Tag Archives: evaluation

How Do Nonprofits Track the Customer Journey?

photo credit: holyoake.org.edu

Integrated marketing and communications is critical to nonprofits, and not just big ones. The smaller a nonprofit’s footprint in the community, the more that it has to consistently beat the drum on a narrow and powerful message. It also has to pay attention — track and measure — both activity and results from all of its external promotional efforts.

Small nonprofits may do the basics like track activity on their Facebook pages through Facebook Insights, or occasionally look at Google Analytics. They may even use a free or low-cost tool like HootSuite to understand activity and sentiment for select keywords across social networks and the organization’s website.

But what I really want is the nonprofit version of the image below:

Google Analytics Customer Journey

The basic idea is that some promotional channels assist a customer in becoming aware of or forming an opinion about an organization, while the customer turns to other channels when (at last) they are ready to act.

(In case you’re wondering, the number assigned to each promotional channel is a ratio. Google says, “In general, ratios less than one mean the channel acts more as a ‘last interaction,’ while ratios greater than one mean that the channel acts more as an ‘assist interaction.'”)

The “customer journey” reflects what many have been suggesting about nonprofit promotional strategy for some time. Potential donors to nonprofits may interact on Facebook, read e-blasts, etc. but not use links in those tools to donate until they are good and ready. Nonprofits rarely understand how all of that promotional “dating” turns into commitment.

The image is the marketing funnel for industries as a whole, created by Google using transactional data from 36,000 Google e-commerce tracking enabled accounts who gave their permission for data to be aggregated. Google also makes available the data for seven specific industries including health and education/government, but, alas, not for the nonprofit sector.

Here’s the health industry “customer journey” so you can see how it differs:

google health customer journey

Still, I think the idea that these affinity-building activities connect somehow to donations is one nonprofits must keep in mind. What channels seem to play a role well in advance of purchase (donations)? What channels come into play when someone is about ready to give? How long does it take from initial exploration or contact to spur a donation?  All communications may play a role and be necessary to build the steady drumbeat necessary to spur contributions.

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Where will the money come from?

Speaking at the Nonprofit Resource Center annual conference on Wednesday, Jan Matsaoka of the California Association of Nonprofits (formerly with Blue Avocado) put things in plain terms: “You can’t talk about what you’re going to do… without talking about where the money will come from.”

For that conversation, she advocates using a “Matrix map” (a version of the BCG corporate portfolio analysis for you MBA types) to evaluate nonprofit activities according to their impact on mission and money. In Matsaoka’s tool, every major activity is a line of business — not just programs, but any activities that require significant management time or money. Fundraising events, holiday appeals, direct mail campaigns, etc., are just as much a line of business as a career closet.

What’s the point of putting your major activities in a fancy-schmancy 2×2 grid? Ultimately it’s about understanding and decision making.

Understanding comes first. You might discover that some things you’ve always done aren’t really valued, and they take resources that might be used in better ways. Her examples included a little-used resource library and a program that used to have funding. Matsaoka says these are “stop sign” activities (BCG called them “dogs”). You might discover other activities that are profitable but don’t have a lot of impact (“money trees”). The trick here is to see if there is a way to make them reach more people or achieve greater results. “Hearts” (or “question marks” in the original nomenclature) are activities that have high impact, but low profitability. Many close-to-the-mission activities fall here, but identifying them as money-losing (or at least not money-making) helps bring into relief the need for revenue that subsidizes these activities. And “stars,” of course, are activities that have high impact and high profitability. Highly effective fundraising strategies that do something to foster awareness of the nonprofit or cause AND support the general fund would fall in this quadrant of the matrix.

A completed example of a matrix map

Key to the Matrix Map: the strategic imperatives associated with each quadrant

The mechanics: a portfolio analysis like this one uses three variables. Matsaoka uses profitability and impact to plot a program’s position on the X and Y axes. A program’s profitability is defined as the revenue tied specifically to the program (fees, contract, restricted grants) minus “all in” expenses (including some allocation of administrative and overhead costs). Obviously, “impact” is a subjective indicator. You’re going to have to do some thinking about the criteria to determine how much impact a program has (see the next paragraph). The size of the program circle is determined by the cost of the program. (As an alternative, I imagine the number or volume of clients or encounters could be used instead of program cost/budget.) Creating such a chart in Excel is easy; once you have the three variables in their appropriate columns, select “bubble chart.”

