Managing and coordinating constituent information has become increasingly important to nonprofit organizations, and this need, combined with a growing power of database software, has fueled a rising interest in Customer Relationship Management (CRM). Constituent Relationship Management is a more accurate moniker for nonprofits as they seek to track an array of donors, members, volunteers, clients and other stakeholders.
CRM is really nothing new. For the past two decades, nonprofits have been building spreadsheets and databases to manage their donors, members, volunteers and other contacts better than they could with card files. As the use of technology in nonprofits has soared, so has the proliferation of these electronic tools. More organizations are now trying to decide how to coordinate their various data repositories (such as synchronizing their donor database with their volunteer database, and marketing lists with their online donors and membership sign-ups).
CRM describes a strategy that focuses on growing the financial and programmatic value of constituents by better managing data about them. By improving the collection, analysis and use of this data, CRM seeks to build better relationships with stakeholders and grow their lifetime value. This means not only increasing their financial contributions to the organization but also increasing programmatic value, such as more civic engagement and improved effectiveness of services. Organizations such as MoveOn personalize e-mail fundraising and advocacy campaigns based on the past actions of constituents to maximize the impact of each mailing and to make sure it doesn’t saturate constituents with requests that are likely to be refused.
This kind of management and growth of constituent relationships requires more coordination of data and interactions than today’s fragmented environment currently provides. “When I wanted some data about members I felt like I was restoring the Sistine chapel!” says Christa Roth, chief operating officer for Hispanics In Philanthropy (HIP). “We were limited in the kinds of knowledge we had about members and were therefore less effective than we knew we could be.”
CRM is really more of a strategy than it is a technology. Some vendors try to claim that their technology is the answer, but these claims can often be misleading because vendors seldom have the capacity to manage data about complex interactions with all constituents—and they can’t create the organizational mindset required of a CRM strategy.
The CRM highway is littered with the carcasses of technology bought with good intentions. Critics of corporate CRM are quick to note corporations’ multi-million dollar investments in systems like Siebel, Peoplesoft and Oracle that largely go unused, and provide little value to the companies. These efforts typically failed because CRM was thought of as a technology rather than an organizational strategy that included technology.
While consolidating and synchronizing constituent data between systems can be a complex task, organizational issues are equally complex. Staff often have a restricted perception of constituents based on past experience. Additionally, in many organizations, knowledge is power, and knowledge about powerful people is carefully hoarded. CRM asks staff members to relinquish power over their own constituent lists. Organizations that haven’t convinced staff of the critical importance of other staff knowing about their constituent interactions will have trouble with their CRM efforts.
CRM also requires staff to trade in familiar tools that they use daily, such as Microsoft Excel and Outlook, for something new. While this is a significant hurdle for many, the benefits of eliminating other organizational inefficiencies (such as re-typing contact information from one database to another), can mean that employees spend more time on higher-order tasks such as improving or developing new services.
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“I’m getting my staff to be more strategic by taking away the mundane aspects of their jobs,” says HIP’s Roth. “If they’re spending three days in front of the photocopier and re-typing data, they’re not focusing on the important, strategic aspects of our programs. Some staff don’t like this, because it requires more effort and a higher level of thinking than the mundane work.”
Recognize that your organization already practices some form of CRM. Those Excel spreadsheets and stand-alone donor management systems are your CRM. The question that organizations must ask is how they can become more efficient and better at interacting with constituents to grow their value and increase their contribution to society.
For smaller organizations, the journey is mostly about looking forward and planning how to manage complexity as the organization grows. For larger organizations, the question is how to move from the Wild West of unregulated data silos to coordinated tracking and management of constituents.
To more intentionally manage and build constituent relationships, organizations should:
- Identify and prioritize key breakdowns. Create a committee or workgroup representative of key organizational activities to identify where interactions with constituents break down or could be improved. This group should look not only at interactions specific to programs, but should also consider opportunities lost, such as broadening a constituent’s involvement with the organization. Survey staff in different areas of the organization about the kind of information they would regularly like from other staff to improve their work. Look closely at interactions that cross between off-line and online. Prioritize headaches based on their immediate impact on operations and important constituents and categorized in areas such as “Fix immediately,” “Live with it until next year” or “Wouldn’t it be cool if…”“We wanted to be more sophisticated in our fundraising campaigns, with different messages for different types of people,” says Allison Kozak at EarthJustice. “We previously had a cobbled-together system that only allowed us to blast out the same message to everyone. Our new system gives us more sophisticated messaging than to an undifferentiated list.”
- Define success measurements. Organizations should honestly benchmark how they currently interact with constituents, and determine what kinds of future measurements or reports will provide insight into their efforts. Choose benchmarks that are easily quantifiable and can be collected simply by looking at data you already collect. More complex organizations should consider doing market analysis that enables them to better segment and understand which constituents to target using techniques such as RFM (recency, frequency, monetary)1 that extend beyond donors to include activities such as volunteering and other civic engagement.
