Measuring Donor Loyalty
The emergent academic evidence on NPS is damning in both respects. Keiningham et al (2007), in a study published in the Sloan Management Review, found no evidence that NPS was the best predictor across customers’ future loyalty intentions. The authors also attempted to substantiate the assertion of a link between NPS and growth, a facet of the measure that has proved highly attractive to managers.
Keiningham et al examined data from more than 15,000 consumers and 21 companies over multiple years. They then added in the growth rates for those companies under investigation. None of the range of metrics they examined, including NPS, was found to be a good predictor of growth. As the authors note, “even when ignoring statistical significance (the likelihood that the correlations occurred by chance), Net Promoter was the best predictor in only two out of 19 cases.” They conclude that “based on our research it is difficult to imagine a scenario in which Net Promoter could be called the superior metric.”
Loyal donors are those who perceive they have a strong relationship with the organization. In measuring loyalty, one must therefore unpack this relationship in a meaningful, not simplistic, way and understand what genuinely drives the perceptions of donors.
We know from research that multiple factors are at work, notably how satisfied donors might be with the quality of service provided by the fundraising team. Organizations must therefore unpack the dimensions of their services and ascertain the extent to which donors are satisfied with each. To obtain managerially useful information, however, data must also be gathered in respect to perceptions of importance. Then, those aspects of the service scoring high on importance and low in terms of satisfaction would be clear candidates for investment.
Equally, extant research also tells us that satisfaction is not in itself enough. Learning from the commercial world has taught us that sometimes even very satisfied customers will defect, doing so because while they may be very satisfied with their treatment they lack commitment to the organization. In our world, donors who are committed to the organization, cause and/or brand are substantively more loyal than those who are not.