Relationship marketing

Introduction

Relationship Marketing is quite the buzz word at the moment but broken down it simply means that the relationship you have with each and every customer/donor as an individual will have a bearing on how your income develops. Having this close relationship with your customers/donors can hardly be considered new thinking as in our recent past when the pace of life was slower it was natural for the butcher to know that Mrs Smith liked to buy pork sausages on a Thursday! Businesses now wish to return to this state (as much as they can) using information and technology.

How this relates to fundraising is fundamental. Charities need to be aware of the changes to help make better decisions about their own fundraising strategies. This knowledge will also help in creating new fundraising ideas. The commercial sector seems to be fundamentally changing in its attitudes to its customers and fundraisers need to know about these changes whilst they are taking place. There is no reason why the fundraiser should not be just as up to date as their company contemporary.

This report looks at this idea of getting closer to the customer, in terms of fundraisers, that is the donors. Most of the information has been taken from the commercial sector and offers an up to date look at changes in the business environment.

"He who knows the customer best has no competition.
Intimacy is the future"
Relationship Marketing International
020 7734 8787

Creating a relationship

The only way to create a relationship with your donors is to find out who they are. Once you know who they are you can find out how important they are to your organisation e.g. one off donors who have never given again are not worth huge amounts of your time, however someone who gives regularly is worth more time.

This knowledge will lead you to:

Use your time more effectively
Concentrate on a smaller number of important donors
A much more effective fundraising programme as the donor knowledge will allow you to target fundraising events/campaigns and use your donors more effectively.

How to get to know your donors

What information do you already have

1. Financial information

Where your money comes from is vital to knowing where to place your energies. By coding money that comes in you will be able to find out what proportion of your money comes from e.g. specific campaigns, one-offs, regular givers, from groups of people at work/individuals etc. All this information is important so you know where to put your energy. For example, an individual hears about your charity and becomes a member, after having a 'relationship' with your organisation her work has a team in the London Marathon and are looking for a charity, she mentions your name. Some people will not make the connection unless you are having that "relationship".

Again if you are not already doing this with your finances speak to your accountant and see what could be done easily, backdate codes if possible, but if not start coding from now on, in one year's time you will have a lot of information.
To do this you will need to decide what your codes are e.g. one-offs, company, individuals, groups etc. It is important that everyone understands the codes so that they write the correct one on the money that comes from their section.

2. Donor audit (basic)

Carry out some simple research. Who are your current donors? Obviously they agree with your cause but how much association to they want with you. Are they:

One off donors, regular givers
How much do they want to hear from you (annually, monthly, do they want to hear about specific events either related to your cause of fundraising, would they help once a year with fundraising if you provide the tools?)
What do they do? Do they work?
What interests do they have?
What have they done for you in the past? Volunteer, fundraising etc
Who are they
What is their age?
What is their gender?
Where do they live?
What job do they do?

3. Donor audit (advanced)

This should only be carried out if you have achieved the first stage. Do not try to be too advanced initially or you are likely to get caught up in the bureaucracy of researching. Choosing a few questions that you think are the most important is the best way - you may also annoy people by asking too many questions initially. Be careful and use your instinct.

Which donors contact you the most frequently, why?
Who gives the most?
Who is most likely to have the most potential to give or pass the word along in the future?
How many donors does the charity have?
How many customers are gained/lost every year
How profitable are those individuals (do they fit the Pareto rule 80:20)
How much is spent on each area
What percentage of customers is worth expanding?

Tailor the questions to suit your own needs. Can you see how each question can help you to develop strategies for using your donors better e.g. if they are very interested in aerobics, would they help you approach their local gym to organise a fundraising event? If they have only given once and you have never heard from them you are probably wasting valuable resources keeping in contact with them?

Once you have developed the questions you want to ask, depending on your own time schedule, you can either:

Research the whole of your database (consider it a useful tool to clear out dead wood - it may take time but in the long run you will be saving money),
Research a percentage of your database
If time is really lacking start with new donors. Ask them the questions and begin to build up information.
Do not look upon this as something to do in the future, if you cannot look back start from now. Ensure all those involved in taking details of new donors asks the questions.

The results

The result of collecting this information should lead to an idea of who your 'best' donors are. These are not necessarily those who give the most so decide what 'best' donor means for you and your team.

Best donors

Once you have established who are your best donors are you must now find a way to use that information.
According to marketeers worldwide the pareto effect is alive and kicking in almost every part of the business. The Pareto effect is this: that 80% of donors bring in 20% of the revenue and that 20% of donors bring in 80% of revenue. Although there has been no specific analysis on fundraising activities, it is a good starting point as it has been proven in the commercial world.
This means that 20% of your donors are the most important and should be looked after carefully. Donor Interaction, dialogue and feedback are the keys All donors are not equal in value terms and therefore their needs and aspirations are likely to be different. If you do not know what these are it will be difficult for you to formulate any good fundraising plans. This does not mean that you are rude to any donors, service excellence is a prerequisite. The future of marketing according to many marketing companies is donor value groups - directing people within your organisation to 'take care' of that 20% of the donors - rather like 'Account Executives' do in Advertising agencies.