If you lack reliable numbers, you can create a scale for any of the variables. For example, you could use a 5 point scale with 1 being low profitability and 5 being high profitability. For impact, you will have to create a scale since it’s subjective. Matsaoka suggests using no more than four factors when figuring impact. Examples: alignment with core mission, excellence in execution, scale/volume/reach, depth/comprehensiveness, fills important gap or need, community building. To that list I would add effectiveness/outcome. For example, you might rate a program 5 in terms of alignment with core mission, and 2 in terms of filling important gap if there are many similar programs in the community.

You may be wondering why a nonprofit’s fund development and marketing programs would be evaluated in the same tool with client- or market-serving programs. I admit that was my first reaction. But I do think it may be helpful to look at the array. If most of a nonprofit’s programs don’t generate revenue (as is the case with many aid-oriented programs), it is important to see that there are enough offsetting money-making programs.

Which brings us to decision-making. This tool isn’t just for understanding the situation facing a nonprofit. It’s intended to foster decision making. Considering a new program? Put it in the portfolio and consider how you’re going to get it to perform in a way that supports both mission and financial sustainability. The portfolio analysis can also be used to cull. By letting go of some programs that may be draining the organization, what will you be able to do, or do better?

Jan, with two co-authors, has a book out – Nonprofit Sustainability. Based on my quick scan as it made its way around the room, it looks like it has lots of examples of Matrix Maps. I’ve ordered a copy and will let you know what I think! Here’s a link to a pdf of a very similar presentation Jan gave a couple of years ago, with all of the slides.

Jan told the sell-out crowd for NPR Center, “The most previous and scarcest resource is the time and attention of its senior leaders.”

“Be ruthless,” she added, about making sure that your resources are invested where they will make the greatest difference.

P.S. If you get the chance to hear Jan speak, do it. Fastest, funniest presentation of this type you’ll ever see.

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The Hard Spade Work of Strategic Planning

[Fifth in a series.]

In May, I reported that the strategic planning process I was facilitating for a small local nonprofit was right on track. After engaging the Board in identifying three possible directions, following a discussion of the environment and potential outcomes, the time came to dig in.

As Patrick Bell, who teaches the Non Profit Resource Center’s “Board Leadership: The Essentials” workshop tells Board members, a Board should provide input for long-range goals and the strategic plan and forge a strong partnership with staff in leading the organization.

That “strong partnership” has to respect the fact that the nonprofit’s leader is the one in day-to-day contact with clients and constituents. Staff should be in the best position to understand the operational challenges of potential directions. And, of course, they are going to be the ones held accountable for achieving the desired results.

This summer, I’ve been helping the staff of a small nonprofit explore three potential directions. By the end of August, we hope to be in a position to cue up the options so that the executive director can choose the best course, and prepare to recommend a five-year strategy.

Here’s a peek at the streams of work that have been underway:

  • Deep diving into outcomes: According to some studies, organizations that commit to outcomes* and evaluate them actually perform better than organizations with a looser sense of impact. Most nonprofits (especially those that operate in the sector that this one does) do not have true outcome goals. They measure output (for example, clients served), but not outcome. The “deep dive” has included interviewing several well-run local nonprofits, investigating the literature about outcomes related to this sector, meeting with a top national academician on the topic, surveying 20 nonprofits in the same sector in similar-sized communities, and collecting feedback from existing clients. The survey of 20 nonprofits (based on public sources) turned up a fourth direction that is now being considered.
  • Investigating targets: Successful for profit companies recognize that they have to be as good as competitors, or their lunch will be eaten. Nonprofits compete, too. They compete to be deserving of funders’ and donors’ confidence. They would benefit from knowing how their “competitive set” is performing with respect to indicators like administrative efficiency and contribution to overhead (total revenues minus total expenses, divided by total revenues). My hope is that this nonprofit will not only land on a couple of indicators that will help them to assess how they are doing, but set specific targets for where they need to be as part of the metrics related to strategic plan progress. A nonprofit, for example, can’t break even. It must be “profitable” enough to fund basics like IT infrastructure (increasingly expensive and critical) and program development. An emerging (but still debated) measure for nonprofits is the amount of funds contributed by social enterprise; McKinsey’s capability model (see link in next paragraph) assumes that nonprofits should develop sources of revenue beyond grants and donations. The survey of 20 organizations revealed a net “profit” ranging from -10% to over 10%, so it’s going to be interesting to figure out the right target for this organization! (One approach would be to decide which organization they most want to be like “when they grow up.”)
  • Assessing capability: We identified several helpful tools to help the organization assess its strength across every aspect of its management, from the Board through operations through communications and fundraising. Here are a couple of resources worth checking out: McKinsey’s tool adapted from its extensive work in the commercial sector, and United Way of Minneapolis’ tool posted on managementhelp.org.
  • Qualitative research into the possible directions: We’ve been out talking to nonprofits serving related clients as well as holding focus groups with people facing the kinds of problems that we hope to alleviate. There is no substitute for going straight to the horses’ mouths, and there have been some surprising insights that have come from this work.

