Friday, November 29, 2013

BIG’s Blog: Zowie!

Talk about a two-by-four to the side of the head! That is how you get a mule’s attention. I just learned that Netflix stock price closed last week at $347.85/share.

Some of our clients and long-time readers will remember that when I started giving presentations and writing blog posts about our new model of fundraising, we actually used Netflix as an example of a 100% online company, and compared Netflix to Blockbuster, since both delivered movies for personal viewing. In those early presentations, we showed Netflix stock price at $35/share and Blockbuster at $1/share. The point of the comparison was obvious: “the market” viewed Netflix as much more valuable (35 X more valuable) than Blockbuster.

Blockbuster’s business model was to maintain its brick-and-mortar stores that had made them highly successful in the past by adding online ordering tools, but you still had to go into the stores to pick up your movies. The point of my comparing Netflix to Blockbuster was that operating 100% online gives you not only a “convenience advantage” but a “cost advantage” as well. Convenience is for the customer. Cost advantage is for the enterprise.

This point was not lost on those at our presentations who later became clients and are today building a new fundraising model that is 100% online.

It was not too much of a leap from my Netflix vs Blockbuster comparison to understand that fundraising really needs to move 100% online. I mean, let’s just take a look at what Netflix charges to access their vast online library . . . it’s only $8/month. I used to spend more than that in late fees at Blockbuster! Today’s direct mail oriented fundraisers get excited that their “average gift amount” is going up even though their absolute number of responses is going down. Would someone explain to me how this is a good long-term trend?

Netflix understands that a “low monthly amount” from many customers is a far superior economic model than trying to get a larger dollar amount from fewer. Ever heard of “elasticity of demand?” As the price declines, demand increases. Hello fundraisers?!? Somehow you don’t see that this applies to donation amounts?? How many of you are complaining that too many people send you $2 to $8? I understand THAT LOW DOLLAR AMOUNTS ARE NOT COST EFFECTIVE for your expensive direct mail programs today . . . but online???

No wonder Netflix’s 100% online strategy is more convenient AND allows them to make more money charging less . . . which allows them to GROW and PROSPER.

Question? Could Netflix have used direct mail to solicit customers and grow their business? Of course they could have. So why didn’t they use direct mail?

Two reasons:

  1. It was much less expensive to build a base of customers online and they could charge less and PROSPER.

  1. Online is where people are today and they wanted to GROW.

Keep your mail appeals going to my 86-year-old mother, but resolve to build a new 100% online fundraising model in 2014 to reach my baby boomer wife and millennial daughters.

Learn the lesson from Netflix about growing and prospering 100% online.

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Wednesday, November 27, 2013

BIG’s Blog: Oh Thankful

Who would have believed when I stumbled across the original insight in 2007, that we could have literally changed the very trajectory of fundraising for so many organizations? I mean seriously? After all, raising funds for the causes we care about is easy. Right? And, over time, because there are so many causes we are collectively passionate about, the "need to raise the funds” spawned an industry sector and attendant professional fundraising class to manage the process, yet following the fundraising methods . . . the processes . . . guaranteed success. Right?

So, then, what to make of the angst that began to build after the turn of the century in the 00s, as suddenly the "fundraising methods” . . . the processes . . . of fundraising began to fail in their ability to deliver year-over-year gains, and this even before the economy tumbled into the Great Recession. We used to think it was a cataclysmic event when a major player in an industry sector, or worse, the whole sector itself began to collapse in the span of a few years. But since the arrival of the Internet and the shockwaves of digital disruption, we have all grown more accustomed to the notion, having watched industry after industry wrestle with digital disruption. But for those in the middle of industry revenue stagnation and decline, the feeling of disorientation is keenly felt.

The product of disruption, however, is innovation . . . and innovation is that uniquely human endeavor that allows us to see the new way forward even as the old crumbles around us.

At Browne Innovation Group, we pause in thankful appreciation for God’s bountiful provision for the past season, and in humbleness give thanks for God’s provision for our future.

Join us.

