Audience Insights: Organizations Overlook the Most Important Clues

Clues for increased satisfaction and visitation are often right under the noses of cultural organizations. I frequently hear executive leaders Read more

Do Expansions Increase Long-Term Attendance? (DATA)

Sometimes it feels like nearly every cultural organization is taking on a major expansion project. But do these projects Read more

Over 60% of Recent Visitors Attended Cultural Organizations As Children (DATA)

You may have guessed it was true – but here’s why this statistic matters. The idea that those who visit Read more

Cultural Organizations: It Is Time To Get Real About Failures

Hey cultural organizations! Do you know what we don’t do often enough? Talk about our failures. It’s a huge, Read more

How Annual Timeframes Hurt Cultural Organizations

Some cultural executives still aim for short-term attendance spikes at the expense of long-term financial solvency – and they Read more

Special Exhibits vs. Permanent Collections (DATA)

Special exhibits don’t do what many cultural organizations think that they do. If fact, they often do the opposite. Read more

Community Engagement

Visitation to Increase if Cultural Organizations Evolve Engagement Models (DATA)

Tipping pointAttendance to cultural centers is on the decline, but data suggest that forward-facing organizations may see improvements by 2020. Here’s why.

Overall, data suggest that attendance to visitor-serving organizations is in a general state of decline relative to population growth – and this may suggest a problem with the current visitor-serving organization business model. For organizations that fail to adapt their engagement strategies to respond to emerging audiences, there’s abundant reason to believe that their attendance levels may continue to stagnate or decline. However, data suggest that those organizations willing to evolve their thinking about emerging audiences and access programming stand to benefit by overcoming the negative substitution trends that are currently depressing attendance. There is a reasonable expectation that evolutionary, agile organizations will experience sustained increases in attendance as this century enters its second decade.

Here’s what your organization needs to know about negative substitution, acculturation, and access programming opportunities…and how they are shaping the future of visitor engagement:

1) Negative substitution of audiences is affecting attendance (and it is happening NOW)

While the US population continues to grow, the historic audiences of visitor-serving organizations (i.e. those audiences with the demographic, psychographic and behavioral attributes that indicate a propensity to visit) have been in a state of general decline. One of the reasons for this circumstance is the negative substitution of audiences. Negative substitution is quantified by a deficiency of “replacements” for the historic visitors who exit our markets. For every one person who exits the market, there is fewer than one person to replace him/her.

Currently, for every one high-propensity visitor to visitor-serving enterprise that leaves the market (through death, relocation, or migration), only 0.948 similar high-propensity visitors are entering the market (typically via birth or relocation). When people leave the market without a sufficient number of “replacements,” we have negative substitution.

Why is this happening? For one, affluent, educated white people (i.e. historic audiences) are having fewer children and/or getting older and/or relocating to emerging markets, and visitor-serving organizations on the whole have yet to sufficiently cultivate the engagement of a newer kind of high-propensity visitor. In other words, on the whole, we’ve done a relatively poor job becoming places where emerging audiences (e.g. millennials, Latinos, etc.) feel comfortable declaring “This place is for people like me.” We refer to this as attitude affinity – a perceptual measurement of if a particular market segment believes that an organization is welcoming to them.

Incidentally, emerging audiences (most commonly Latino and other historically underserved populations) are playing a major role in population growth. Historically “underserved” audiences are increasingly the mainstream audiences of the future…and failure to cultivate their engagement may risk a generational alienation from our organizations.

Ultimately, this downward trend demonstrates the failure of access programming within visitor-serving organizations. If the past few decades of access-motivated initiatives had been successful, then we would not be experiencing negative substitution. Instead, we would have cultivated these audience members to become our current visitors. Demographers and researchers have been writing about this inevitability for some time.  If our programming had proven responsive to this opportunity, then we would be experiencing audience visitation that increases alongside population growth. That’s not what’s happening.

 

2) Misunderstanding access programming jeopardizes long-term sustainability

Many organizations incorrectly consider “access” primarily in terms of affordability.  If simply offering a reduced admission was a cure-all to access issues, then very few organizations would still have underserved audiences at all.  The presence of a continually underserved audience indicates the failure of an organization’s access programming.  In the past, organizations could perhaps put access issues on the back burner and get it away with it – there were enough traditional high-propensity visitors to support the organization.  However, as the traditional market shrinks and historically underserved audiences grow to become an increasing majority, the issue of access can’t be de-prioritized any longer.  The future well-being of many visitor-serving organizations hinges on their ability to connect with these audiences. The reality is that effective access programming engenders trial and usage by cultivating new audiences as eventual regular visitors – an organization’s lifeblood.  Access isn’t primarily about price. It’s about eliminating every barrier to engagement.

Do the data suggest letting everyone visit for free?  No.  Of course not.  The data indicate that time is more valued than money for the vast majority of audiences.  A person thinking about visiting a zoo on a Saturday in June is very unlikely to delay their visit until a Tuesday in November simply because of cost.

