This is my fourth of five posts focusing on Frederick Reichheld’s book “The Loyalty Effect” and how the concept of “loyalty” effects for-profit and non-profit corporations equally. If you don’t own a copy of this book, I suggest you buy it, read it, and change your approach to doing business.
I once worked for a smart boss who said, “What get’s measured, gets done! ” Of course, she said it in a very crisp British accent. And she was right.
Reichheld spends all of chapter eight talking about measuring loyalty and creating a more balanced dashboard tool that includes loyalty measurements. I especially liked his point that “… measurement lies at the very heart of both vision and strategy.” Here is a little more from Reichheld (page 217) on how important measurement is:
“Measurement is the business idiom. Just as language shapes thought and communication, measures shape the attitudes and behavior of a business organization. The choice of what a business measures communicates values, channels employee thinking, and sets management priorities … Deciding what to measure and how to link measures to incentives are among the most important decisions a senior manager can make.”
Yesterday, I ended my blog with a link to an article from studyfundraising.info. In that article, they provided some suggestions on things to measure with regards to loyalty. I urge you to re-read that article and consider developing a scorecard or dashboard with some of those measures.
After a robust walk with the dogs this morning, I came up with some additional suggestions (some of which align with Reichheld and some don’t). So, here are some additional measures you may want to consider:
- Donor renewal rate for your overall resource development program as well as for individual fundraising campaigns (this year versus last year)
- Year-end evaluation of donor database with measurements focusing on:
- What percentage of last year’s “first time donors” renewed their financial support (regardless of the fundraising campaign). In other words, how many second time gifts did you get from last year’s first time donors?
- Comparison of this year’s pool of donors versus last year’s pool of donors on the average number of years a donor has supported your organization with a financial contribution
- The number of “total number of private sector dollars raised divided by the total number of “stewardship touches” (e.g. all touches with donors and prospects who didn’t contribute) … compare this year’s number versus last year
- For certain fundraising campaigns (e.g. annual campaign pledge drive), a comparison of how many renewing donors increased their contributions versus decreased versus stayed the same
- For your organization’s “Top 50 Lifetime Donors,” the percentage increase of the total value of their contributions this year over last year (and perhaps even year-to-year over a five-year trending period)
- Using an annual donor survey to measure “donor satisfaction” with your organization’s ability to impact change through programming
Tomorrow is the last day of this blog series on donor loyalty, and we’ll focus on strategies and activities to help build loyalty. However, I strongly urge you to invest time and resources in measurement systems and providing transparency in reporting these facts because it is this data that will drive strategy and performance.
Does your organization used specific “loyalty measures”? If so, please share your ideas with us in the comment section of this blog. If you think I’ve missed something, please weigh-in. There are no right or wrong answers.
Here is to your health!
Erik Anderson Owner, The Healthy Non-Profit LLC eanderson847@gmail.com http://twitter.com/#!/eanderson847 http://www.facebook.com/home.php#!/profile.php?id=1021153653 http://www.linkedin.com/in/erikanderson847
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