CDE project 18 section 3: action 1 - understand the paradigm shift

Written by
The Commission on the Donor Experience
Added
April 28, 2017

Putting the principles & actions into practice

Action 1 - understand the paradigm shift

‘What really has happened is that the word-of-mouth network has gotten more efficient—much, much more efficient.’ 

Foreword to the New Rules of Marketing & PR (2010) by David Meerman Scott

If you take time to read books on the paradigm shift in the way we communicate and make purchasing decisions, you will begin to comprehend its profound impact on fundraising. Publications like Sticky Marketing by Grant Leboff, first published in 2011, and The New Rules of Marketing & PR by David Meerman Scott, first published in 2010, explain the paradigm shift and how this affects sales and marketing. Whilst not written for the voluntary sector, the principles these thought leaders outline can be translated to fundraising, which is a combination of sales and marketing. Understanding them helps you begin to both think and apply a different mindset. These are written in a way that is easy to digest.

The challenge is that many of us just do not have the time to read books like these. It is an exercise that often has to be done outside of work, and so it is often put off. This section summarises some of the key ideas.

What are these principles, and what evidence do these authors cite?

In Sticky Marketing, Grant Leboff explains the symptoms:

We are now:

  • irritated by the amount of direct mail that we receive
  • irritated by the number of spam emails that monopolize our inbox
  • irritated when we answer a cold call
  • irritated when we are interrupted by advertising when we are busy trying to do something else[2].

In fundraising, these symptoms manifest themselves as falling response rates and rising costs. This led to charities sending and doing more, and consequently garnering bad press, which dominated the media in 2015 and 2016.

What is the possible root cause or reason? David Meerman Scott in The New Rules of Marketing and PR observes that

[A]dvertising, in all forms, has traditionally relied on getting prospects to stop what they are doing and pay attention to a message… With the average person now seeing hundreds of seller-spun commercial messages per day, people just don’t trust advertising. We turn it off in our minds if we notice it at all. 
The web is different. Instead of one-way interruption, Web marketing is about delivering useful content at just the precise moment that a buyer needs it.[3]

Jump ahead to 2016 and Grant Leboff shared his thinking with a group of Directors of Fundraising. These are the key points he made about the consequence of this:

  • For the first time in history everyone is now a channel. 
  • As a result, we get our information not just from media channels but also any organisation that has a website, Facebook page, a YouTube channel, or a Twitter account - as well as from individuals. 
  • The direct effect of living in a world of abundance of information is scarcity of attention. And if you don’t have people’s attention they won’t donate.
  • The traditional marketing model (a wide funnel narrowing to a small funnel) works in a world where attention is relatively easy to get. It always works on the premise that only a small amount of people are in the market to buy what you've got and it's going to touch them at that particular moment. When attention was plentiful a small response was acceptable. In 2016 attention is scarce. So, that's why that model is failing.
  • Marketing (and fundraising is a form or marketing with an outcome of a donation) used to be the art of interrupting someone else's audience. Now what you have to do in marketing is build an audience and retain it. That is a fundamentally different skill from interrupting someone else's audience, which is completely transactional. 

So if this explains the problem, does it help provide an opportunity for fundraising? If everyone is now a channel, can this help charities attract attention?

Grant Leboff in Sticky Marketing writes,

The creation of the internet is changing all the rules of communication. The internet is the first many to many medium...The internet is capable of facilitating a dialogue between potentially millions of people in a way no previous media outlet could. [4]
As consumers live in a more connected world, with mobile phones, text messaging, blogs, forums, wikis, instant messaging, social networks etc, they take more of their social proof directly from each other… Most people today will rely on only two sources when looking to make a purchase: searching the internet and asking their network. [5]

So can we also excite our audience whose attention we attract and retain to become champions?

According to the Nielsen Global Trust, the most credible form of advertising comes straight from the people we know and trust. Eighty-three per cent of online respondents in 60 countries say they trust the recommendations of friends and family. [6]

Your best marketers and fundraisers are the people - the ecosystem - you create around the audience you build. You can say that you are a worthy cause and you are a brilliant charity and I probably won't believe you... Your best marketers are when a friend of mine shares shared a video with me or a piece of content with me saying ‘this is really great’. Then I'm absolutely going to look at it. That is how you cut through in a world where we have attention deficit disorder, because I might not be looking at official channels but I will look at what my friends say.

Grant Leboff, 2016

This approach emphasises that the best message comes from an individual, as Anne-Marie Huby, co-founder of JustGiving, explains:

There is growing evidence of the value of enabling individuals to tell an organisation’s story. A recent experiment by LinkedIn illustrates this. To better understand the value of word of mouth LinkedIn compared the click-through rates of an identical post, when shared by an employee, or from the company handle – i.e. the exact same content, but published by two different ‘champions’. You won’t be surprised to hear that employees get twice the number of click-through from their shares, compared to company shares of the exact same content. That’s a pretty clear endorsement of the power of Word of Mouth. 
There is also a hard fact of life that charities need to consider: they achieve less cut-through on Facebook than their own supporters. Your average Facebook post by an individual is seen by about 12% - that’s about three times the rate achieved by organisations. Algorithms change all the time, but the nature of Facebook’s business model makes it unlikely for the balance of power to be fundamentally altered.

