Measuring Donor Loyalty
For decades, business has pursued an effective formula for customer loyalty. But, despite rigor and expense, the secret to enduring relationships remains elusive. Over the years the concepts of "satisfaction," "value" and "quality" have all taken their turns as the key to customer profitability. However, one by one each has proven to be an insufficient indicator of future customer behavior. Although these costly frameworks improve survey scores, they often have limited impact on the bottom line.
The current in-vogue concept is the Net Promoter Score (NPS) that, like many of its predecessors, uses an "attitudinal" framework to measure loyalty.
More about NPS in a moment, but first this question: Why measure attitudes at all? The reason attitudinal frameworks exist is simple: Capturing how the customer (or donor) thinks or feels provides different insights from what we can learn looking at past behavior — i.e., transactional data. If measured properly, attitudinal insights can be additive, providing a multidimensional and more accurate view of the donor, customer or constituent.
For example, are there some past behavior patterns that viewed through the transactional lens look like “loyalty” but are in fact spurious? Similarly, isn’t it possible that many constituents are very committed to an organization yet those feelings have not manifested in “good” behavior, as measured by past transactional conduct (i.e., what we call “latent loyalty”)?
Conventional practice seeks to measure and understand loyalty through transactional analysis. Fundraisers working from this perspective equate loyalty with a particular pattern of purchases, contributions, advocacy actions, etc., and seek to build it by pushing enough of the “stuff” that seems to generate these behaviors (appeals, catalogs, e-mails, videos, petitions, etc.). The goal isn’t to create loyal donors through communications. Rather this approach assumes that some donors are innately loyal and simply need to be prodded to give. Put another way, sufficient volume increases the likelihood of “good” donors raising their hands, responding and thus keeping themselves in the “good” bucket.
