Data management: External Relations

- Plan every outsourcing project well in advance

- Be clear about your requirements

- Involve the IT department as early as possible

- Get written agreement on objectives, deadlines, prices, and responsibilities

BRITISH RED CROSS

Jo Georgiou, supporter services manager at the British Red Cross, outsources three aspects of data management

"The first is response handling when volumes are high and a rapid turnaround is required," she says. "For example, if there's an emergency appeal, donors expect their funds to reach the crisis very rapidly, and we lack the in-house resources to fulfil that expectation. The second is low-risk data capture, such as cash responses to a mailing to existing donors. The third is overflow call handling." Georgiou prefers to keep in-house anything that involves complicated data capture or relationship-building with donors. When selecting agencies, she relies on recommendations from other charities. She also suggests running trials before giving a full project to a new agency.

Georgiou believes that openness and planning are the secret of good agency management. "Be clear about your requirements and develop a process map so that everyone knows what's expected of them," she says.

"Most importantly, though, get a good account handler, someone who understands the needs of your business."

A data-management agency can breathe new life into a charity's database, but it is vital to use the right agency and to manage the process closely, says Alex Blyth

Elaine Ingram has been waiting a long time for a new database. As the marketing manager of the Arthritis Research Campaign, she keeps her donor records on a DOS-based system set up long before anyone had heard of customer relationship management, or even of the Windows operating systems.

Her colleagues know that she needs a new system, but, as is often the case in the charity sector, there are other, more urgent needs. She has waited in line behind the grant allocation department, all the while wondering why it is that when she adds new donors to her database, the total never seems to increase, and why some donors respond to certain mailings and others ignore them.

After yet another delay in getting the new system, she decided she could wait no longer. She explained to her chief executive that she needed to hire a data-management agency to clean her data, do some simple modelling, and so begin to increase the charity's income.

Ingram is one of a growing number of charity fundraisers who are outsourcing data management. It is a decision that few take lightly, because of the sensitivity of donor data. When taking the outsourcing route, charities should be aware of the many questions to ask and pitfalls to avoid.

Why outsource?

The first question to ask is whether outsourcing is a better option than hiring in-house staff. For Ingram, an agency was a bridging solution before getting a new database. Many larger charities, such as the NSPCC and Barnardo's, prefer to keep it in-house. Some argue that they have a responsibility to their donors to look after their data themselves, while others just find it more cost-effective to run it in-house. For small to medium-sized charities, however, outsourcing may be the best option from both a security and a price perspective.

"It's so easy for inputting and processing standards to slip," says Cliff Hughes, new-business director of Valldata Services, a data management consultancy whose clients include the Royal British Legion and Marie Curie Cancer Care. "But an external supplier knows that the continuation of the relationship is dependent on its consistent delivery to agreed standards. Furthermore, a supplier can handle the peaks and troughs of activity by plugging the work into a process that is already running. The client is relieved of the problems of staffing up or down and so they can often save considerable sums of money."

Outsourcing can often be safer and cheaper, and in some cases it can even be better. Hiring an in-house data manager provides the expertise of one person.

Hiring an agency provides the expertise of several. Also, consultants are often highly experienced and can help to plug expertise gaps in a charity.

Peter Cross, a charity specialist at consultancy NCC, says: "An in-house team knows where they are now, but we know where they need to get to, and how they're going to get there."

What to outsource

Data management covers a wide range of activities. Not all are widely viewed as appropriate for outsourcing, but most are. Generally speaking, few charities feel comfortable outsourcing the data management of any project which involves the cultivation of relationships with new, high-value donors. More typically, a charity will outsource response handling when the volumes are too great for it to handle in-house, or the required turnaround in an emergency appeal is too rapid. Low-risk data capture is another common candidate for outsourcing, as is stand-by call handling capacity.

Data cleaning and data modelling are often best done by external specialists.

Monte Fields, client relationship manager at list broker Occam, argues that it can be efficient to outsource data buying.

"You should outsource work that is not related to the core business of the organisation, functions for which no-one in the organisation has expertise and that will use up staff time for a disproportionate return," he says.

"For example, buying data for cold mailings requires an encyclopedic knowledge of over 8,000 lists on the market. Put scores on potential selections and complicated pricing on top of that, and you could use another member of staff for just one mailing."

