Customer Relationship Marketing in Non-Profit Setting - Research Paper Example

Customer Relationship Marketing in Non-profit Setting Introduction Customer Relationship Marketing is the process of covering all marketing activities which focuses on establishing, developing and maintaining successful customer relationships. The aim is to develop long-term relationships, customer loyalty and customer retention which improve corporate performance. Profit making organizations use CRM to gain customer loyalty as well as retain customers in order to make profits (Ronald & Scott 16). This is different from not-for-profit organizations because their aim is voluntary work and not profit making. The characteristics of not-for-profit sector are resource attraction and resource allocation, non-profit motive, multiple constituencies and emphasis on tactical marketing (Francis Buttle, 1996, 180). Customers for not-for-profit organizations are constituted in groups: service users, resource generators, regulators, managers and staff members. This means there is a need for not-for-profit-organizations to develop long-term relationships not only with resource providers but also with other customers. The overall goals for CRM in not-for-profit organizations are to find, attract and win new donors, cultivate and retain them, entice previous donors to come back with strong commitment, and reduce the cost of dealing with donors. Fundraisers for charities are constantly looking for ways to develop long-term relationships with resource generators. They need to create, develop and maintain donors. Competition has been traditionally recognized as taking place in profit making companies but this has also been experienced in the not-for-profit sector in terms of vying for donations from corporations or donors who are watching how every penny is used. Non-profit organizations more often consider the inappropriateness of marketing to their needs, which they may have a point considering the traditional purpose of CRM. However when these organizations focus on relationships rather than making profit and having multiple markets, they are able to meet their needs. CRM in non-profit organizations benefits them in creating a central database that can serve members, communicate any information and available news without wasting time. This builds stronger relationships and a strong organization. An organization should provide value to its ‘customers’. CRM enables non-profit organizations bridge the gap between donor needs and corporate needs build and manage data of donors, treat donors differently and how they are comfortable as well as provide interaction rules. When non-profit organizations invest in Customer Relationship Marketing Systems, they find the most effective ways of capturing donor data and utilizing it. CRM basically consists of internet, software, procedures and methodologies that help in organizing donor relationships. It is also concerned with serving donor needs at a more personal level rather than treating them like the rest of donors. Though the specific functions of CRM systems are still debated on, it is believed that functionalities depend on the purpose of the system (Francis Buttle, pg 180) CRMs provide these organizations with analysis of donor data which provides an improvement in resource generation. They also enable organizations identify and target their best donors. CRMs can segment donors according to their contribution, how often they contribute and which projects they support. CRMs also enables organizations grow donor base by assessing opportunities effectively. Organizations are able to increase their client satisfaction in providing services that are more personalized. They are also able to effectively access the accurate information that includes top donors by use of specified criteria (Adrian & Jay 165). Hypothesis Donor loyalty and donor retention builds a long-term relationship between donors and non-profit organizations. Literature review It is important for not-for-profit organizations to value and manage customer relationships. This is because there is stiff competition in the sector as many organizations are rising up in seeking for donors. Customer relationships will also maximize in retaining existing donors effective by creating and satisfying their expectations (David 7). Donors tend to have stable relationships with several organizations and are based upon the personal commitment they have with these organizations. Just like existing customers are important to the for-profit sector, existing donors are very valuable to not-for-profit sector. In order to maximize on the growth of existing donors and attract new ones, organizations must move to viewing their relationships with the donors, instead of concentrating on managing donor databases. The greater the level of donor satisfaction is with the relationship the greater the chance that the organization will retain them (Bernard, 72-76). Valuing donors is focusing on the donors by satisfying their expectations and needs. This is done through knowing most details about the donors and keeping in continuous contact with them in terms of what they expect and giving them all the information they need. There should also be high service for donors (Moira & Baker 22). The organizations should also work towards committing themselves to the customer expectations as well as provide quality information and work. To establish a relationship with donors, the organizations must provide the value preposition in meeting donor expectations as well as decreasing their uncertainties. Donor value segments should also be identified by closely targeting them and knowing the donor profiles. Donor profiles include basic information like name, address, telephone