Forcing or forging a relationship? Part 3: how to measure a relationship
- Written by
- Charlie Hulme
- March 18, 2015
You are only nine questions away from unlocking enormous value from your current file. Nine questions that represent the beginning of the end of inevitable donor churn.
No more torturing transactional data trying in vain to squeeze extra value from it. No more overlaying socio-economic profiles revealing fascinating but utterly useless segments – for instance, ‘wow, we’ve discovered that 7.4 per cent of our house file are called Neil, read the Telegraph and do tai chi every Tuesday evening’. No more expensive and time-consuming ‘thank-you’ programmes with absolutely nothing to show for them.
Instead you are only nine simple questions from knowing exactly who your most committed donors are and who they aren’t.
Below you can see a simple image of the way the world of relationships works. This model applies to your relationships with friends, colleagues, loved ones, through to brands and causes.
On the right-hand side you see what we all want to see from our donor’s relationship with us: behaviour, either giving or doing.
On the left-hand side you see what we do to try and cause this behaviour: everything we say and do.
Sitting in the middle is the lens all that information is filtered through: your donor's attitude. This, as we saw in the previous article, is formed of their functional connection with you which causes their personal connection, which causes commitment, which in turn causes behaviour.
Without the lens of this commitment model any form of segmentation or selection is a shot in the dark; it might work, or it might not. With the commitment model each component part of the relationship is measurable, giving you a very clear idea of just how committed your donors are, or are not.
As you see above there are three questions to measure their functional connection, three to measure their personal connection and three more to measure their commitment. Each question is scored one to 10. None of the questions is relevant in isolation, only the collective commitment score counts.
If you add these questions, today, to every interaction you have with donors, you can determine exactly who your most committed donors are and who most warrants your time, energy and investment.
What difference does it make? In a straight A/B test mailing to high and low commitment donors the response rate from high commitment more than doubled that of the low commitment, giving an ROI of 943 per cent compared with just 234 per cent.
Moreover through our work measuring loyalty with over 250+ charities around the world we have empirically identified a 131 per cent difference in lifetime value between the highly committed donors and the low commitment donors.
Every charity can reasonably expect to see a radical leap in lifetime value if only they could identify their donor's commitment and begin to steward them from low to high and from high to higher.
Like every charity you have high and low commitment donors sitting on your house file right now. But you've had no good proxy to identify them: until now.
As we've already seen in part one of this series, transactional information is a far from complete picture. It can tell you what people, aka anonymous groups of data, did. But it can't tell you what they'll do. By adding attitudinal data to transactional you get a model that is proved to be predictive of future behaviour.
This definitively answers the question our sector has been obsessed with but never been able to answer: who?
Who are my best prospects? Who should I focus my time, money and effort on? Who doesn't warrant that investment? And so on.
This transforms the way we segment from the backwards looking, non-causal methodology of recency, frequency, value to one that is 100 per cent cause-and-effect based.
But it's really only a very small piece of the value to be found in using commitment modelling.
Yes it finally answers the 'who' question, 'who are my best donors', in a way that was impossible to do before now. But the real value comes in being able to answer the 'what' question: what exactly do I need to say and do in order for donors to become and stay committed?'
That's what you'll discover in the fourth part of this series: 'how to manage a relationship'.
© Charlie Hulme 2014