In Part 1 of this blog post, I looked at the current state of new donor recruitment in the UK, where many charities are finding it increasingly hard to enlist new supporters at an acceptable cost. The channels and methods that have worked in the past are increasingly congested, are limited by regulatory changes and are facing steadily declining response rates. From direct mail to face-to-face to telephone fundraising, the major routes to market for many charities are becoming less and less viable.
In the previous post I said there was, however, a positive fundraising future for non-profits to look forward to. Not – or not only – online, which for charities has been much hyped and little delivered, but integrated multi-channel marketing, which has data at its core.
What do I mean by this? The future for non-profit marketing is, I think, exactly the same as for its for-profit equivalents. The companies that are conquering the world of commerce are, essentially, giant databases: think Amazon, Google, Faceboo, Uber, Airbnb, Kickstarter. Their business models are based on customers giving them their data, which they then use to market back to the customers. These are businesses built by coders and data analysts. It is commerce reduced to an endless stream of yes/no answers.
I can't off-hand think of a single charity that is run like this. The nearest is Charity:Water, for which the website was built first and the charity around it. But in most charities the database is the box in the corner that only one person, whose status is only slightly higher than the office junior's, knows how to use. Or there are 20 different databases in the organisation, one for each work group and none of which talk to each other in any meaningful way. Most charities don't employ people whose expertise is in actually understanding the data that's kept in such systems, and that data by and large isn't used to drive the important decisions of the organisation.
I don't think this approach has worked terribly well up to now, but it certainly won't work in the future. To me, the future of charity marketing looks like the ability to communicate with supporters individually at scale across multiple channels and platforms consecutively. Digital technology means we can track every interaction with an individual across every possible channel and bring all that information together to allow us to target appropriate communications at them.
Marketing campaigns of the future will move from a small number of big activities – a mailing with a dozen segments, say, or a face-to-face campaign – to thousands of different, dynamic interactions across multiple media. All of these will interrelate in real time, meaning we are endlessly re-segmenting individuals based on their behaviour to bring them the most relevant content. Every interaction will be tracked to ensure that the media mix constantly changes as money and effort moves to what is working today.
That sounds very simple in theory, but it is extremely hard to do at an organisational level across every platform and channel.
Charities need to overcome a number of major barriers to be able to succeed in a multi-channel world. For one thing, only a truly integrated approach will work – and charities are awful at integration. Silos proliferate in all sizes of non-profits and key functions are often divided by unbridgeable walls. What the rest of the world considers to be marketing, charities frequently divide into "fundraising" and "communications", put under different managers with conflicting objectives and populate with staff who talk different languages to each other.
The systems and technology charities use are frequently outdated and incompatible. The sort of software that any small business can use these days for a modest fee typically offers levels of integration, functionality and simplicity that the creaking accounting and fundraising systems used by so many charities can only dream about.
There is then the massive issue of expertise. It's not just about having people who are digitally minded; it's about having people who are able to look at large quantities of data and turn it into actionable information. These skills are not needed only by specialist analysts, but also by staff at all levels up to the most senior leadership. People who not only can, well, do sums (an issue in some places) but who are properly data-minded.
I suspect what we will see is a massive shake-out as the organisations that manage to properly embrace the new approaches thrive at the expense of those that don't. It will be fascinating to see who the winners and losers will be.
Tobin Aldrich is a fundraising consultant and chief executive of the direct giving charity the Misfit Foundation