What is the best selection process?

The ideal selection process never begins with panic. All too frequently, charities realise at the last minute that they need data to be cleaned before mailing, or they need a greater response-handling capacity than they had expected. They then call an agency, deliver a woolly brief, set an unrealistic timetable, fail to define deliverables, and end up paying an exorbitant fee for less than satisfactory results.

So, drawing up a comprehensive briefing document must be the first stage.

Getting recommendations from similar charities, reading the trade press, visiting exhibitions and scouring the internet are good ways of building a list of potential suppliers. Most experts agree that shortlists should comprise no more than half a dozen suppliers.

Jackie Fowler, managing director of direct marketing agency Burnett Works, has helped charities such as Cancer Research UK, Crusaid and Macmillan Cancer Relief with data management. She says: "Make sure you know who will actually be working on your business. You probably don't want a junior team, but you may get one if it reflects the size of your budget." Site visits are often advisable, as is giving new agencies a small project on which to prove themselves.

What to look for in an agency

Every charity is different, so each will have different criteria for selecting an agency. Traditionally, most buyers have insisted that agencies have a background in the charity sector, but some are now challenging that view. Chris Duncan, managing director of data consultancy Alchemetrics, says: "Sector specificity is a must in the design and implementation of marketing strategies and tactical campaigns where a detailed knowledge of your customer needs and market conditions are required. Sitting behind this, though, are technologies and processes which are often improved through exposure to best practice across different sectors."

The Arthritis Research Campaign's Ingram is also open to fresh approaches: "Many agencies seem to have a 'charity formula' which they apply without bothering to find out about your organisation, so I was keen to include non-charity specialists on my short list," she says.

When selecting an agency, some look for ISO9000 or similar accreditations, while others insist on taking up references. Some want to see evidence of professionalism, particularly since many agencies are small, newly formed companies. Others are more interested in finding out about the agency's ability to analyse data. Many are impressed by an agency that is prepared to state that 'x' investment is likely to produce 'y' result.

"A good partner will add considerable value with advice, new ideas and innovation," says Andrew Woodger, business development director at Adare Intellidata, a consultancy that has worked for Save the Children, Oxfam and Unicef.

Jo Georgiou, supporter services manager at the British Red Cross, counsels caution when dealing with agencies calling themselves 'one-stop shops'. "Agencies who claim to be able to do everything will often be outsourcing much of the work themselves," she says. "This might involve a mark-up along the way. It almost certainly involves a greater risk from your point of view, and you should get formal reassurance that the key partner is accountable for its associate agencies."

How to manage the relationship

Once the right agency has been selected, the next challenge is to manage the relationship, and it is at this stage that many projects go wrong.

This is primarily because the marketing or fundraising department that hired the agency failed to involve the IT department at an early stage.

Buy-in from the IT department is absolutely essential, as is agreeing how all those involved will work together. These projects are always complex and if lines of communication are not formalised at an early stage they can become labyrinthine.

Other than that, a clear plan, regular reporting, defined objectives and frequent meetings should ensure that the project runs smoothly. Hughes at Valldata makes a plea for honest feedback: "It is much better to be told if you're falling short, than to be continually fobbed off. Sometimes the problem results from a simple misunderstanding and it is far better to resolve it if possible than go through the selection process all over again."

How to get best value

Few would advocate buying data management consultancy solely on price, but that is not to say that costs cannot be controlled and minimised.

In negotiation, tell the agency what is important to you and see if there is room for a mutually beneficial manoeuvre on any aspect. Ensure that costs are transparent and, ideally, fixed. Ensure that the contract provides compensation should the agency fail to deliver according to its obligations.

If you do decide to outsource, there will be many things to manage, but there are also plenty of incentives. Most obviously, costs can be reduced and income increased, but there are many additional benefits, as becomes clear from the conclusion of Ingram's experience.

"Bringing in the agency was an extremely worthwhile experience," she says. "We have cleaner data and valuable information to inform our future mailing strategy, and there was an unexpected side effect. Having independent experts come in to give us an impartial view of our data situation helped my colleagues appreciate that new software would be a wise investment."

OUTSOURCING TIPS

- Only outsource when you are certain that there will be benefits

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