“We’re now tracking interaction types into a system,” Roth says. “How long does it take us to respond to them? What was the solution to their problem? Are we getting more timely in our responses? Who are good targets for our different activities?”For small organizations, putting these initial steps into your annual strategic planning will help you to avoid the pain and expense of steps 3-5 as the organization grows. Organizations should consider how their data collection about constituencies will grow over time, and how the vendor’s capabilities can allow the organization to grow with it.
- Identify where data lies. Based on the desired interactions above, identify where islands of data about constituents reside in the organization. Is critical data in a staff member’s spreadsheet? Is most of the critical data in a donor management system, or in a custom-built database application, or both? This information will be critical in your conversations with technology providers. Do not start a technology search or hire a database consultant until these first three steps are done.
- Begin strategizing how and when to consolidate data. Start conversations with database consultants and vendors about how to begin consolidating the most important constituent information in your organization. Which data repositories appear too valuable to mess with, and which ones are weak and could be replaced or cannibalized by a new solution? Some organizations may not want to touch their donor management system, while others may be ready to give it up for something better.The replacement of a weak but important system can be a prime opportunity to create a more rational, centralized constituent data repository for other functions. Investigate modular software packages from Convio, CitySoft or eTapestry that allow an organization to purchase—for example—just a volunteer management function, but later grow into donor management and event management (See table). Look carefully at the reporting, analysis and list-creation capabilities of new software. Evaluate the costs of migrating data from one system into a centralized system in contrast to regularly updating the data between systems. Finally, investigate the total cost of ownership over at least a five-year period to capture the total amount in recurring fees charged by an application service provider (ASP), compared to the cost of running licensed software in-house, the additions of new functionality modules (like the volunteer management example above), any consulting required to integrate new systems with existing databases, and support and training fees.Costs of these vendors vary depending on the number of modules an organization chooses, the number of constituents in the database, and the number of staff who have access to those records. At the low end, a small organization can use the basic functionality of Groundspring for less than $50 a month. Larger organizations may seek out more complex offerings from ASP providers Convio or GetActive that can run into several hundreds or thousands of dollars a month, or offerings from licensed software providers Blackbaud and Microsoft CRM that could run up to $30,000 to $50,000 or more for a medium-sized organization.While CRM may promise many benefits, don’t be afraid to say no, especially if the organization is not ready or there are investments that might bring a greater return. After such an analysis, one organization decided to postpone a technology investment to improve its CRM in favor of upgrading its accounting system. In that case, manual process changes were cheaper than automation and consolidation in a new system.
- Consider the organizational implications of centralizing data. Organizational factors can kill technology initiatives faster than anything else. Ensure that staff see the benefits of broader access to constituent interaction information. Make sure the functionality of new tools is at least equal to old tools, so staff can adequately do their jobs. Make sure that managers understand how reporting and analysis of data can help them monitor and fix problems. As new systems change the nature of work in the organization, make sure that the right incentives and staff-review metrics reflect the ship’s new course.“Our CRM initiative allowed me to re-work the way things get done,” Roth says. “I’ll now get alerted if a new client is not responded to within 48 hours. That allows me to re-work capacity as needs arise. If you don’t spend time up front planning, you won’t be able to build capacity on the back end.”
- Monitor and tweak. Organizations and people are not static, so neither should be your CRM efforts. Ongoing evaluation and process readjustment is critical to the success of CRM. Put a form on your Web site to get feedback and suggestions. Look at your metrics regularly to see if you are making improvements. Hispanics In Philanthropy created an integrated systems committee comprised of key program staff that meets weekly to discuss ways to improve their systems and prioritize which ones to do first.
The decision to incorporate CRM into your organization should be based on a solid strategic and cost-benefit analysis. With a high level of commitment and clear sense of the gains to be made, the decision can reap many benefits. For organizations that are growing, remember that as staff and constituents grow in numbers, the interactions become more complex. Identify points at which current systems will no longer satisfy your needs to deliver quality programs before they break down.
1. RFM (recency, frequency, monetary) analysis is a marketing technique that companies use to determine quantitatively which customers are good targets for different messages. It examines how recently a customer has purchased (recency), how often they purchase (frequency), and how much the customer spends (monetary). For nonprofits, customers are constituents, and measures should include not only donations, but volunteering or other forms of engagement with the organization.
Paul Hagen is the president of Hagen 20/20 (www.hagen2020.com), a research and strategy firm that helps organizations utilize technology to improve their efficiency. Hagen is a long-time researcher, organizer and entrepreneur. His career spans education and nonprofit (U.S. Peace Corps, Teach For America) and the corporate technology sectors (Forrester Research, Andersen Consulting, BBN). Hagen holds a M.Ed. in educational technology from Harvard and a B.A. in political science from Stanford.