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Friday, November 22, 2013

BIG’s Blog: Blockbuster is gone . . .

Your late fees are waived: Blockbuster closes. CNN correspondent Todd Leopold writes in his November 6th article, “Be kind, please rewind, the signs used to say in video stores, urging customers to return their rented VHS tapes spooled back to the beginning.” And then Leopold’s best line in the article: “If only Blockbuster could rewind back to the 1990s.

After selling the database marketing company I founded in 2000, I was contacted by a friend who had been a former client and was now working in a business strategic consulting firm. He asked me if I would join him in a consulting project with Dallas-based Blockbuster Entertainment Inc. I told him his timing was good and I would be happy to join him on what seemed a very important project. My friend’s firm had been approached by Blockbuster in soliciting a proposal to strategically assess how their organization could use the Web to enhance their business. He soon set up a preliminary conference call with the chief marketing officer and the then CEO, Michael Kelly.

When the day came for the conference call I was very excited as I had done my homework and had studied the market . . . specifically their new online competitor, Netflix. My friend and I were ready to highlight the overarching strategy of Netflix and how that insight could help Blockbuster, but as the conference call got underway, it became quickly apparent that all the Blockbuster leadership was interested in were tactical solutions that would drive more people to their stores. Both my friend and I tried to say that online ordering, as a delivery channel, was going to grow rapidly because people found it easier than driving to a Blockbuster store. Netflix was already doing this and growing rapidly.  

The Blockbuster people didn’t want to hear about it. It was about using the Web to drive store traffic . . . period.

Do you think today the Blockbuster leadership would like a re-do of that meeting? I wonder. Today it is so clear, in fact, that now online streaming has eclipsed online orders of DVDs.

Well guess what? I have a déjà vu of that meeting at least a couple of times a month as I talk to way too many fundraising leaders who are just trying to use the Web and online tools (including social media) to increase response of their direct mail appeals. They call it “integrated campaigns.”

At Browne Innovation Group, we still believe in direct mail appeals to my 86-year-old mother, but no amount of hype from online tools or social media is going to get my wife or daughters to open your mail. They are virtually 100% online.

Netflix got what Blockbuster didn’t see. The Internet is a new thing and to be successful, you need a new plan and new model. Netflix used the Web as a new platform first to take online orders, and then delivered the DVDs through the postal service. Today the Web is the order mechanism as well as the delivery mechanism.

To be successful with Boomers, Gen-X and Millennials, fundraisers need to be 100% online . . . period.

Join us.
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Wednesday, November 20, 2013

BIG’s Blog: Software as a Service is coming fast?

Software as a Service (SaaS) is coming on fast as the dominant enterprise IT. Some commentators such as Geoffrey Moore say it is a fait accompli. Nobody in the nonprofit fundraising world would use the term “fait accompli,” but clearly the ground is shifting.

For the fundraising world, IT revolves to a large degree around the donor management software system, a.k.a. the donor database. Mr. Moore’s arguments are cogent when focused on what he calls the tyranny of the product release model, and that can be easily understood by not only IT Directors but Executive Directors and Chief Financial Officers as well . . . to wit:
Anyone who has ever implemented an ERP application knows what I mean. The one thing you know for sure after having just implemented any given release of an enterprise software product is that under no circumstances will you ever implement the next one. After all, you have just spent 18 to 24 months, and up to ten times the license price of the software, to perform open heart surgery on your enterprise. Who in their right mind would want to undertake that again anytime soon?
Indeed, you not only forego the next release, but the one after it as well, and possibly the one after that if you can get away with it. Eventually, of course, this tactic catches up with you, and you once again agree to undergo open-heart surgery, freezing your enterprise’s other investments in IT for yet another 18 months or so.
So, to conclude, you have paid maintenance of 18 to 20% per year for anywhere from five to ten years for the express purpose of not availing yourself of the innovation created during that time period. This is horrible for you and no good for your vendor either, who must maintain back releases of the product with increasingly painful workarounds. It is not a vendor problem or a customer problem or even a product problem. It is a business model problem.