number, occupation and work address, date and place of birth, marital status and family data, donor history with the organization, contacts and organizational events attended. Other profile details can be found internally from professional staff who evaluate the donors, donor income and assets and its sources, directorship, family and community connections, clubs memberships and social, political and community activities. There should also be a delivery value system in the core values of the organizations and provide technology for effectiveness. The organizations should also manage and maintain donor satisfaction (Ronald & Scott 16). For donor relationship to be managed or prevail, there are several key dimensions that are very important. The first dimension is reliability where the organizations must prove their ability to perform the service they promised accurately as well as dependably. Second, they must be willing to be responsive by providing prompt service to their clients and donors. Third, they should assure donors that employees are courteous and are able to stir confidence and trust. Empathy is the final dimension where organizations should be caring and provide attention to clients and donors. Donors are the most important people for any not-for-profit organization and they should be seen this way instead of treating them like communities like organizations do nowadays (Francis 180). The ability for an organization to raise funds and grow will depend with how it treats its donors. First donors should be addressed by their names instead of an object like “Dear Supporter” as this sounds insulting. Non-profit organizations should know and understand their donors very well in terms of what they like in the organization’s programs. They should also make a point of communicating with their donors even when they are not in need of money. This is the beginning of building donor retention program (Francis 18). Sometimes donors stop donating because they find another organization that deserves their donations more. An organization needs to pass its messages or information clearly to donors and it should consistently communicate the same as well as act upon it and it should engage in activities that are supported by people. Sometimes those donors who stop giving because of being disappointed don’t give to other charities. Amazingly if the organization didn’t have sound relationship with its donors sometimes those donors don’t remember giving to the organization when requested to reconsider giving again. For donors to be retained they need to be satisfied with the services provided by the organizations in exchange with their donations. Donor satisfaction measurement can be developed by percentage retention rate with hand in hand with the number of years they have been loyal to the organization. According to Robert (12-15), donors want to feel wanted, welcomed and appreciated for them to feel happy. They also need information on what action was taken on the money they gave. They should be communicating through annual reports and newsletters. Connecting with donors is the key way to donor retention. Non-profit organizations can do this through a planning donor recognition program. In planning the organizations should determine how often they would like to be in contact with their donors and for what purpose. An organization may decide to stay in contact with donors who giving to a certain level at least eight times a year or more through birthday cards, newsletters or meeting face to face. A thanksgiving letter can also be sent thanking the donor for supporting a certain project. Thanksgiving can also be done through dinner or luncheon, in national newspapers as well as posting donor list relating to particular projects they support or supported. After fundraising events organizations can post newspaper ads to thank those who donated. Which ever the way the organization uses, they should thank donors by mentioning them where they can (Francis 180). Not-for-profit organizations benefit from donor retention in several ways. Established donors provide continuous donations to the organizations. Due to the satisfaction they receive they even donate more and create a barrier for competitors (other organizations). Established donors refer other donors to the organizations as they are able to spread by word of mouth about the vision and mission of the organizations. It is costly for an organization to acquire new donors than retaining the existing ones. Retaining donors also provide a good organization image to the public and many will be willing to associate with it (Robert 1-15). According to Barbara & Jeanne (137), donors can be segmented according to those have been involved with the organization most like current and former board members. Another segment would be those donors who have donated to the organization for over a period of time or who made a significant donation recently. An organization should be able to come up with ways in treating different donor segments. Capital campaign donors are the major donors and prospective for future donations. Organizations should give them a very personal communication that recognizes their contribution to the organization. In this case letters can be individualized to every donor. Another donor segment is former advisory and board members. This group comprises of current, former and future donors and thus they should be treated very special and the organizations appreciation towards them should be customized. They always want to feel part of the organization and so wouldn’t appreciate if they receive mass appeals. Other major donors include event sponsors, corporate donors who’ve not donated most recently, hosts, family foundations, individuals and smaller foundations who are giving up to a certain level. Their appreciation should also be customized by the organization (Barbara & Jeanne 137). They should be given enough attention even as much as things may be busy for the organization. Another set of donors are those who contribute between a hundred dollars and a thousand dollars. An organization may not give them customized communication but they need to get a lot of attention regardless (Matt 1-21). There is a segment of donors who gave last year and even though they’ve not donated this year an organization still needs to keep in touch with them and still love them, and may be they might decided to donate in future. The final segment is the lapsed donors whose contract has elapsed. They are normally given minimal attention by organizations compared to the rest of the donors. An organization should never ignore these donors as they may decide to help again in future. The best way would be to call them and by providing them will personal attention might just get them back as a donor on board (Adrian & Elaine 89-101). Data Analysis, Presentation and Interpretation Introduction The data has been analyzed using statistical package for social sciences (spss) version 12.0, which is statistical data analysis software. The population size is 10 which is a representative of the population that is involved in giving gifts to not-for-profit organizations. This information is reached by focusing on three main activities. These are: data presentation, analysis and interpretation. Quantitative Analysis Response Rate Type of respondents Questionnaires issued Questionnaire Returned Response rate Donors 10 0 100% Total 10 10 100% As seen from the frequency table above, all the questionnaires issued to donors were returned. All the total questionnaires issued out were 10 and the questionnaires returned were 10. Thus, the response rate was 100%. Awareness of any not-for-profit organization As seen from the pie chart above, 100% were Yes while 0% were No. This implies that all were away of a not-for-profit organization. Donating to any not-for-profit organization As seen from the chart above, 100% were Yes while 0% was No, indicating that all were donating to a not-for-profit organization. Donation frequency As seen from the chart above, 20% were less often, 30% were for often while 30% were for more often. This implies that an equal number give their gifts often and more often compared to those who give less often. Perception of Not-for-profit Organizations According to the chart above 60% were positive while 40% were negative. This implies that many donors have a positive perception towards not-for-profit organizations compared to those who have a negative perception. Provision of various form of donor recognition According to the chart above 60% were Yes while 40% was No. This means that many donors feel the organizations they give their gifts to provide for them various form of recognition to show their appreciation. How Not-for-profit organizations have recognized donor past gifts As seen in the chart above, 60% were better than expected, 0% were for just as expected while 40% were for worse than expected. This implies that many donors feel how not-for-profit organizations recognized their past gifts were better than what was expected as compared to a few who felt it was worse than they expected. Satisfaction of information received from not-for-profit organizations on what they donated Following the chart above, 40% were very satisfied, 20% were somewhat satisfied, 20% were somewhat dissatisfied while 20% were dissatisfied. This means that many are not very satisfied with the information they received from not-for-profit organizations regarding how the gifts they gave out were used. How effective the not-for-profit organizations are in using the gifts given As seen in the above pie chart 40% were excellent, 40% were good, 20% were average while 0% was good. This implies that an equal number of donors think the not-for-profit organizations use their gifts effectively. How informed donors are about the not-for-profit organizations they donate to According to the pie chart above 40% were very well informed, 40% were generally informed while 20% were not well-informed. This means that an equal number of donors were well informed about the not-for-profit organizations they give their gifts to. Level of donor involvement in in the not-for-profit organizations Following the pie chart above 20% were a great deal of involvement, 40% were some involvement, 20% were very little involvement while 20% were no involvement. This implies that just like a large percentage of donors are actively involved in the organizations they give gifts to, still many don’t involve much. Satisfied with involvement level As seen in the chart above 40% were yes while 60% were No. This implies that many donors were not satisfied with their involvement level in the organizations they give their gifts to. Qualitative analysis Many people were aware of at least one not-for-profit organizations. Many people donated to not-for-profit organizations because they would like to be associated with giving a helping hand in their entire lives. The donors gave gifts often to the not-for-profit organizations they supported, but it depends with their source of income and how constant it is otherwise fluctuation in income leads to giving less often. Many donors have a positive perception towards the not-for-profit organizations. Those who have negative perception are few but it is because they feel some of these organizations are not genuine and are only there to source money for the individuals heading them. Many donors are happy with how they are appreciated by the organizations they give gifts to. These