teri Kline Henley. Marketing Communications for Local Nonprofit Organizations: Targets and Tools. New Jersey: Routledge, 2002. Read More