Measuring Donor Loyalty

In simple terms, looking only at a willingness to recommend is too narrow an approach to capture the richness of donor behavior, particularly when it never occurs to many individuals to recommend a favored charity to someone in the first place.

5. NPS is not as predictive of giving as other measures. The purpose of attitudinal frameworks like NPS is to help organizations increase donor loyalty by nurturing those who love the organization (to get a greater share of wallet and actual recommend behavior) and properly identify those who don’t. Then, where financially worthwhile, to repair what is broken and grow the relationship.

Unfortunately, NPS does not do a very good job of discriminating key behaviors. Put another way, the “promoters” are not all that different from the “detractors” when you look at how they behave. The high, low, % incresse chart (at right), from our recent Donor Commitment Study (DonorVoice U.S. Donor Commitment study, November, 2011) affirms what many others have found — NPS (the last column on the right) is not as good as Donor Satisfaction (or a model based on commitment) at identifying differences in behavior as evidenced by the last row showing the percentage difference in giving among those “high” and “low” on the various frameworks. Perhaps the ultimate indictment of “willingness to recommend” comes from a study by Schneider, Berent, Thomas & Krosnick (2007), who found willingness to recommend is not as good as satisfaction in predicting actual recommend behavior.

6. Confusion over what NPS is really designed to do. In June 2011, NPS creator Reichheld wrote: “The reason that so many researchers hate NPS is that so many senior line executives love it.”

He continued to defend NPS by saying that while it was less accurate for predicting individual customer behavior than other measures, it was better at predicting business growth. But a few weeks later he wrote that predicting individual behavior was the basis of NPS — rather than a correlation to growth. Recent responses to criticism on the part of those responsible for NPS are characterized by caution, caveats and more than a bit of confusion. Is it designed to predict loyalty? Or growth?