Charities finding salvation in market research and analytics

FEBRUARY 6, 2012 – Big name brands are not the only organizations seeing that market research can be a powerful asset in connecting with consumers. Charities could also benefit from the possibilities that collecting customer data can offer.

Increasing people’s willingness to donate is an ever-pressing issue in the nonprofit sector. Since the recession, donations have dropped off and have stuggled to return to levels seen before the financial crisis.

According to Knowledge@Wharton, the online business journal for the University of Pennsylvania’s Wharton Business School, maintaining a steady flow of donations in between the global disasters that put nonprofits at the front of consumers’ minds is a major challenge for the Red Cross and other organizations. A person may be moved to write a check or swipe a credit card when images of devastated homes and refugees are flashing across the screen, but the urgency falls away as the news cycle rolls on to other stories.

“The question for groups like the Red Cross is how to identify and reach out to those one-time givers who are most likely to become regular donors,” the source notes. In order to find an answer to that, organizations could start looking at the wealth of data they have on long-term and one-time donors to plan how they can increase contributions.

The famed nonprofit teamed up with the Wharton Customer Analytics Initiative and researchers from several institutions to devise a method for reaching out to donors more effectively. Together, the groups will go through a “data pool” containing details on more than 500,000 donors, analyzing the communication-response correlation, trends in giving rates and retention of existing donors.

The Red Cross’ messaging will also be put under the microscope, and the data scientists will be examining the psychology behind the messages and how that drives people to donate. Instead of creating marketing campaigns based solely on “intuition,” Elea Feit – a Wharton marketing lecturer and research director of WCAI – told the source, it’s better to have hard evidence about why a strategy could work. 

Fiet added that direct mail and the internet have forced organizations of all kinds to think more carefully about what they’re doing to convert consumers.

Yet the issues that arise with Big Data will remain the same, the source notes, as businesses in any sector are struggling to harness the information and hire the data analysts capable of gleaning insight from millions of files. 

Many companies have been virtually buried by the “avalanche of available customer data,” which makes it difficult if not impossible for them to derive value from the undertaking.

“The vast majority of firms are not doing it well,” Mark Jeffery, senior lecturer of technology information management at Northwestern University’s Kellogg School of Management, told Knowledge@Wharton. “It is not enough to buy the data warehouse and the analytics. You have to change your organization and your marketing processes to take advantage of that information.”

Jeffery noted that most groups that are trying to make use of Big Data have no problem with the collection part of the process, but they stumble at the point where they have to do something with the information and integrate customer analytics into their business strategies and models.

According to a Fast Company blog post, it’s important that any organization taking on a Big Data program gets its CIO and other leaders involved. The undertaking requires much more than just setting up a few databases, the source warns, so companies need to lay out a plan for how they will collect, organize, plot and mine the data.