Measuring Donor Loyalty
In fundraising, the measure is particularly problematic because it is deemed culturally inappropriate in many countries and contexts to discuss one’s charitable giving. People simply don’t discuss their philanthropic choices in the same way they do their cars, holiday destinations or computing choices. As a consequence, using the Reichheld method in the nonprofit sector results in a disproportionately large segment of apparent detractors, and the net score is therefore a meaningless amalgam of different perceptions.
2. NPS throws away data. Throwing away data is an odd description, but in essence, that is what NPS does by collapsing the 9s and 10s and the 0 to 6s and ignoring the 7s and 8s. There is ample statistical and empirical evidence for this being wrongheaded with 0s being behavior-wise nothing like a 6. And this says nothing of the 7s and 8s who are ignored completely in this methodology.
In aggregate, the approach has a very arbitrary feel with the rich pattern of attitudes originally articulated by respondents almost completely ignored. If the desire was simply to create a binary variable (will recommend, will not recommend), one can only wonder as to why that was not the option presented to consumers/donors in the first place.
3. NPS does not identify the full set of organizational experiences that matter. The system of NPS consists of only a single question: willingness to recommend. That’s it! And while simplicity is an important goal, NPS takes it to the extreme. Reichheld argues that NPS is the ultimate measure and that everything you need to know to predict growth can be explained with NPS. He goes so far as to assert that other survey-based metrics such as customer satisfaction have no link to growth at all.
Current academic thinking and research, by sharp contrast, have highlighted the importance of a wide range of factors that drive customer and donor loyalty, with the most successful predictive models based on a broad range of different dimensions. We know, for example, that donor loyalty is driven by an amalgam of satisfaction with the service provided by the fundraising team (i.e., the donor experience), commitment to the organization’s mission and trust in the organization to have the impacts it has promised with its beneficiaries. Models embracing a range of these different dimensions typically have substantively more predictive power than any one measure.