organizations provide various forms of recognition to show their donors their appreciation. Still a few donors didn’t feel appreciated. There are benefits that are valuable to donors in the organizations they give their gifts to. They would like to be invited as guest of honor in the organization’s events, their names be listed in the Donor Annual Reports, receive information on the impact of their giving to their organizations, receive badges acknowledging them as major donors and be given an opportunity to advice the organization’s upcoming projects. Many donors feel the organizations they give gifts to recognize their contributions more that they expected. Still a few felt their recognition was worse than they expected as their giving is not associated anywhere in the organizations they give their gifts to. Good number of donors was satisfied with the information they received regarding how the gifts they gave were used. Still a good number were not satisfied with the information as they thought the information was not clear or the reports provided were not adding up. Many donors felt their gifts were used effectively by the organizations they give to though a few thought their gifts were not put into good use. Many donors were generally well-informed about the not-for-profit organizations they give their gifts to while a few were not well-informed because they didn’t receive very crucial or clear information regarding the organizations. As a few of donors felt satisfied with their involvement level, a great number were not satisfied with their level of involvement. They would like to be involved by providing service on volunteer boards or committees, be given opportunities to interact with the board, be invited for special events of the organizations, and be given opportunities to interact with the stakeholders of the organizations as well as be involved in the new upcoming projects. Only a few number of donors involved a great deal in the organizations they give gifts to. Still a good number involve in some way while a few had little or no involvement. Summary of Findings, Conclusions and Recommendations The study focused on the donor value by finding out how satisfied they were with the not-for-profit organizations they give their gifts to. 10 donors were interviewed both who gave in the past and those who are giving currently. The study examined the knowledge of not-for-profit organizations to the donors, donation frequency, donor perception towards the organizations, benefits received from the organizations they give gifts to, how satisfied they are with the information received from the organizations regarding the use of their gifts, their involvement level in these organizations, and how they would like to be involved. Discussion Long gone are the days when organizations used to give less attention to donors. As not-for-profit organizations are rising up at a high speed there is need for donors to support the same. This is creating competition in the not-for-profit sector and thus there is need for these organizations to create donors, satisfy and retain them for long term support. Many people are aware of not-for-profit organizations and regardless of what segment they come from they are all over. People would like to be associated with an organization that is there to help the community achieve something and whatever they have be it little they are willing to give it out. It is then upon the not-for profit organizations to identify these donors and know how to tap them. Different segments of donors give at different times and for a different period of time. This depends with the source of income of these donors. Those who give less often could be their source of income fluctuates compared to those who give more often and organizations should understand each of these segments in order to come up with strategies to satisfy them. Many donors know not-for-profit organizations’ motive is not to make profit but to support individuals, institutions or the community in some way. Thus, these organizations need some source of income to sustain their activities. This is why many donors are willing to support these organizations. But there are other donors who have a negative perception towards not-for-profit organizations. This could be because of information received in public about some not-for-profit organizations that are not genuine. Some of these donors have experienced in their past donations to these organization that are not genuine and developed a negative perception towards the rest of them. Those who have negative perception are likely to give less often to these organizations or not give at all. Donors like to be appreciated by the organizations they give gifts to. Organizations need to provide various forms of recognition to show their donors appreciation. Organizations need to know benefits their donors value most. They would like to be invited as guest of honor to the organization’s events, have their names listed in the Annual Reports of Donors, receive frequent information on the impact of their gifts to the organizations, be given badges acknowledging them as the major donors or receive an opportunity of being part of upcoming projects. As much as donors give, they expect some appreciation from the organizations they give their gifts to and these organizations should work towards exceeding these expectations. Another way of valuing donors is for organizations to give satisfactory information to them regarding how their gifts were used. Donors would like to know how effective these organizations used their gifts and if those gifts made any impact on the organizations. When they receive this information, donors are motivated to do more by giving more or sourcing for other