Along the way, our understanding of the external environment has greatly expanded, insights that we’re weaving into the partially completed strategic plan document. When we’re done, the executive director should be in a position to put in front of the Board a well-researched recommendation and plan that answers the questions:

  • Where are we now?
  • What are we trying to do?
  • What will have to change?
  • How will we get there?
  • What do we expect to happen when we get there?
  • What are the risks and how can we mitigate them?

McKinsey, in a recent article entitled “How Strategists Lead,” did a great job of describing what we’re trying to build: “A great strategy, in short, is not a dream or a lofty idea, but rather the bridge between the economics of a market, the ideas at the core of a business, and action. To be sound, that bridge must rest on a foundation of clarity and realism, and it also needs a real operating sensibility.”

* Outcomes are defined as, “Socially meaningful changes for those served by a program, generally defined in terms of expected changes in knowledge, skills, attitudes, behavior, condition, or status. These changes should be measured, be monitored as part of an organization’s work, link directly to the efforts of the program, and serve as the basis for accountability.” — adapted from the Glossary of Terms of the Shaping Outcomes Initiative of the Institute of Museum and Library Services, Indiana University and Purdue University Indianapolis; The Nonprofit outcomes Toolbox: A Complete Guide to Program Effectiveness, Performance Measurement, and Results by Robert Penna; and the Framework for Managing Programme Performance Information of the South African government. As published in “Leap of Reason: Managing to Outcomes in an Era of Scarcity, Venture Philanthropy Partners

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Don’t wait: evaluate

You don't have to brag like a pro wrestler! (rmwhittaker1012000/flickr under CC license)

I haven’t fallen off the grid, but I’ve been very busy helping organizations wrap up their holiday campaigns, take stock and prepare to improve their marketing, fundraising and communications programs in 2010*.

Even if the executive director or Board isn’t asking for it, everyone who leads one or all of these functions for a non-profit should document their evaluation of their 2009 program.  (Look for a suggested evaluation process outline in tomorrow’s post.)

Here are some comments I’ve received when I suggest doing such an evaluation:

  • I don’t have time
  • They’re not asking for it
  • Wouldn’t that be bragging if I’m a department of one?

I’ll come back to comment #1 and #2 in a moment, but I thought I’d share with you my response to #3, which I received by email on Friday from a capable staffer who is about a year into a new position with a small but thriving non-profit:

Don’t be sheepish about reporting how you did on performance metrics that were visible to the board.  You are evaluating the function, or, alternatively, the plan.  Even if you are a department of one, it’s important to show the Board that you are a good steward of the organization’s limited resources.  It shows that the function continues to learn and adapt.

Internally, it’s important for the chief executive to scrutinize and evaluate every major aspect of the operation.  Especially when a function is relatively new, it’s important to shape the conversation about how it should be evaluated.  Start with the details and work backwards to the information that is “board worthy” in your situation.  For example, your one or two page executive summary for the Board should report results for metrics that rise to the level of a dashboard, key measures that are directly related to the organization’s health.  But it’s also wise to capture major conclusions from new things that you tried this year.

Your executive summary is an opportunity to continue to educate the Board – bring them along with what you’re learning.  Although you don’t seem to face this challenge, it’s pretty common for Board members to ask management to “do an ad” or implement some kind of marketing tactic that is not well founded in strategy (at best) or harebrained (at worst).  Finally, if the Board had a responsibility for implementing some of the tactics, it’s also good to hold the mirror up so that they can have a conversation about their own follow through.

As for comment #1, make time.  An evaluation helps you figure out where time and money are being wasted.

And as for comment #2, that’s code for “if they can’t pin me down, I can’t look bad.”  Two of the main drivers of any non-profit’s success are fundraising and communications/image.  Begin to lead the dialogue about how the Board should keep its finger on the pulse.

*Of the three organizations that I’ve been intensely involved with this year, two raised 20% more than year prior and one came out about even, which isn’t bad for a difficult year.  Woo hoo!


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