Access programming is significantly less about affordability than strategic sustainability. This is where organizations are being inappropriately emotional about business matters, and misguided ideas about “affordability” are lessening the solvency of some organizations. Today, there exists compelling, data-informed science that suggest that cost is overstated as the primary barrier to engagement (schedule reliably trumps cost). Think of it this way: If $34.95 proves unaffordable to select audiences, so will $24.95 or $29.95…or any other realistic “discount” from the general admission basis. In terms of true affordability, nearly any price diminishes the visitation potential for our most affordability challenged audiences.

Price is not panacea when it comes to affordability. And affordability is not antidote for access. Price is a revenue optimization tool that provides organizations with the resources to support access programming that, in turn, cultivates the engagement of future audiences.

If you want to be relevant to the audience of tomorrow, you better be working to engage them today.

 

3) Acculturation improves future outlook (provided organizations update engagement models)

IMPACTS- HPV substitution ratios

But there’s hope! Check out this graph from IMPACTS. It demonstrates substitution ratios derived from a predictive modeling process for US visitor-serving organizations. The Y-axis indicates the antecedent term (the first value) in the substitution ratio.  Thus, an antecedent term <1.00 indicates negative substitution – for every one person exiting the market, there is less than one person to replace them.

Why does the trend improve in the future?  Acculturation. Emerging audiences tend to adopt “mainstream” behaviors over time – including, potentially, engaging with visitor-serving organizations such as museums, zoos, aquariums, performing arts centers, etc.

Think of the observed differences between first, second, and third generation immigrants to the US. For example, the first generation of immigrants may not speak the language, may have gone to school overseas, may tend to live in clusters of like ethnicities, etc. The next generation was born and raised in the United States – and may be more acculturated than their parents…but still retain certain behaviors due to household customs (English as Second Language, etc.). However, the third generation tends to be even more acculturated, with fewer traces of “old country” behaviors.

Because population growth is being driven by births of second and third generation Americans, acculturation represents a tremendous opportunity to engage these emerging audiences – provided, of course, that organizations have cultivated a relationship with these audiences before they enter the mainstream. Significant research indicates that relationships with brands are often cast during a person’s early, formative years – a failure to cultivate the engagement of a less acculturated first or second generation audience member may effectively preclude the future engagement of a fully acculturated third generation audience member.

The good news about this data? Organizations that intelligently and diligently evolve their engagement models during this critical time stand to benefit from the positive impacts of acculturation in the near future. The perhaps challenging news? Organizations will need to be thoughtful and actively evolving before 2020 (i.e. the predicted “tipping point” in the audience acculturation projections) so as to cultivate the support of these future audiences before they enter the mainstream market.

This isn’t a “Let’s just wait until 2020 to get serious” situation. This is a “If you start thinking strategically and work hard now, then you’ll see a payoff in 2020” situation.

Interestingly (and unsurprisingly), technology accelerates acculturation. This means, of course, that utilizing digital platforms and cultivating real-time communications with emerging audiences is critical for organizations. This is also another compelling reason for leaders to listen to PR and social media staff members throwing around the word “innovation.” In many ways, the industry doesn’t need to “pivot” (that mindset created many of the challenges that visitor-serving organizations are facing today) – it needs to reset.

Organizations that invest in cultivating more strategic “access” models today will be able to take advantage of the engagement benefits suggested by the predicted acculturation trends. Yet again, the time-proven lesson proves true: You reap what you sow.

 

Like this post? Here are a few related posts from Know Your Own Bone that you might also enjoy:

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page (or ) Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, IMPACTS Data, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 3 Comments

Audience Acquisition: The Cost of Doing Business for Visitor-Serving Organizations (DATA)

Visit us v2

Here it is: the data-informed equation for how much money organizations should be spending in order to maximize opportunities for financial success.  

Data suggest that approximately 70% of visitor-serving organizations are not investing optimal funding in acquiring audiences.

Marketing budgets seem to be an unnecessarily emotional topic for many nonprofit organizations. Optimizing marketing investments – like admission prices – are increasingly a product of math and science (read: decidedly not “intuition” or “trial and error”). They need not be based on fuzzy-feelings and inappropriate loyalties to failing business models that ignore the realities of the outside world.

We live in a pay-to-play world where organizations have to spend money to make money. When it comes to budgeting for audience acquisition costs, many organizations seem to have fallen into that familiar trap of “last year plus 5%” that lazily assumes the continued efficacy of the same old platforms and strategies. Of course, such a strategy completely ignores shifting advertising cost factors, evolving platforms and channels, and technological innovation. Say it aloud: Nonprofits do not operate in a vacuum and cannot afford to ignore the changed economies and technologies of the world around them.

Several organizations that have made this realization have asked IMPACTS if there is an equation to inform their audience acquisition costs so as to maximize their opportunities for financial success. And, the findings of a three-year study suggest: Yes, there most certainly is!

 

The key equation for acquisition costs

Let’s first establish a few definitions and “same page” this conversation:

Audience acquisition costs are the investments that an organization makes in advertising, public relations, social media, community relations…basically, anything and everything intended to engage your audiences.

