Silo presentation Institute of Fundraising Convention

Presentation

Silos

How they destroy value for both fundraisers and supporters

How to improve integration

Institute of Fundraising July 2010

This presentation will look at how silos between depts and divisions destroy value for both fundraisers and supporters. And how better collaboration and integration can improve donor loyalty, lifetime value and help your organisation meet its goals.

Ill look at the issue from three different perspectives How organisational structures which can hinder collaboration The need for integrated marketing comms Customer centricity how we need to focus on supporters needs

It will also give you some strategies for how you can improve integration and maximise supporter value.

One thing I want to emphasise is that whatever position your in and whatever level of hierarchy you can contribute to this process. If your not part of the solution your part of the problem.

One last thing is that this is not a lecture on how Shelter did it and found all the answers. Improving integration is an on-going project. Organisations and the environment they work are fluid and constantly changing. As old silos are destroyed and new collaborative ways of working are found, new silos will inevitably form. So at this is an continuous process.

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What well cover

What do I mean by silos How they destroy value Strategies for working in a more integrated way

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Silos what are they Organisational units defined by:- Product cash giving, events, regular giving, payroll giving, catalogue etc Function Acquisition, retention, Campaigns, fundraising, HR, services,Channel DM, telemarketing, retail, web etc

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Why formed They are an area of knowledge and expertise Theyre accountable

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Silos

3 different perspectivesOrganisational structure Marketing communications Customer centricity (or lack of)

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Organisational structure

Many nonprofits are structured with traditional functional departments: services , fundraising, IT, Communications, policy , finance, HR etc. Yet what often surprising is that a silo approach often exists between depts that are supporter facing eg direct marketing , campaigns and events. Often duplicating acquisition, over contacting supporters, and implementing unrelated messaging.It can even happen within teams eg DM acquisition and retention teams working in isolation.

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Marketing communicationsSilos can create a fragmented approach to communication with different functions often implementing unrelated campaigns. Confusion and noise IMC making all mediums of communication work together to achieve a goal, whether its fundraising or awareness ... its about creating a complimentary and supportive environment to achieve aims.Consistent message through a variety of channels, creates halo effect. Wastage of resources producing different themes, propositions and visuals for communications takes time and money.

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Customer centricity The process of organising our products channels and processes to fit supporters needs instead of around our dept silosAnd this way maximise their value

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So how do silos destroy value for both organisation and supporter

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Fragmented communicationsIMC is really important as audiences become more fragmented and the media and channels they use become more diverse .

Eg Shelter a few years ago Different functions often implementing unrelated campaigns. The communication of different messages has the potential to cause confusion with our audiences.There was no potential for synergy. Opportunities sat in silo whoever picked up phone Could not be joined up to benefit the whole of Shelter.Wastage of resources different themes, propositions and visuals

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Innovation Saul Kaplan the biggest value in creating ideas will be found in the grey areas between sectors, silos and disciplines.

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Innovation Cross team working gives you much stronger possibility to produce innovation and new ideas Great ideas generally cut across boundaries.

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Innovation Silos are far less likely to produce innovation because staff can only offer products and services that sit firmly in their silo. Great ideas that dont sit neatly in silos can be exploited.

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We all experienced a great opportunity but it doesnt sit anywhere you cant exploit it and nor can anyone else.

Innovation Charities have all this equity lying around the place that just needs to be combined to produce something of value.

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Like a garage full of parts individually useless, but combined give something of real value.

Differentiation purple cows

a brown Cow is a beautiful, intriguing sight at first .think of how excited a five year old child gets when they first see a cow and then witness that enthusiasm fading as they grow older . What people want is a purple cow. Seth Godin

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Best practice can lead to brown cows Supermarkets, hotels, Best practice can iron out quirks, individuality DM prides itself on rigorous testing and best practise Downside is all charities start offering similar productsSupporter experience remarkably similarHowever, Purple cows are risky But in longer term as supporter expectations, technology and environment change being boring becomes the riskiest strategy.

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And this destroys value

Leads to derivative products and offerings.

Acquisition more difficult, attrition rises

Decreases LTV

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Silos damage acquisition, donor development and retention

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Acquisition

Acquisition- is increasingly difficult, response rates are falling, acquisition costs are rising and rois dropping.