Does peer recommendation apply to fundraising? Is buying a product different from donating to charity?

In 2013, New Philanthropy Capital published a report titled Money for Good.[7] For high earners (classified as individuals earning over £100k p.a.), the top two reasons a person chose a particular charity, other than being an existing donor, were because they had been asked or recommended by a family, friend or colleague.[8]

So social proof does matter in our world. In The Networked Non-Profit, Beth Kanter and Alison H. Fine use a term similar to social proof—‘not-so secret sauce’ or ‘social capital'—which they describe as: 

Social capital is the stuff that makes relationships meaningful and resilient. Within such relationships two things generally exist: trust and reciprocity. People do things for one another because they trust that their motives are good and that they will receive something in return some time in the future.[9] 

Not only can your cause leverage that social capital, but you can also help people increase their own social capital, as Grant Leboff states:

People share things to increase their own social capital. I share something because I know it's going to make you laugh, or you're going to find it useful or you're going to find it interesting... No one is going to share a piece of material that reflects badly on them. The opposite is true they are going to share material that’s going to reflect well on them. So you need to think about that when you start to build your marketing.

JustGiving also found the very association of an individual with a cause increases the likelihood their connections will support that cause:

Most important of all, when someone fundraises for a cause, something other than money moves around their network. By lending their name to a cause, supporters also lend some valuable social equity to it. In effect, their support for the cause changes the way their connections perceive it – whether they are aware of it or not at the time. In JustGiving’s matching experiments, we have found that people who have sponsored a friend for a particular cause in the past have a significantly higher propensity to support the same cause in the future, compared to other potential donors in similar demographics. This means it pays off both in the short and long term to consider one’s supporters as high-value advocates.
Anne-Marie Huby

In the context of the voluntary sector and fundraising, the impact of social capital is potentially even more powerful. Donations by their very nature are not a fixed price, unlike a particular camera model. A recommendation from a donor could lead to a larger donation, open doors to a company or get the attention of a foundation. Also, our sector can be proactive in asking individuals to help spread our organisation’s story in a way that a camera manufacturer could never be. In fact, it is probably more socially acceptable for individuals to actively advocate for a charity.

So can we use the fact we are all now channels and leverage our social capital with our networks to impact donations and fundraising?

The battle in the marketplace is no longer for transactions. Rather, it is for attention.[10]

Grant Leboff goes on to explain:

If you're interrupting someone else's audience it's just a transactional thing I interrupt you, you give or you go, and you're on your way. Suddenly I'm trying to build an audience and retain it. It is a completely different discipline. It's a fundamentally different mindset. 

This changes the approach to ongoing communication with your existing supporters too:

…You used to produce interesting content just for your audience. If you were going to direct mail 10,000 people you were producing content for those 10,000 people. Now you're going to produce content to share - because that is the new currency. And that’s a different skill. It has to engage me otherwise I'm not going to share it. But engaging me is not enough. You've got to engage me and encourage me to share in some way as well. 
Marketing today requires us to keep as many people engaged as possible. Even if they do not become paying customers some of these prospects will tell others about your company. 

In the context of fundraising, it is not just about asking for money (!)—it is now about engagement and telling your story in a way that others will spread it for you.

The principles outlined in the Summary are derived from understanding this paradigm shift.

This section has extracted elements from relevant books to help you understand the paradigm shift and outline the opportunity it provides. The books contain much more on what to do as a result, so please read the publications (and follow-up publications). For a list of suggested books see Appendix 1. Please also read the speech notes delivered by author Grant Leboff in November 2016, to a room of Directors of Fundraising from a range of UK charities, in Appendix 2.

Questions to ask: Does your organisation understand the changes in marketing that have taken place and their impact on fundraising? How can you create time and space for staff to learn about these changes and think through the implications?

------------------------

[2] Sticky Marketing, p. 16, Chapter 1.

[3] The New Rules of Marketing, p. 7, Chapter 1.

[4] Sticky Marketing, p. 14, Chapter 1.

[5] Ibid., p. 29, Chapter 2.

[6] Nielsen’s Global Trust in Advertising Survey

[7] Money for Good UK, New Philanthropy Capital.

[8] See also the follow up report, Fundraising Perspectives, with reflections from fundraisers, http://www.thinknpc.org/publications/fundraising-perspectives.

[9] The Networked Non-Profit, p. 33, Chapter 3.

[10] Sticky Marketing, p. 40, Chapter 3.

Click on the image below to see project 18 in full - PDF format.

About the author: The Commission on the Donor Experience

The CDE has one simple ideal – to place donors at the heart of fundraising. The aim of the CDE is to support the transformation of fundraising, to change the culture to a truly consistent donor-based approach to raising money. It is based on evidence drawn from first hand insight of best practice. By identifying best practice and capturing examples, we will enable these to be shared and brought into common use.

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