Market potential is a data-based, modeled outcome that indicates an organization’s potential engagement with its audiences. For most organizations, “market potential” primarily concerns onsite visitation. In other words, it answers the question, “If everything goes well, how many people can we reasonably expect to visit us this year? (NOTE: Market potential may not match an organization’s historic attendance – organizations “underperform” their market potential all the time…for reasons that we’ll soon explore.)

Earned revenues are the product of admissions, memberships, merchandising, food and beverage, facility rentals…basically, all revenues attendant to the onsite experience that are supported by audience acquisition investments. These revenues exclude annual fund, grants, endowment distributions and other sorts of philanthropy.

Here’s the equation to maximize your market potential (as suggested by the recently completed three-year study):

 IMPACTS audience acquisition equation

Expressed another way: Optimal Audience Acquisition Costs = 12.5% of Earned Revenues. For example, if your organization generates annual earned revenues of $20 million, then this would suggest an annual audience acquisition investment of $2.5 million.

Further, additional analysis would suggest that 75% of the audience acquisition costs should be earmarked to support paid media (i.e. advertising). So, of the $2.5 million suggested above for audience acquisition, nearly $1.9 million should support paid media.  The remaining 25% (or, in this example, approximately $600,000) would support agency fees, public relations expenses, social media, community engagement – all of the programs and initiatives that round out an integrated marketing strategy. Forget to invest that 25% at your own peril. Earned media is critical for success and many social media channels are also becoming pay-to-play.

And now the other side: Why such a large percentage allocated to paid media? Again, ours is an increasingly pay-to-play world. Rising above the noise to engage our audiences frequently means investing to identify and target audience members with the propensity to act in our interest (e.g. visit our organizations, become members, etc.). There is tremendous competition for these same audience members – from the nonprofit and for-profit communities alike.  Think of the most admired and successful campaigns in the world – do Nike and Apple rely on 3am cable TV “bonus” spots that they get for a reduced rate and that don’t hit target audiences? Nope. While earned media plays a major role in driving reputation, paid media plays an important role in a cohesive strategy – and doing it right costs money.

 

The equation in action

How does the study suggest this equation? Check out the chart below. It indicates the relationship between performance relative to market potential (i.e. how well the organization actually performed when compared to its market potential) and the audience acquisition investments made by 42 visitor-serving organizations (including aquariums, museums, performing arts organizations, and zoos) over a three-year period:

IMPACTS - Audience Acquisition

The data strongly suggests that there is a correlation between an optimized audience acquisition investment and achieving market potential. It also indicates the perils of “underspending the opportunity” – a modest investment intended to achieve cost-savings may forfend exponential revenues. (Though the data never has – and likely never will – support it, many organizations seem to foolishly hold dear to the notion that they might somehow “save their way to prosperity.”)

Additional analysis indicates that the studied organizations invested an average of 7.9% of earned revenues toward audience acquisition…but only achieved 76.0% of their market potential. However, the organizations achieving ≥95.0% of their respective market potentials invested an average of 12.7% of their earned revenues toward audience acquisition.

In no instance did an organization investing less than 5.0% of earned revenues on audience acquisition achieve greater than 60.0% of its market potential.

Overall, the data suggests that the “sweet spot” for audience acquisition investment is in the 10.0-15.0% of earned revenue range. Splitting the difference (and further supported by the findings of organizations achieving ≥95.0% of their market potential in the study) gives us our 12.5%.

NOTE: Before we start parsing the nuances of media planning and creative approaches to advertising, let’s baseline the conversation by acknowledging that each of the studied organizations were led by competent persons operating with the best of intentions. Yes – “great creative” matters – but it doesn’t offset an inadequate marketing investment. Sure, a viral social campaign helps…but it doesn’t negate the importance of other media channels. In other words, there aren’t exemptions from the need to invest in audience acquisition for visitor-serving organizations that rely on earned revenues.

If your organization is struggling to meet its market potential, it may have less to do with all of the usual suspects such as parking, staff courtesy, special exhibits, pricing, etc. and more to do with an antiquated view of the necessity of meaningful marketing investments. Can your organization overspend? You bet. However, that doesn’t seem to be the problem confronting most visitor-serving nonprofit organizations. If your organization is struggling to meet its market potential, then it may be that in today’s pay-to-play world, you simply aren’t paying enough to play in the first place.

 

Like this post? Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page (or ). Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Digital Connectivity, Financial Solvency, IMPACTS Data, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 18 Comments

The Game Has Changed: Nonprofits Now Compete with For-Profits (DATA)

Arm wrestling for profit

An organization’s nonprofit status may carry neither the perceptual weight nor the relevance that many leadership teams imagine…and nonprofits may be sabotaging their own opportunities for support because of it.