Communication tools

Telephone. Telephoning is a good way of clearing your database and asking a few questions on the way. You can find out whether someone is receptive to being called and
Talking. Talk to donors. Divide them up between you and your team, have, for example, one morning every week/month/etc when you telephone a set number.
Listen to them. Do not underestimate the power of listening. By listening to what hey are saying and what they are not saying you will be able to decide their place.
Write to them. Keep them up to date with what is happening. Try to get a balance with who wants regular information and who wants the occasional update. This does not have to be costly but can be a photocopied sheet or nowadays with computer software newsletters are not hard to create quickly and effectively. Also consider writing a hand written note to people, as that appears very personal.
E-mail them. Often individuals in companies will have e-mail and it is a good way to send short notes/requests/etc very cheaply.

Things to consider:

Find out what they like/don't like
Try to please them
Keep up to date with what they're doing, where they are
Stay interested in them
Observe them
Treat them as an individual
Change your behaviour to respond to them
Tell them when you're doing something new (e.g. a new website)
Ask their opinions

Donor panels

This is widely used in the commercial sector as a way to keep up to date with customers and receive positive feedback. A group of people are asked to be the Donor Panel and are requested to comment on various things e.g. direct mail letters, newsletter, they could be asked to proof read information if you are hard pressed for contacts.

Where to put the information

Keep a centralised database so donors are not contacted more than they wish and so other can update with the information on how long ago the donor was contacted and what the result was.
Visual aids are very powerful tools. Devise a way to have this information in front of you, or on the wall, which explains who, your donors are. For example when you begin talking to your donors, take detailed written information but why not have a chart on the wall and put in the details so you get a picture of how many are your core donors etc. This information will help you with being creative and remind you who may be able to help you in different ways e.g. if you have an accountant who is a regular donor, may be they would help you with your accounts.
Have a map of the country/region, if this is relevant.

The future

Organisations are now looking into relationship marketing. This translates into not just selling their product but providing a lifestyle service to their customers. This means the closer they get to their customers, the more likely they are to find out what their needs are and then go out and satisfy those needs. It is a complete turnaround in that the organisation is almost seeing itself in servitude to an individual's needs.

Example of getting close to your customers and expanding your horizons
One example of this is my local supermarket Tesco. Tesco, which is known as supermarket, which usually meant where someone would buy their food now offers the following services:

Club card credit card club card bonus collection
Customers' lifetime valuations vouchers for products
Discounts on holidays personal calls from the manager
Customer research Tesco customer magazines
Tesco own brand insurance B&Q discounts

Taking one of those, the credit card, means that Tesco is moving into banking. One may find that very strange until you think about your own movements. Do you have a deeper relationship with your supermarket or your bank? Which one tries to save you money on a weekly basis? These questions are fundamental changes in the way organisations are beginning to think.

Here is a quote that launched the Marketing 97 conference and indicates a shift in thinking about customers and how to get them to buy more products:

"We need to think beyond one-off transactions or purchases, and shift our understanding to the motivations that lead customers to elect to give us their custom over a lifetime"
Raoul Pinnell, Global Head of Brands & Communication, Shell International.

More tips

Don't forget in the commercial world it has been proven that it is easier to sell to the existing donor than to get new donors.
Other questions to ask yourself: how much does it cost you in resources (time/money) to obtain an new donor, how much does it cost to retain a donor and how much does a donor give over time.
Use your instincts when talking to donors, they may find you bothersome, and they may want to chat.
Only ask questions that you really want the answer to - if you aren't going to act on their answers don't ask them.
When telephoning it is often good to have a mirror in front of you and to ensure that you smile. Whether you believe it or not it does get transferred down the telephone line.
If you make a mistake in whatever you are doing in fundraising, apologise quickly as this will almost always stop any bad feeling
Creating a relationship is hard work and will not be achieved over night, but setting specific time aside and clear goals to work for will help you and your colleagues.
Make it easy for your donors to communicate with you
Treat individuals differently
Reward them (in terms of charity work may mean letting them know the successes that have been achieved over a period, but other ways should also be thought of to thank those who deeply support the cause - from a hand written letter to inviting them to events along the way.
Revenue: make more profit from existing customers, keep customers longer, acquire new customers.
Decide on how you are going to monitor your donor base and evaluate what the data collected means.

Conclusion

We now live in an affluent society where the majority of people have their basic needs covered. This means that people are now looking for something more in life, at least that is what big businesses seem to be saying. Surely, if this is the case, Charities have a huge part to play as they are offering an altruistic side to an individual's lifestyle?
Make this year the year when you become closer to your donors. Although the task may appear daunting, make simple, basic in-roads and see the difference. The key is to only ask what you really need to know and can use at that time, after all if you succeed in creating a relationship you can also go back to ask more questions/opinions. Also note that people are likely to be quite suspicious if you confront them with a whole list of questions. Start gradually and move along slowly and clearly.

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