Phil psych meets donor loyalty
Howard Lake | 11 July 2022 | Sponsored posts
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For almost thirty years I’ve been championing the importing from the commercial world of satisfaction, commitment, and trust as relationship measures that can help nonprofits manage loyalty. But it’s long past time to stop our reliance on our for-profit colleagues and begin to create new models and perspectives for ourselves.
For sure satisfaction, commitment, and trust have a good pedigree. Donors who are very satisfied with the quality of service they receive from the fundraising team, for example, are considerably more likely to renew than those that are merely satisfied. When I last looked at the numbers in 2010, “very satisfied” people were twice as likely to be giving next year than those merely “satisfied.”
In almost every study I have ever conducted on loyalty, donor satisfaction has been a significant factor. So too, the notion of commitment. And in our sector, that’s commitment to the mission or passion for the work of the organisation. Usually, commitment correlates very strongly with intentions to increase or continue giving but, of course, whether it is a predictor of actual future behaviour or value is more open to doubt.
Trust connects donors with their impact
Finally, trust has been important because for most donors it connects them with their impact. If I give you a donation of £100 today and you tell me you will use it to vaccinate ten children, I really have no idea whether you took my money and did that or not. But if I have a higher level of trust that you did what you said you would do, I will be significantly more loyal. Interesting though, that trust is usually the weakest of the three factors.
However, all these measures come from work conducted in the for-profit space and from the domain of relationship marketing. Marketers now understand that relationships are experienced through these three variables and so it makes sense to track them and reward marketing managers for what they are then able to deliver. In our sector, there is now increasing awareness of these factors, but very few fundraisers are routinely rewarded for performance against these metrics.
Which factors drive actual future behaviour?
But before we get too enamoured with a game of catch-up to our commercial colleagues, are these truly the right metrics? Should we just be transplanting ideas in this way? At IFSP we would now argue not. We are just beginning to see the results from our new two-year study of donor loyalty and retention focused on the factors that drive actual future behaviour. Essentially, we matched responses from an initial survey with actual future behaviour and tracked it over time; a methodology that allows us to see exactly what was indicative of future giving.
It’s important to understand that most work on retention and loyalty has attempted to predict giving intentions (i.e., I intend to continue giving or upgrade). We were able to find few studies that attempted to predict actual future behaviours. And, of course, it turns out that what predicts giving intentions is broadly NOT what predicts actual behaviour.
What might be? Rather than start with commercial drivers of loyalty, perhaps we might build our own set of indicators that are unique to our sector, unique to the nature of supporter relationships, and possibly even unique to our own organisations.
What have we learned from our new study so far?
So far, the factors that predict whether an individual will still be giving next year are satisfaction (which we would expect from my previous work), but also supporter wellbeing and identity – ideas all drawn from the emerging science of Philanthropic Psychology or PhilPsych. What is great about this early set of results is that these are also factors that we have shown to be powerful in the here and now. So, we can manage for loyalty in a similar manner to how we can manage for substantive growth in annual giving.
One of the issues with satisfaction, commitment, and trust and other measures such as net promoter scores, is that they are often not diagnostic. They might tell you your score is (say) 5.1, but they deliver little sense of what one might do with that information. The great thing about these new metrics is that they are, at their core, diagnostic. One can understand immediately from a supporter survey what factors need to be addressed and how.
We also learned that benchmarking in this space may offer limited utility. Yes, we may understand that aspects of wellbeing and identity drive loyalty, but the contribution that different charities might make to supporter wellbeing will also be different. So, in using PhilPsych metrics to predict and measure loyalty, they have to be tailored to the particular circumstances of the organisation. We believe that benchmarking will continue to offer utility but would now focus this internally, by tracking trends and rewarding staff for significant changes they are able to deliver to performance.
Our new science of loyalty report will be released in September 2022.
Professor Adrian Sargeant
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.