All organizations – not just nonprofits – are now in the business of promoting “social good” in order to gain support. The recent Super Bowl was an excellent example. From McDonald’s “Pay With Love” commercial, to Dove’s #LikeAGirl campaign, to all of the emotional daddy-love commercials tugging at our heartstrings, the world’s biggest advertising stage was full of attempts to demonstrate meaningful brand values. The integration of social values within business operations and communications – “corporate social responsibility” – is one of today’s most prominent business trends. And, this trend has a profound impact on nonprofit organizations because, today, the market demands transparency and authenticity to encourage support (e.g. donation, ticket purchase, etc.). The market increasingly expects organizations to articulate and demonstrate a “why” (or “so what?”) beyond “to make money.” In fact, many studies demonstate that social responsibility is no longer optional for businesses.

In other words, if your organization imagines one of its key differentiators to be its social responsibility, well, then your thinking may be at complete odds with the way the market perceives and evaluates all organizations (i.e. nonprofits and for-profits alike).

Consider this: A nonprofit organization’s “competition” for funds and market share isn’t limited to a similar organization down the street. It’s increasingly a myriad of entities within the for-profit sector. And, generally, these entities have a leg-up in allocating financial resources to help communicate and support their social missions.

Here are some considerations for organizations to remain relevant and meaningful in our age of social good for business’s sake:

 

1) Consider that people may not even know that you are nonprofit

“Wait. What?!” For many individuals working within nonprofits, this can be a big shock. However, time and time again in my work at IMPACTS, the data indicate that the majority of the same public that organizations endeavor to serve do not know that many nonprofits are actually nonprofits.

IMPACTS perception of VSOs as nonprofit

A majority of people – including visitors! – are unaware that these organizations are nonprofits. As the data indicates, the market’s lack of regard for an organization’s tax status extends to all types of visitor-serving organizations – so no one is immune to this condition. The question is: Does it matter? Well, if you consider your organization’s tax-exemption as a primary differentiator in a crowded, competitive market, then this data may be very alarming. However, if you tend to accept that the market is infinitely more interested in what you actually do as an organization than it is in the esoterica and vagaries of the US tax code, then this finding isn’t nearly so troubling.

We all know how challenging it can be to make a lasting impression. In the few precious moments when we hope to engage with our audiences, is the foremost thing that we hope to communicate about our tax status? And, if so, does the market even care? Which leads me to…

 

2) Audiences are increasingly sector-agnostic

The fact that people are confused about the nonprofit status of many organizations likely doesn’t matter.

Data suggest that 91% of global consumers will chose to associate with and support brands and organizations that provide some sort of social benefit over a product that does not. For nearly all brands right now, it’s cool to be kind.

For-profits are well aware of this and many have (or have had) campaigns that tie directly to a purpose, prominently including: Patagonia’s Common Threads Initiative, Bank of America and Khan Academy’s Better Money Habits, Coca-Cola’s Ekocenter, and Toyota’s Meals Per Hour, and LifeBuoy’s Help a Child Reach 5. That’s just the tip of the iceberg. These initiatives are focused and generally easy to communicate and understand. This may be why the Pepsi Refresh Project didn’t do very well by comparison – and that also may be why many true nonprofit organizations are struggling when it comes to communications. But I digress…

While many of these types of initiatives include a nonprofit beneficiary, the fact remains (and, indeed, becomes glaringly obvious): People don’t need to donate directly to a nonprofit to support something that they believe in. They can simply buy fast-food fried chicken.

And, with that, BAM! We’ve attached the idea of “giving” to a traditional economic utility curve. This model is arguably more sustainable because the consumer actually gets something (a product or experience) in addition to the feel-good attached to supporting a cause. Whether nonprofits like it or not, this model changes the way people think about supporting causes.

It’s great that some nonprofits are benefiting from these campaigns. They are an opportunity for securing support from a for-profit company and can be very successful partnerships! However, many organizations neglect to consider what all of this may be doing to the general market’s attitude toward nonprofits. I’m absolutely not saying that these partnerships are a bad idea. I’m saying that to move forward, it may be best to recognize (and accept) this evolution we’ve helped to create in the market’s perception and their related progression toward a more sector-agnostic world.

 

3) Having a mission is money

It’s time that nonprofits remove the emotion that may be elicited by the use of the word “mission” so close to the word “money” and tackle this one head-on. I’m talking mostly to organizations that do provide a service, product, or experience and indeed operate – at least a little bit – based upon the concept of a more traditional utility curve (i.e. visitor-serving organizations).

Visitor-serving organizations that highlight their mission financially outperform those marketing primarily as attractions. At IMPACTS, we check in on this data every quarter and the connections between how well audiences believe that an organization achieves its mission continues to correlate with financial performance.

Yes, nonprofits are arguably and increasingly competing with for-profits – but not on how well these entities can be for-profit-y. For-profits are competing with nonprofits regarding how conceptually nonprofit-y they can be!

Transparent, social-good acting, for-the-best advocating, morally-sound, socially-valuable…the same perceptions that may have been traditionally associated with successful nonprofits are among the biggest wants of for-profits in today’s world. If your marketing team is all about discounts and sweepstakes and only posting about how people should “visit us!” tell them to knock it off. That’s not good business, and it’s not the sweet spot in which these organizations need to shine.

 

4) Demonstrating impact and prioritizing transparency are more important for nonprofits than ever before

Donors increasingly make decisions based more on the values that an organization shows by way of their actions and real-time communications on social media then what an organization tells in ads and individual status updates. The web empowers potential supporters to make their own decisions about organizations based on their overall perception of the brand. Organizations that don’t walk their talk generally suffer. Extreme cases are those of McDonalds and SeaWorld.

Right now, nonprofits risk being perceived as second-rate at achieving the very positive attributes that define them (i.e. being about more than making a buck).

Sharing compelling mission-related stories and providing real impact is at the heart of many nonprofit organizations, and its how they’ve kept the lights on for decades. In fact, people care more about how they feel when they give than how organizations spend their money. The reality is that many for-profits have more resources to elicit the very emotions that nonprofits try to summon…and that “giving” could be going somewhere else.

 

Nonprofits are masters of tugging at heartstrings and making the world a better place. Now – more than ever before – it’s up to all nonprofit organizations to do more than tell. It’s time to show how well we do what we do best. Our increasingly sector-agnostic world has changed the game. Organizations need to decide if they still want to be a valuable player and, if so, update best practices accordingly.

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page (or ) Or for more regular sharing of nonprofit marketing information, follow me on Twitter

 

Photo credit:  © Nikolai Sorokin | Dreamstime.com

Posted on by Colleen Dilenschneider in Financial Solvency, Fundraising, IMPACTS Data, Myth Busting, Sector Evolution, Trends 2 Comments

Three New Pricing Realities For Visitor-Serving Nonprofits in The 21st Century (DATA)

Admission tickets

Want to keep moving your mission moving forward and your doors open? It’s time to end the debate on these pricing-related topics.

As the visitor-serving industry (museums, theaters, symphonies, historic sites, etc.) broadly struggles with declining attendance trends and a potentially unsustainable reliance on kindness and not commerce, “getting your price right” is more important than ever to nonprofits who depend on the gate to support their missions. Too high of a price may serve as a barrier to visitation. Too low of a price risks leaving money on the table and all of the attendant fiscal challenges associated with failing to maximize earned revenues.

Much is happening in the world that changes/challenges the way that traditional visitor-serving nonprofits operate: social media and technology, the need for real-time transparency, and changing demographics in the United States and beyond are just a few, prominent factors influencing our industry. And, these factors are changing everything from internal operations to membership products and the role of fundraising. And, unsurprisingly, the information age requires embracing new realities related to pricing.

Let’s end the debate on these three pricing-related topics and get on with the business of running effective businesses that enable meaningful missions:

 

1) Pricing is NOT an art (Pricing is now a science)

Determining the optimal price of admission is no longer a trial and error process. In fact, it’s anything but a “guess” (however well-educated). Data is playing an increasingly important role in the way that institutions operate for good reason.

A near-decade of research including hundreds of interviews with US visitor-serving nonprofit organizations strongly suggests that many pricing models are the product of “unintentional collusion” (AKA “the blind leading the blind”). This deeply-flawed model fails to contemplate two critical factors when it comes to informing a pricing strategy: (i) the fact that a proximate (or competitive, or peer) organization has established a price does not necessarily mean that it is an optimal price; and (ii) the market tends to view organizations – however “alike” they may be – in very unique terms, and this uniqueness frequently extends to pricing.

Unintentional collusion looks something like this:

IMPACTS unintentional collusion

Thanks to readily available data and analyses, there is no reason to base pricing on anything beyond an organization’s own, unique equities. For every organization, there is a data-based “sweet spot” in which admission prices are optimal.

Let’s consider a quick example of what an optimal pricing strategy looks like when charted (Note: This particular example is from a performance-based entity, but this way of considering pricing applies to any type of admission):

 IMPACTS ticket price analysis example

In the above example, the data-informed analysis suggests that pricing less than $75 for a ticket to the performance (more specifically, to a “premium” seat at a non-matinee, live performance) would be “value advantaged” – a polite euphemism for leaving money on the table! However, anything above $75 pushes the price into the “value disadvantaged” realm – a place where the price poses a needless barrier to entry (and, generally, one where the increased per capita revenues will not offset the decline in attendance). For every category of admission, every organization has an optimal price – one that is neither value advantaged nor value disadvantaged.

Organizations guess their price (without leveraging data to inform their pricing strategy) at their own risk. Getting the price wrong can alienate potential visitors and supporters if it’s too high, and make it difficult to raise prices to an optimal value over time if price starts too low.

Looking for ways to help support a price increase? Well, data suggest that a whiz-bang new exhibit or facility expansion isn’t necessarily coupled to an increased price tolerance. Instead, efforts to improving an organization’s reputation or the overall satisfaction of visitors are much more reliable indicators of increased value for cost perceptions.

 

2) Admission pricing is NOT affordable access (Admission enables affordable access)

A thought that sometimes emerges once an organization’s optimal pricing has been quantified is strangely, “but that’s too expensive to provide affordable access!” Admission is not a substitute for affordable access. Admission and affordable access programs are completely different things…and an organization needs to establish its optimal pricing strategy in order to support effective affordable access programming.

In other words, if you subsidize price in the name of affordable access (i.e. artificially lowering the price to create a value advantaged pricing condition), you are limiting your organization’s ability to fund quality programs that DO provide true affordable access. Making your entire pricing strategy an “affordable access program” leaves money on the table as folks pay an admission price below what they (the market!) indicate they were willing to pay for your experience.

When it comes to the truest definition of affordable access, an admission price point of $15 or $20 or $25 is functionally irrelevant to many of our most under-served audiences…most any price at all may pose an insurmountable barrier to visitation.

What if you aim to provide affordable access for the community? Won’t a high admission price deter folks? The data suggest “no” – at least not the people who were able to pay in the first place – but that doesn’t mean it’s not a good idea to develop true access programming to better engage constituents for whom price is barrier while also considering strategic promotions that celebrate your community. Speaking of which…

 

3) Discounts are NOT promotions (Promotions serve a purpose beyond cheap access)

Promotions celebrate community while discounts devalue your brand. These are very real and very different things. The biggest differentiating factor is the question “So what?” If the point of providing a discount is simply admitting folks for a lower price, then the discount is a bad idea that devalues your brand. (And, as a reminder, data suggests that all discounts provided through social media are bad business for nonprofit organizations.) However, if an organization’s answer to “so what?” is “to celebrate a community” and that purpose is made clear in external communications, then the program that you are describing is a promotion. The feature of a promotion may include a special pricing opportunity – think special pricing for mothers on Mother’s Day, or differentiated pricing for local residents.

Discounts make people say, “I got in cheap.” Promotions make people say, “I feel valued.” Discounts are not only meaningless, but data suggest that they also lead to less satisfying overall experiences and even increase the time before a return visit! While this may be surprising to some folks, it’s classic pricing psychology in action.

IMPACTS intent to revist

 

 

If visitor-serving organizations aim to keep providing inspiration and education to the masses, then the first imperative is to exist – and it’s hard to exist (let alone thrive) in the long-term without a sustainable revenue strategy that optimizes pricing.

Pricing strategies – and even pricing psychologies – are not mysterious so let’s stop guessing. The data is not uncertain.

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution 4 Comments

The Critical Role of Reputation in Nonprofit Success (DATA)

KYOB Even clean hands damage surfaces

A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well. – Jeff Bezos

The reputation of an organization drives its impact and solvency. Or, is it those things that create a good reputation? Reputation is neither the cause of success, nor the outcome. It is both. It’s a chicken-and-egg issue, and that may be why some organizations tend to focus on only one side of the equation.

 

Organizations can – and should – keep tabs on and aim to influence their reputations in order to experience greater success in terms of both solvency and mission-impact. If your organization is like most, you don’t have a single position devoted to managing reputation…and likely think that this responsibility should rest somewhere fuzzy within the marketing department. Today, with an ever-increasing emphasis on transparency and potential supporters wanting to make their own assessments on the worthiness of organizations, an organization’s reputation plays a more important role than ever before.

Managing reputation isn’t an issue of structure, skillset, or tasking – it is an outcome of a successful workplace culture. Here are five reasons why your organization will benefit by integrating discussions concerning reputation management into its culture:

 

1. A good reputation shows why your organization exists (and naturally attracts people who share a passion for your mission)

“People don’t buy what you do, they buy why you do it…The goal is not to do business with everybody who needs what you have. The goal is to do business with people who believe what you believe.” –Simon Sinek

This was said by Simon Sinek during his TEDx talk on how great leaders inspire action that has been viewed over 20 million times. (It’s 18 minutes long, and is one of those inspiring, change-your-thinking videos that makes you want to send it to everyone with whom you’ve ever worked…or even marginally talked shop.)

If your organization is doing its job correctly, then the reason why staff members come to work every morning should be apparent. Your mission messaging should trump marketing as an attraction if you are a visitor-serving organization. In essence, your reputation is a reflection of your organization’s character and culture – and organizations will benefit by making sure that their reputation is strong, consistent, and, thus, without need of “hard selling.”

“If I take care of my character, my reputation will take care of me.”- Dwight L. Moody.

 

2. Reputation drives success (by way of donations, relationships, attendance)

A good reputation means greater odds for the long-term financial sustainability of your organization (provided that you remain true to your values and address “crisis” with expediency, sincerity, and transparency).

For visitor-serving organizations, reputation plays a particularly important role in driving visitation. Data suggest that an organization’s “reputation” is a primary motivator for visitation for high-propensity visitors (i.e. those who demonstrate the demographic, psychographic, and behavioral characteristics that indicate a heightened likelihood to visit a museum, symphony, historic site, or other visitor-serving organization). (Regular KYOB readers are likely rather familiar with the data below!) Because museums are currently suffering lower attendance as an industry, the importance of understanding this relationship is especially urgent.

IMPACTS decision making utility model

A strong and stable reputation based on what you do best plays a logical role in building stronger relationships with other organizations, sponsors, politicos, and supporters.

 

3. Reputation conversation necessitates acknowledgement of the importance of online engagement

What makes up an organization’s reputation? Good question. Regular KYOB readers know that I talk about this…a lot. The answer is a little bit paid media (e.g. advertising) and a lot bit of reviews from trusted sources (particularly word of mouth and earned media – both of which are often facilitated by social media). In fact, reviews from trusted resources are 12.85 times more influential in terms of your organization’s reputation than is the advertising that comes out of a media budget.

IMPACTS -Diffusion of messaging Repuation

 Because real-time, online platforms play such a critical role in both cultivating and maintaining reputation, it is nearly impossible to intelligently discuss reputation without also contemplating (online and offline) engagement strategies. It means that organizations will need to talk about social media as it relates to organizational goals and the behavior of breathing human beings instead of reducing the conversation to “likes” and technological skillsets…and that’s a good, necessary thing.

 

4. Understanding your reputation requires understanding your audience (another best practice increasingly necessary for success)

In order to understand the strength of an organization’s reputation, that organization actually needs to listen to people outside of the organization. No, a person inside of the organization cannot determine current reputation. Create an image and build a culture to create a desired reputation? Sure. But nobody in the organization can talk about the organization’s reputation without first listening to feedback from your audiences. Only your market can lend insight into current perceptions of your organization.

Paying attention to the market is critical and it’s one of the main reasons why marketing has evolved from a service department to a strategy-oriented department.

 

5. Reputation management falls to everybody (because it falls to nobody)

Most organizations do not have a Chief Reputation Officer (aside from, perhaps, an overworked CEO), but there is budding conversation about why some organizations may want to consider it.

Reputation management is fundamentally different than a role that might be found within a marketing and communications department. It involves strategically managing and monitoring relationships with distinct constituent groups – including groups related to development, visitor services, community outreach, and government relations functions.

 

Even if an organization does appoint a committee or a position related to reputation management, we live in a time when not having the whole organization on board with your vision (or your “why” – see point #1) can lead to a fragmented reputation. Today, Benjamin Franklin’s words have never been truer: “It takes many good deeds to build a reputation and only one bad one to lose it.”

In sum, an organization’s reputation is one of its most valuable assets, and, as such, it’s time we start actively talking about it within every department.

 

We would all like a reputation for generosity and we’d all like to buy it cheap.

–Mignon McLaughlin

 

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Posted on by Colleen Dilenschneider in Community Engagement, Digital Connectivity, Financial Solvency, Nonprofit Marketing, Sector Evolution, Trends 1 Comment

Signs of Trouble For The Museum Industry (DATA)

Main Hall and Stairs Mational Museum Warsaw

As the US population grows, the number of people attending visitor-serving organizations is (still) in general decline. And this is a very big problem for sustainability without a digital-age shift in our business model.  It’s not just museums. Many visitor-serving organizations – science centers, historical sites, aquariums, zoos, symphonies, etc. – are failing to keep pace with population growth.

Consider: In the five-year duration spanning 2009-2013, the US population increased by 3.5% from 305.5 million to 316.1 million. The majority of this growth occurred in major metropolitan areas – the very population dense regions where many visitor-serving organizations are located. Indeed, nearly one in seven Americans live in the metropolitan areas of the country’s three largest cities – New York, Los Angeles and Chicago.

However, during the same duration, data indicate that attendance at many nonprofit, visitor-serving organizations has declined. In fact, of the 224 visitor-serving organizations contemplated in the 2014 National Awareness, Attitudes & Usage Study of Visitor-Serving Organizations (NAAU), 186 organizations (83.0%) reported flat or declining attendance. And this is neither a regional nor curatorial content-specific finding – the study representatively contemplates visitor-serving organizations of every size, type, and area.

Many organizations are hesitant to acknowledge attendance challenges…especially when they have historically cited being the “most visited” as an indicator of their expertise and effectiveness. I sense that pressure from governing boards also plays a role – particularly as many organizations have been tasked to maximize earned revenues (often inevitably linked to visitation). Perhaps most concerning of all are attempts to blunt the challenge by proposing half-measures as remedy – you’ll no doubt recognize the “don’t worry, we’re going digital!” excuse and the related practice of sending mid-level staff to innovation conferences as attempted evidence of progress. (This last excuse may be especially worrisome as it seems that many staff members tasked to “innovate” may not actually be empowered to carryout their plans for advancement.)

But, regardless of the excuse, the numbers suggest that our industry risks becoming less relevant to future audiences. What does this mean to visitor-serving organizations? Let’s look at a few examples. (Note: To keep this from being a huge, overwhelming chart, I pulled out major metro markets and a few areas cited as “up and coming.”)

KYOB VSO attendance - IMPACTS

To illustrate, the population of the Atlanta, GA Metropolitan Statistical Area (MSA) has increased in the past five years by 9.4%. During the same duration, visitation to the Atlanta-area organizations contemplated in the NAAU study indicates an attendance decline of 4.6%. Think about that – if engagement were keeping pace with population growth, an organization with an annual attendance of 1,000,000 in year 2009 would reasonably expect to welcome 1,094,000 visitors in year 2013. Instead, on average, the studied organizations saw attendance decline from the theoretical 1,000,000 visitor level in year 2009 to 954,000 visitors in year 2013. Measured against the expectations of population growth, visitor engagement underperformed by 140,000 visitors!

