Measuring Donor Loyalty

It seems silly and overly simplified to state it this way, but this is precisely how much of the nonprofit sector tends to operate — the group who pushes out the most stuff through the most channels wins. This is little more than a race to the bottom.

If not that, then what?
What is the alternative? A better approach is to separate cause and effect, and develop a more accurate representation of what actually is occurring in the marketplace. It is borderline heretical to say this, but nonprofits do not directly impact donor behavior, only indirectly. What an organization directly impacts through the experiences it serves up across marketing, fundraising and donor service are donor perceptions of the organization and its approach. This in turn shapes how donors view their relationship with the nonprofit and determines their behavior.

Thus, organizations can more efficiently and effectively improve donor behavior by getting a handle on what organizational actions they take today that improve or detract from the donor relationship. It is the quality of the donor relationship that dictates whether donors stay or go.

If you accept this conceptual “creation” formula, then two high-level requirements are mandatory for any framework claiming to measure attitudinal loyalty. It must be:

1. predictive of outcomes (i.e., right side of the formula above) and
2. able to identify (with modeling) the organizational levers (i.e., experiences) that matter most to increasing loyalty and value.

Of course, life isn’t that neat. Identifying the most appropriate organizational levers and then finding adequate ways to measure them have proved difficult, and over the past three decades a number of different approaches have fallen in and out of favor. In the 1980s, Parasuraman, Zeithaml and Berry developed the SERVQUAL scale to measure the quality of service provided to customers. This measured what they regarded as the five underlying components of any service, namely: