Charities rely on supporters for their funds and on supporter data for effective fundraising. As David Reed finds out, consumers are quick to spot when something has gone wrong and use it as a reason to leave, so good data quality can stop them having that excuse.
Doing the right thing is what charities are all about. After all, they are called good causes. So doing the right thing is doubly important in the third sector since the expectation among donors is high that the organisation is using this asset effectively. An added pressure on data quality projects is the transparency of reporting about costs. With most charities aiming for an 80/20 split between funding their activities and paying for their overheads and admin, wastage through poor data is unwelcome.
The good news is that charities are getting it right most of the time. In 2010, out of 3.9 billion asks made to the general public, just 18,442 complaints resulted. According to the Fundraising Standards Board, a self-regulatory body that conducts an annual audit on complaints, the top tier of causes are performing better than the rest. Despite accounting for 91% of the volume of asks, the top 50 charities were the subject of 66% of complaints.
There are few prizes for guessing which media consumers complained about most - direct mail, telemarketing and door-to-door. But as Samantha Wilson, marketing and policy manager at the FRSB, told delegates at the Fundraisers Masterclass, organised in April by DataIQ in association with The REaD Group, “the most complained about media are also the most effective.”
The Board commissioned analysis from the UK’s only professor of non-profit marketing and fundraising at Bristol Business School, Adrian Sargeant, to dig further into the annual returns about complaints provided by members. This revealed the number of asks made in key channels for every complaint generated (see Chart One). High volume channels generate remarkably few objections.
When complaints do arise, however, there is usually on leading factor. “One-third of all complaint about direct mail are about poor data, where an item is poorly addressed or sent to somebody who is deceased, closely followed by frequency of appeals” said Wilson.
FRSB research highlights that data protection is an important area of concern for consumers. Of the total received, 1,200 complaints were about this, with direct mail generating the majority of compliance-related complaints (at 46% of the total). Significantly, three-quarters of all complaints about email related to data protection, suggesting issues with opt-in or unsubscribes haunt this sector’s digital marketing.
When commercial organisations fail to get their data quality right, there is a risk to their brand. However, consumers have a relatively high degree of tolerance towards their data errors. Charities operate in a far more sensitive realm since the emotional allegiance which brings an individual towards a cause also raises their expectations.
Consumer research carried out by The REaD Group and unveiled at the event showed the risks involved. Badly targeted mailings would make nearly half of consumers stop donating to a charity, a figure that has risen by 18% since the same survey was carried out in 2010. Frequency of contact has also become a major trigger of disaffection, with a small majority of consumers pointing to it as a reason to defect.
Louise Walker, group marketing manager at The REaD Group pointed at that a core donor group - the over-65 - emerged as the easiest to annoy in this way. “Are charities getting it wrong more often or are consumers more sensitive because of the economic climate?” she asked.
One benefit of the high level of engagement and trust which consumers feel towards charities is the willingness of donors to notify the organisation about a data error - over 60% would do this if they received an inaccurately addressed piece of direct mail. More worryingly, 20% say it would make them less likely to donate in the future. Actual cancellations and unsubscribes are relatively rare at around 8%.
But the message from this research is clear - consumers notice if data is accurate and feel let down if it is not. While they are more likely to try to get it corrected than to defect, a proportion will see it as a reason to move away from that charity.
In an era where new donors are getting harder to recruit and existing donors are potentially giving less, anything that could impact on charity funding needs to be addressed. If that issue is something as relatively straightforward as data quality, it looks like an easy fix.
James Kliffen, head of fundraising at Médecins sans Frontières (MSF), pointed out that between Q1 2006 and Q1 2011, new donors in the US fell in volume by 23.4%, while the volume of all donors retreated by 6.4%. “There has been a catastrophic decline in new donors in the US, although they are still using predominantly cold direct mail and are all fishing in the same pool,” he said. “But I don’t think it is just the recession, it is also because of the rise of digital.”
This is proving to be both a blessing and a curse - MSF now generates over 20% of its funds through online channels. Understanding what is driving digital donors is less easy, he explained: “When we ask them why they give, the answers are unhelpful - some even say they have heard our ad on BBC radio!”
During his tenure, MSF has focused on ensuring that the majority of the funds which it collects are unrestricted - that is, that they can be used for any purpose the charity requires, rather than being given for specific causes, such as when a disaster happens. Combined with a distinctive culture within the organisation, this has taken MSF away from the classic direct marketing model used widely in the sector.
“We have given up on the idea of the supporter journey as an organising concept. We need to concentrate on the basics first - saying ‘thank you’ often and ‘please’ rarely,” said Kliffen. The tone and content of its messages reflects this, with agency copywriters having been dumped in favour of frontline nurses and doctors as well as former professional journalists.
The difference in MSF marketing from typical charity communications is probably most evident in its use of email. It had a problem around the permissioning available, but after discussions with the ICO, the charity has adopted an approach that both fits its culture and also allows it to contact non-opted in members.
“We only returned to email last year because of insurmountable data problems. We have decided not to use a newsletter - we have an ‘e-not-newsletter’. We only send it when we have something interesting to say and we never ask for money,” said Kliffen. Despite this, significant sums are generated on the back of the emails which are not segmented according to donor value. “Why shouldn’t a low value donor get the same information as a high value one?” asked Kliffen.
MSF’s funding from each donor now sits at four-times the industry median at £618, twice the level of the next charity. It has been generating a return on investment from its marketing of 10:1, with 85% of the funds generated unrestricted. Not everything has been working - Kliffen admits that an integrated campaign last year was a failure. “It was the bleeding edge which drove a lot of web traffic and not a lot of money. But I am convinced we are moving in the right direction,” he said.
The concept of the customer journey has not been abandoned entirely by this sector. Indeed, Glenn Gook, group solutions, The REaD Group, noted that the critical stages of acquisition, upsell, loyalty and win-back remain fundamental goals. “One problem is that organisations have been too focused around acquisition and not loyalty,” he said.
Getting that balance right will also impact on the media channels used. “Social media are a huge opportunity, but I have yet to see any charity make significant income out of it. Is it best used for awareness or acquisition? Macmillan is using it purely for brand marketing, for example, with a view that awareness does drive web traffic,” said Cook.
Attributing revenues to the source channel will continue to be one of the major data challenges for charities using multiple channels. But if they can acquire and enhance their supporter data, the communications which become possible get really interesting. “SMS has been used spectacularly well by some charities. For example, RNLI uses it when a lifeboat is launched to text local donors saying, do you want to continue to support it?” he noted.
Sophisticated targeting and supporter journey management is only possible if the underlying data is of the right standard, however. Cook pointed out that most charities have data assets which they are not exploiting fully: “It is very expensive to buy cold data. Yet 80% of your database could be lapsed or inactive donors - when retargeted, they typically outperform cold data by 20%.”
That is a strong argument in favour of applying data quality, hygiene and enhancement to supporter data which might otherwise have been neglected. Consumers don’t like it when charities get their data wrong - they like it even less if they feel forgotten - something that generally happens three years into the relationship. But it can happen even earlier.
MADTA’s John Conway reported on his experience testing supporter journey management by giving £20 on twenty different charity websites and tracking their response. “The longest it took a charity to send an acknowledgement was seven months,” he recalled. No amount of data management can improve that if the underlying processes are missing. With donors getting hard to get and keep, aligning supporter and data management has become even more compelling.