donors from their network. Donors who don’t receive this information think they were taken for granted or their gifts didn’t perform the work it was meant to be. They become suspicious of the organization activities and later stop giving. Many not-for-profit organizations see donors more objects than human beings and human beings are very social. Donors would like to be more involved in the organizations they support besides giving their gifts because many of them are not satisfied with their involvement level. They would like to provide service on the organizations’ volunteer boards and committees, get an opportunity to interaction with the board, be invited for special events, be involved in the upcoming projects as well as get an opportunity to interact with the stakeholders. Those donors who are not satisfied with the way not-for-profit organizations are treating them, are associated with giving less often or backing out or not involving at all in the future organization’s projects. Those who feel appreciated work like they own the organizations and they support those organizations as much as they can. Conclusion The findings relate to the literature review in that donor loyalty and donor retention provide long-term relationship between donors and the not-for-profit organizations they give their gifts to. United Way International (UWI) Australia Case Study and Recommendations Case Study of United way United Way International is a not-for-profit organization with member organization of 42 countries. UWI was created in 1974. The UWI affiliates conduct initiatives, work with its employers and local groups to raise and distribute finds to support many NGOs. UWI addresses immediate needs of NGOs to alleviate suffering. It also supports its members to come up with long-term solutions that will deal with the route problem. Through its Donor Advised Gift Program, UWI supports many programs around the world including arts, education, environmental services, human and health services. Revenues come from contributions provided by foundations, corporations, employees and individuals. The willingness of donors to support is massive. According to United Way International (2003), UWI has identified its donor segments as follows; Ordre de Connaissance ($500,000 -$749,999) Ordre d’ Indépendance ($250,000 -$499,999) La Société Nationale ($100,000-$249,999) Ordre de Fraternité ($75,000-$99,999) Ordre d’ Egalité ($50,000-$74,999) Ordre de Liberté ($25,000-$49,999) Membres de la Société ($10,000-$24,999) Platinum Level ($7,500 - $9,999) Gold Level ($5,000 - $7,499) Silver Level ($2,500 - $4,999) Bronze Level ($1,000 - $2,499) To attain donor loyalty and retain them UWI needs to come up with donor retention strategies. These donors need to feel valued and appreciated. Recommendations to United Way International (UWI) Recognize donor segments The organization should identify all the donor segments it has and come up with strategies on how to satisfy all of them instead of treating one special and not recognizing another segment at all. Regardless of their level all segments are needed either now or in future. Provide information that donors will be interested in The most information that donors will be interested is satisfactory information regarding the impact of their giving on the organizations and how their donations were spent or used. Annual donation reports could be sent to these donors to make them stay informed at every stage. Involve donors more in the organization The organization should involve donors more besides their giving in the organization activities. An organization plan that consists upcoming events and projects can be communicated to this donors and invite them to be involved in their area of interest. This will make donor-organization relationship even stronger. Donors will feel more needed beyond the gifts they give. Provide different forms of donor recognition The organizations should come up with different ways of recognizing its donors. It could be invited them for a luncheon, giving them awards, sending them appreciation cards, acknowledging their birthdays and so on. Recognized benefits different donors value Different donors have different benefits they value from the organizations they support. It is upon the organization to identify these benefits. While one donor would like to be part of an upcoming project another one would like to be invited to the organization’s events as the guest of honor. Which ever the way the organization should work towards providing these benefits to its donors. Works Cited Adrian & Elaine. Fundraising management: analysis, planning and practice. Routledge, 2004 Barbara & Jeanne. Fundraising Basics: A Complete Guide. 3rd ed. Jones & Bartlett Publishers, 2008 Bernard, Marr. Managing and Delivering Performance: How Government, Public Sector and Not-For-Profit Organisations Can Measure and Manage What Really Matters. Butterworth-Heinemann, 2009 David, Kurtz, L. Contemporary Marketing. 13th ed. Cengage Learning, 2008 Francis, Buttle. Customer relationship management: concepts and technologies. 2nd ed. Butterworth-Heinemann, 2008 Francis, Buttle. Relationship marketing: theory and practice. Sage, 1996 Adrian & Jane. “Donor retention: an exploratory study of door-to-door recruit”. International Journal of Nonprofit and Voluntary Sector Marketing 13 (2008),  89 - 101 Matt, Evans. Creating Value in the Nonprofit Sector. 2 Apr. 2010 Moira & Baker. Business success through service excellence. Butterworth-Heinemann, 2004 Robert, Ian, P. Face Time: Relationship Philanthropy. Civil Sector Press Ronald & Scott . Leadership: succeeding in the private, public, and not-for-profit sectors. M.E. Sharpe, 2005 United Way International. Annual Report. 2002. 1 Apr. 2010 Read More