SaaS frees us all from the tyranny of the product release business model. Yes, with SaaS there is some level of ongoing disruption that you must cope with both within IT and with your user base, but please, do not even mention that in the same breath with the kind of burden the product release model imposes. Instead, thank your lucky stars you are getting innovation that you are paying for when you are paying for it. It is current, and so are you. This is huge!

We all need to keep our eye on this ball if Mr. Moore is right about it being a game changer.

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Monday, November 18, 2013

BIG’s Blog: Raise your hand

In way too many fundraising organizations dissent has been quashed, and anyone inside or from the outside of the organization who questions the viability and effectiveness of current fundraising methodologies is dismissed as misinformed or, worse, a fringe voice.

There is no mention of the sentence, “this isn’t working.” Groupthink remains firmly entrenched and enforced with the mantra, “this must work.”

But, of course, this means that you are guaranteed to fail.

Every new thing or idea comes from the fringe.

By the way, the U.S. Postal Service just said it lost $5 billion over the last twelve months . . . and that’s the seventh year the agency has reported a net loss.

You can keep doubling down on direct mail fundraising, believing that it will always be there (groupthink), or you can raise your hand in the next meeting.

Raise your hand in the next meeting.

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Friday, November 15, 2013

BIG’s Blog: Pitbull vs. the Beach Boys, or how “Ft.” is changing the world*

Music can tell you a lot about how your donors of different generational cohorts think and see the world.  For many of our donors, the Beach Boys were the iconic band of their generation.  About how many of those Beach Boys hits were performed with another artist?

Pitbull is a popular entertainer (and philanthropist, he recently helped to open a new charter school in his old neighborhood.) If you have a newer car, one that tells you the title and artist of the song on the radio you will see Pitbull (ft. . . insert popular artist here).  

“Ft.” stands for “featuring,” or, put another way, a major artist appearing on another major artist’s record.  This happens with many of today’s hits.  It is collaboration, the fusion of two great artists that gives greater pleasure to the audience.  How cool would it have been to have the Beach Boys and the Beatles record a studio version of “California Girls / Back in the USSR?”  That is what today’s music leaders are doing.

That’s nice, but what does this have to do with fundraising?  Millennials will expect you to collaborate across organizations, let alone across your internal organization lines.  If you want to reach Millennials, think about whom you are partnering with, and how that makes the donor’s world better

The golden age of fundraising is not in the past, it is in the future, and collaboration will be a big part of it.

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*The author is not endorsing any of the lyrics or themes of the above-mentioned artist.  Listen at your own risk.

Dave Targonski, CFRE
Director of Development and Stewardship
Office of College Relations
Belmont Abbey College

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Wednesday, November 13, 2013

BIG’s Blog: Earning a Raise

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Monday, November 11, 2013

BIG's Blog: 1+1 = Several Million Dollars

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In one of my posts last week, I opined that “your fundraising model is so screwed right now.” The reason I pointed this out was that you do not have the digital business model to accomplish what needs to be done to connect with younger generational cohorts, beginning with the impressively large Baby Boomer generational cohort.

Gordon Plutsky, who is both employed as a Chief Marketing Officer for King Fish Media as well as an adjunct professor at Endicott College, and Jeff Brooks, the creative director of TrueSense Marketing, had their ideas merged by Mr. Brooks in a recent post on Future Fundraising Now.

To be successful with Boomers, Mr. Brooks synthesized Mr. Plutsky’s points (that were made for commercial marketers) and translated them into three points for nonprofit fundraisers.

  • Great fundraising offers. Give your donors specific, compelling, exciting things they can do to change the world through your organization. The standard unrestricted "support us" offer doesn't necessarily meet their need for meaning and connection.
  • Be thankful. They need to know -- quickly and specifically -- that you got their gift, you put it to work, and you're grateful for their generosity.
  • Report back. This is the difference between winners and losers in Boomer fundraising. Show them what their giving accomplished. The more specific and emotional you are at this stage, the better.

Can you do this with your mail-centric fundraising and communication business model? Barely! Of course, if barely is good enough for you, then go for it.

Or, move 100% online to engage Boomers, Gen-X, and Millennials.

You’ve got a window of opportunity . . . don’t waste it.
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Saturday, November 9, 2013

BIG's Blog: For Fundraisers . . . On Being Seen

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It’s Saturday . . . so you probably won’t finish reading this whole blog and WORSE, you won’t listen to the video I have embedded in it.

Although listening to it and finishing this blog will . . . for most of you . . . make your week, your month, and probably your year. And for a few of you (you know who you are), it WILL CHANGE the direction (trend line) of your fundraising.

Those of you who haven’t begun to shift your fundraising business model are screwed right now because you cannot do what I am doing with this video.  To be honest, there are some who can technically accomplish the steps, but you cannot duplicate the reaction and payoff that I am going to get from those of you who read and listen.

My two daughters, ages 26 and 25, are brown and black. My naturally born older sons are obviously white. My oldest daughter was born in the U.S. and is biracial. My youngest daughter was born in Ethiopia . . . so even as I write this, you are picturing in your mind (you can’t help it) a brown girl and a black girl. Being daughters means they are also women. So again, you are fleshing what that means for them.

So who has a better chance of being successful if I choose to leave my business to one of my children? One of my naturally born white sons or one of my adopted colored daughters?

Listen to Nilofer Merchant’s talk: On Being Seen.

After listening to her talk, see if you can connect your problem in fundraising with the point of her message.
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Wednesday, November 6, 2013

BIG’s Blog: Asking someone to marry you is . . .

Of all the important things that people learn when they take our Courses, perhaps one of the most important is an emphasis on the need to build relationship FIRST.

Any organization that seeks to connect with the Baby Boomer, Gen-X, or the Millennial generations must begin . . . begin . . . by first forming a relationship. You do not meet the man or woman of your dreams and immediately ask him/her to marry you. Asking someone to marry you or, conversely, hearing a marriage proposal is a very emotional experience; one that those of you who have gone through it can attest to. In the same way, if you want to be successful long-term with Baby Boomers, Gen-X, and Millennials, you do not "ask for support" the first time they hear of you and your mission/ministry.

You say, "But Mike, that upends how we currently acquire donors through the mail and most other ways."

Do you suppose THAT might have something to do with why you are NOT acquiring significant numbers of Boomers, Gen-X, and Millennial supporters?

Something has changed.

Most, if not all, of your mail acquisition programs seek to touch an emotion . . . but emotion is only skin-deep (so to speak). Emotion is of the moment; it doesn’t last. Whereas relationship, is, by definition . . . depth.

Of late, much has been made of the fact that 60-something percent of first-time givers to mail solicitations do not give a second gift. It wasn’t always 60%. In fact 20 years ago it was half that or lower. Why was it lower 20 years ago? Could it be that 20 years ago the Depression and WWII generational cohorts made up virtually all the donor base for organizations like yours? These generational cohorts “trusted institutions” like yours. As the boomers have started to show up on exchange lists, their mode is very different. They may react to an emotional appeal, but very few stick around. Why? Emotion is fleeting.

So then, the correct order is this: first, develop the relationship, then second, "ask" with emotion . . . but don’t ask unless you have a relationship.

“But Mike, but Mike, we can’t do this with mail.”

I know.

This upends your current fundraising methodology, but hopefully it opens your eyes and explains why things are the way they are today.

Join us.
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Monday, November 4, 2013

BIG's Blog: The Gulf

By this time, most of my readers understand that I am espousing a very different approach to fundraising necessitated by the two huge societal shifts that are going on. The first shift is the philanthropic leadership shift as the Depression and WWII generational cohorts decline in number and the Baby Boomer and younger generational cohorts rise to take their place in funding charitable institutions. The second shift is the equally rapid communications technology shift from analogue to digital communications.