We need to need to develop new products, offerings and channels to attract new audiences. However these products or channels may not sit in your area. Eg Direct marketing teams have traditionally used cash and rg products to recruit new supporters.Now they are using campaigns and events offerings Eg Vertical rush event, campaigns, AITH

True value comes from the customer business (and any metrics) must be organised around the customer

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Donor Development

To maximise roi you need to develop a supporter journey approach to maximise LTV. To do this you need to integrated approach.


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Retention

Rates are falling, because donors expectations are changing and we are failing to meet their needs. We need to develop messages, products , communications that are developed across our organisations .


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Resource misallocation

As fundraisers your role is to optimise your capital and human resources to maximise income.

However if marketing investment and its subsequent return is evaluated at dept or product level you may be wasting resources.

True value comes from the customer and the business (and any metrics) must be organised around the customer.


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Example Youre a DM team recruiting new supporters.Considering inserts.Your hurdle rate is 2 to 1 If you get less than this the activity ceases.First look at Silo approach to evaluation


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First look at Silo approach to evaluationYear 1Year 2Year 3TotalRG income504540135Investment605570

Product RoI = 1.92 to 1 after 3 years.

Below hurdle rate

Stop doing inserts

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Then integrated approach*

Year 1Year 2Year 3TotalRG income 504540135Event income453025100Total income 235

RG Investment605570Et investment55515Total investment 85

Customer RoI = 2.7 to 1 after 3 years. Above hurdle rate Roll-out with inserts

In this example we show the same activity but one version measures the true value of the relationship.It shows that using a simple product based approach we have been underestimating the value of the relationship, and we may have cancelled this activity which in fact was profitable.

Youll also notice that evaluating using this customer centric approach you begin to adopt strategies that maxmise long term customer value.. Its no longer about your dept or one particular product its about driving profit from the relationship that may well cut across channels, products and functional (dept) boundaries. This can be quite a cultural shift (and may be unpopular).

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Resource misallocation - KPIs

Choose your KPIs carefully People work to the incentives and the targets they are given (look at what happened to the banks!) Each dept has its own success measures. Decisions are constructed from rationale positions which individually are logical, but combined produce a dysfunctional organisation. So you can end up with get wastage, duplication and low productivity but at dept level people are hitting kpis. Sometimes asking individual fundraising teams to maximise net income can in the long term destroy value !

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Silos can inhibit your staffs talent and skills Many of our organizational structures are a legacy of the large industrial companies of the past.Huge capital investment Managing ten of thousands of staff Tasks broken down into simple processes on production line Creativity not required Rigid hierarchical structures to manage this labour To ensure maximum returns from this huge capital investment.

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Liberating talent of organisation Our organizations are not capital intensive Value is created by the intangible assetsIts about attracting the best talent and using that talent effectively We now need a more collaborative approach working across teams People with different skills, knowledge and expertise With a different perspectivesCross pollination of ideas

Creativity is required.29

So how can you work in an integrated way to maximise supporter value ?

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Customer value management (or supporter journey approach)

An approach that puts the customer (that could be a company, supporter or trust ) at centre of process focus on their needs to maximise value of relationship Maximising value will involve all depts and divisions and collaboration is a pre-requisite

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Build your own customer LTV models First evaluate current market segments and their customer journey programmesEstimate their LTV Develop new mix of products and channels to develop customer journey programmes to maximise LTV.Evaluate them, rank activity and pick those with greatest potential to create maximum life time value, Test Measure Refine model

First evaluate current market segments and their supporter journey programmesEstimate LTV from these existing programmesNow develop new strategies and proposed supporter journey programmes to maximise LTV.Evaluate them, rank activity and pick those with greatest potential to create maximum life time value, Test Measure Refine model

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Build your own customer LTV models Isnt it complicated ? Often concern about how this can be done, issues around not having sufficient customer data or having to predict future activity.However, using simple assumptions does at least give you comparative values of different groups of customers and different supporter journey programmes.Build models, test and over time, refine.

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Benefits of this approach Creates a framework to work collaboratively Helps build buy in and team cohesionCreates an agreed contact plan/protocols Which in turn forms the basis of individual plans, budgets and KPIsNow KPIs are engineer ed around what will maximise customer life time value

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Organisational design

Review organisational structure ensure different depts and divisions are there because they add value.Ditto for levels of hierarchy However, whatever you decide still will be need for silo bridging strategies Make sure lateral working between teams is encouraged.How ?

Culture and leadership Vision A united purpose that helps people work together Values collaborative working is one of Shelter key valuesKPIs develop shared metrics with other depts to reinforce customer focus and collaborative working

Create a vision You need a single united purpose that helps people work together and establish 3 or 4 different actions that demonstrate to staff that the end goal is being met. Create ambitious goals they are shared and have supporting metrics. You need a purpose or vision or meaning that staff believe in. Its about empowering them and getting people collaborating together.You have to create meaning and purpose. It sometimes helps to focus on a crisis or common enemy to help people work collaboratively .Look at the only coalitions weve had the Churchill coalition government to help defeat Hitler and now the Lib dem/conservative coalition where two parties have focused on enemy of reducing budget deficits .

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Evaluation*

Staff must be evaluated on collaborative working

At interview stage 121s Appraisals part of 360 evaluation Job descriptionsAnd part of PDPs

Staff evaluation - This needs to be adapted because traditionally employees are evaluated on things such as their knowledge on the task or function and their diligence to follow defined systems and processes These are easily controllable and measurable attributes with the aid of performance measurement, processes. In other words, these can be hired and demanded from employees.

But what about collaboration and creativity often these are ignored by conventional management practices and its precisely these things that contribute to innovation and add value.

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Start small Look at your own team first breaking down those internal silosThen look at partnership with another team and grow from there Eg Shelters contact strategy grew out of informal agreement between DM & campaigns team.

Find out other teams objectives Find out other teams business needs Identify mutual interests and potential for working collaboratively Offer something make first moveeg DM team recruit campaigner s- services marketing, through our F2F teams - event recruitment - Digital advice - cross sell opps in telemarketing, mobile site, emails, newsletters etcEncourages culture of reciprocation Builds trust

Encourage x-dept working A culture where staff have the freedom to communicate with everyoneMeaning informal as well as formal teams can be created Eg Formal - Integrated messaging working group x divisional group with formal roles and responsibilities, senior management buy in documentation etc Eg Informal - Huddles informal meetings called by project managers anyone can come along. Temporary teams that are created for short time to solve a problem and then disband.

Encourage x-dept working Lunchtime seminars and presentations to exchange information Team building events Hot desking Staff shadowing

Systems to breakdown silos Integrated databaseData-captured consistently and with DP statements to allow supporters to flow through organisation .Contact management teams unlikely to share data unless they know that their supporters will be managed probably.Contact protocols - typically these govern the frequency and type and gaps between communications .Contact plans Supporter journey approach Plans budgets and KPIs which support integrated working

Sell it

Present to different parts the organisationPersonalising approach to different depts and their different business needs Individual level too ,People want to work this way and not be stuck in one silo Its more fun wording together to solve a problem Career developmentFortunately seems to be the way the culture is moving tooPeople want to co-create, collaborate, and share Internet encouraging this with social media, wikis, flickr , on-line platforms

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Integrated Marketing communications

Establish proposition , visuals and creative that works for whole organisation Eg Shelter Customer insight focus groups Establish what messaging resonates Using this insight to create agency brief Five agencies pitched and came up with concepts Which we tested with consumers

Brief must ensures that - ideas meet organisational needs campaigning, fundraising, And creative idea works across different channels and mediums

Focus on idea - not who created it Not just ATL agencies in pitch,

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Use the internet to foster greater collaboration Increasingly not for profits are developing online platforms where customers can manage their relationshipGive supporters news, feedback and engaging content. amend personal details, identify project interest, Donate, volunteer, campaign, sign up to events, Anywhere, 24 hours a day, 7 days a week

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For example CRUK MyprojectsCARE MycareShelter myshelter

In other words these platforms are Customer centric They recognise that supporters can engage in many different forms (donate, volunteer, campaign etc.) Cuts across silos I choose what products I want, they are not chosen by the dept that 'owns' me

To create these sites depts within the organisation have to work collaboratively to provide the systems and content required.

Conclusion

Silos can inhibit : - Innovation Differentiation Acquisition, donor development, Retention Misallocation of resources Talent and ideas not fully exploitedSupporter engagement

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Conclusion

Look at :- Organisational structure Culture and valuesIntegrated Marketing communications Focus on supporter & journeyThink about what you individually can do Keep at it!

Any questions ?

Matt [email protected]

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Silo presentation Institute of Fundraising Convention

Leadership & Management

Transcript of Silo presentation Institute of Fundraising Convention