Technology, Analytics and Marketing Converge

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Nonprofits have long been considered innovators in direct marketing, pioneering many of the techniques in widespread use today. As a result, the nonprofit segment of the direct marketing industry has been growing at a phenomenal rate, and this rate is not expected to slow.


One of the drivers of future growth will certainly be the acceptance on the part of nonprofits of a paradigm shift in the way they market to their donors and members. This paradigm shift is characterized by a move from mass production to customized production, mass media to individualized media, uniform products to tailored products and uniform messages to tailored messages.


Nonprofit direct marketing guru John Groman explains the difference between these two marketing approaches as going from "we make, you take, we speak, you listen" to "Have it your way, please." Regis McKenna, author and marketing consultant, talks about the coming age of the never satisfied customer, where the consumer has come to expect anything, anytime, anywhere, anyway.


What are the necessary ingredients for nonprofits to achieve success in this new marketing environment? Three elements must converge: technology, analytics and marketing.


It is often said in direct marketing that list is the single biggest predictor of success. In this case we are speaking of the database of donors/members -- the technology element -- and how it is designed, integrated and managed.


Today's database software for donor and member management enables true enterprise wide customer relationship management. EWCRM refers to an approach and a methodology for managing relationships across all business units within an organization.


In the case of nonprofits, this means that a single record contains, among other information, a donor or member's full donation history including direct mail gifts, pledges to walkers in a special event, soft credits for a matching gift made by the donor's employer and purchases from a catalog or gift shop. Also, in this kind of database, volunteer participation, customer service interactions and research pertaining to planned and major gift potential also would be stored in the very same record that contains the gift history. In many nonprofit organizations, each of these types of interactions, both financial and nonfinancial, are on separate databases or not on a database at all. The one view of a donor or member relationship with the nonprofit is not available and, as a result, marketing is not only inefficient, but fails to capitalize on this information to truly build a relationship with the donor or member.


Constituents assume that the nonprofit knows every interaction they have had and although these same constituents have a high tolerance for repeating demographic information, it doesn't have to be that way. Individuals like to be recognized and reminded of their support. True EWCRM software enables just this kind of relationship-building. The result? Increased ability to target, segment and recognize donors/members; tailored communications to enhance affinity, informed cross-sell strategies; and growth in market share and revenue.


In addition to the use of database software that facilitates EWCRM, successful nonprofits must make use of analytics. This means that traditional recency, frequency and amount segmentation will not be enough to retain competitive advantage.


Although regression models and profiling can have a significant, positive impact on the bottom line -- and many nonprofits are employing these techniques successfully -- there are also simpler, less costly techniques available to nonprofits. Surveys capture and append data to a donor/member record and new segmentation strategies differentiate a donor or member by the number of affinities/sources of interactions he has. For example, selection priority might be given to an individual who has given direct mail gifts and walked in an event and volunteered over an individual with only direct mail gifts. These techniques help not only in segmentation but they also enable what Seth Godin, founder and president of Yoyodyne, has dubbed Permission Marketing.


With Permission Marketing, the power shifts from the marketer to the consumer. Marketers no longer decide who gets messages and how often, the consumer decides. So if you're a health charity and you ask your donors if they want information about a specific disease and they say "yes" you have the opportunity to build a relevant dialog that enhances relationship-building and improves the bottom line. The process should be a continuous one of gaining knowledge about your donors and members and then using that information to provide the right message at the right time to the right person. Increase fundraising and membership revenue will follow.


Permission Marketing also enables nonprofits to address privacy concerns since the source of the information is not suspect and since having previously gotten the donor or member's permission, your message is more likely to be received favorably.


The final ingredient for the future marketing success of nonprofits is integration of the marketing effort with the database and analytics. The concept of EWCRM must be adopted organization-wide and its principles adhered to not just in the design, development and maintenance of the database and in the collection of survey and overlay data, but also in the communication that then goes forth as a result.


Nonprofits must practice individualization. Current technologies now allow for cost-effective marketing to donors and members on a one-to-one basis. This creates an opportuntity to make information relevant to the constituent based on their interactions or communications with you. This practice should extend to every channel the nonprofit uses: mail, phone (both inbound and outbound), television and the Internet, to name just a few.


Implementation can be as simple as acknowledging and recognizing in the next direct mail piece the fact that the donor just rode in a bicycle event to benefit the charity. Or it can be as complex as a newsletter that uses digitization to create multiple, unique versions for segments of the file based on interests they have communicated to the non-profit.


As noted earlier, the Internet should be an integral part of this strategy. Internet marketing is analogous in many ways to traditional direct marketing. The best Internet marketers use an underlying database to avoid having donors/members repeat information already given. Moreover, the Web site knows every interaction the donor/member has had with the nonprofit, and tailors the messages the individual receives online accordingly.


Organizations who invest and work to coordinate internally with the goal of combining technology, analytics and marketing will unlock the key to success. Each organization will craft a solution that takes into consideration its unique organizational imperatives and its unique constituent base. In the end, organizations that undertake the process will build better, lasting relationships with their donors and members. Organizations who are using these techniques today are seeing a significant lift in results. Organizations who fail to employ these techniques in the future will operate at a competitive disadvantage. If you are not already in the game, it's time to get started .


Phyllis Freedman is senior vice president and managing director of the fundraising and membership services division of Epsilon, a database management and direct marketing company. Her e-mail address is pfreedman@epsilon.com.
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