Each one of these shifts by themselves would likely cause a rethink of established operating assumptions and tactics, but taken together they are akin to tectonic change by virtue of their seismic shift.

I am in a very unique position as every month I am talking to 20 or 30 different people with leadership responsibility in Development.

What I have noticed for quite some time is the gulf of very differing priorities and perspectives between the two segments of the people I talk to . . . and it always breaks down along what side of Development they are on. If they are a board or Council member, in the case of religious communities, there is a focus on specifically what is changing in fundraising. If, on the other hand, they are the professional fundraising staff leadership, there is almost a singular focus on the “how” of the tactical details that are going to change the trend-line of their fundraising operation. Because, make no mistake about it, professional fundraisers clearly understand the ground underneath them is shifting.

So what is the practical gulf between these groups?

The board or Council leadership does not have to carry the day-to-day responsibility of delivering financial resources for the organization.

The Development Director and their staff, on the other hand, do have the day-to-day responsibility to deliver financial resources for the organization.

The gulf between these two groups is illustrated to me by the direction of the conversation when I talk to members of each group. The questions and focus of the conversation are completely different.

Organizational leadership is very intrigued by the big picture of the shift I am espousing, and are telling me this is all new to them.

Whereas when I talk to paid professional staff they are always interested in focusing on the tactical . . . the “how” of making a new model work.

To an outsider like me this makes total sense. The professional staff has to deliver. Their jobs are on the line if revenue targets are not met. This drives a culture of “looking for silver bullets;” that ONE – hopefully easy-to-implement – new tool, technique, or insight that can immediately increase revenue.

Honestly, with few exceptions, the vast number of professional fundraising leaders understand that “things have really changed,” and they are open to looking at a new fundraising model, but the PRESSURE OF THE MOMENT makes them hesitant to invest time and money in anything that isn’t going to generate an immediate return.

And at the same time, the professional staff understands they have made every conceivable incremental change they can to tweak the way they currently do fundraising. They have no more rabbits in the hat to pull out. Yet they feel the organization’s leadership is only interested in talking about TODAY’S RESULTS.  This singular fact is causing a deep morale problem in many organizations.

How do you bridge this gulf and bring the two groups to the point of talking?

Start talking about the trend-lines in your current program. Looking back over the last three years, what are the trends telling management your fundraising revenues will look like in two, three, or five years?

That conversation can bridge the gulf because it has nothing to do with today’s results; it is about futures.

Join us.
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Friday, November 1, 2013

BIG’s Blog: Websites and Websites

Bob Lefsetz writes a blog mostly about the music business. Recently, he wrote, “The album is dying in front of our eyes.”  He goes on to say that both Elton John and Paul McCartney released new albums and Elton’s isn’t in the Top Fifty and McCartney barely broke 20,000 worldwide sales this past week.

So Lefsetz rhetorically asks, “What’s the industry to do?” and then he gives his answer: “Have a rethink.”

It would be such an easy segue to compare album sales to direct mail appeals for nonprofits; but let’s not go there yet again!

Rather, consider your Website.

I’ll bet you have redone your Website within the last couple of years. And, have you maybe added features you didn’t have before like video, for instance, or links to Facebook, Twitter, or YouTube?

But what is your Website’s true purpose?

Could you replace your Website with a Facebook page? Seriously, could you? At least with a Facebook page there is the dynamic of constant posts. Facebook pages can link to video. If your organization has a Facebook page and a Website, which do YOU check out more often?

If you’re like the 99% of people I ask, it is Facebook. And why? Could it be the dynamic of reading a comment or seeing who has posted a picture?

Will I feel or see that same dynamic on your Website? And if not, why not?

Is your Website just static information with some pictures and stories you change every two weeks or once a month?

Do your mission and ministry come to life on your Website?

Do this: Ask someone not connected to your organization – preferably someone you barely know – “What do you think of our Website?”

Now, ask someone you know well, “Does our organization come across on our Website?”

Oh, and one more thing, make certain these people are under 35 years of age.

Listen to both of them.

Time for a rethink?

Join us.
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