The expectation would be for attendance to increase alongside population growth – otherwise, it is indicative of underperforming the opportunity.  Again, the findings are stark and concerning for organizations in the engagement business:

KYOB VSO Performance against expectations - IMPACTS

In most any other business, if you saw the market steadily increasing in size and your product’s usage in steady retreat alongside it, you’d likely think, “This business model sucks.”

Well, our business model sucks.

Confronted with this evidence, I’ve heard leaders recycle tired strategies of securing larger donations from an aging donor base, and plans to gain more grant funding from governments and foundations. Generally, they aim to “pivot” from a reliance on earned revenues to (hopefully…fingers crossed!) additional contributed revenues. Except no. The visitor-serving industry doesn’t need to pivot. It needs to reset.

Here are three behaviors we need to adapt to reset our current condition:

 

1) Stop citing poor previous efforts as evidence that something will not work

Some visitor-serving organizations will declare that they “already tried” something after investing only the most minimal of resources necessary to claim effort. This is a surefire recipe for failure …yet, it happens all of the time. Here’s a quick example: Many organizations will offer options to buy tickets online and simply invest enough to create a webpage for it. Then when nobody uses that method to buy tickets they say, “Look! We tried that and nobody bought tickets that way!” Actually, nobody bought tickets that way because your site wasn’t mobile friendly, it takes 10 different screens to buy a ticket, it requires several pages of personal information, it’s confusing and time consuming, and it costs more. Often it’s an organization’s own fault when data-informed things don’t work, but organizations frequently take a half (or maybe a one-tenth) approach to something and basically (knowingly or unknowingly) set it up for certain failure. This is just one, basic example.

“Our crummy product failed, ergo everything related to this project won’t work” justifies stagnancy by masking it with false wisdom. Organizations think that they are cutting-edge for trying something without any conviction, and that the wisdom they received from their inevitable failure justifies closing the book on really big things like digital engagement. How does this even make sense? This type of excuse-making is a shortcut to irrelevance. Just stop doing it.

 

2) Stop defending past decisions

This seems to be a particularly hard one for many leaders to embrace. After all, it may be human nature to defend one’s past decisions as “right” and “good.” And, at the time when they were made, they probably were. But times change. Today, we are witnessing incredible changes – many borne of technological advancement – accelerating progress at a revolutionary pace. By what rightful reason do we think that we’re exempted from the prevailing changes affecting the rest of the world?

Just because you spent thousands and thousands of dollars on print material doesn’t spare you from the necessity of hiring an online community manager. On a more substantial investment scale, those millions of dollars that you invested in a new entrance to facilitate faster put-through times doesn’t exempt you from developing a mobile ticketing platform that may make ticket counters increasingly obsolete. This is a lesson to learn in real-time (as opposed to retrospectively): Repairing and updating past decisions is often more time-consuming and, ultimately, more expensive in the long run than starting anew. It’s OK – heck, even encouraged – to approach the current condition untethered to the past. That was then, this is now.

 

3) Embrace the inevitable path of progress

Max Anderson, CEO of the Dallas Museum of Art, gave a short ignite talk at the most recent Museum Computer Network conference. The topic of his talk was how to “persuade your museum director to help you” (i.e. how to get him/her to invest in “innovation”). From the beginning of the video it’s easy to see one of the biggest, most glaring problems in our industry: He begins his talk by asking how many museum directors are at the conference. Very short awkward silence ensues…followed by laughter. Really?! Are even our conferences about innovation and new ideas attended primarily by middle managers?!

The reason for the lack of executive decision-makers at many conferences is not necessarily the fault of museum CEOs (as the conferences aren’t always adequately geared toward Directors). But it’s not wholly the task of middle managers to communicate and justify the imperative to remain relevant to CEOs either. There’s a messed up barrier to betterment here, and it has more to do with a flawed structure than simple lexicon within an antiquated museum hierarchy. His talk is absolutely true, probably staggeringly helpful, and thus amazingly messed up at the same time.

We’ve developed this detrimental idea that “digital” has to do with “tech” (not people), and “innovation” isn’t necessary for survival. Max Anderson’s “primer on the psychology of museum directors” underscores that the status quo (and, of course, legacy!) is what museum directors are primarily interested in…but the status quo isn’t working to bring in more people by creating crowds OR buzz. Efforts to abide the current condition fundamentally ignore the challenges imposed by a broken model. Changing lexicon is a pivot. Pivots sound pretty. Pivots sound agile. After pivoting, however, you may be facing in a different direction but you’re still standing in the same place.

Millennials – the largest generation in human history – may necessitate an update to the visitor-serving model in the information age. These “kids” will soon have kids, who will eventually have more kids, and if we continue to ignore the reality of negative substitution in our attendance, then we may soon have no museums, aquariums, or symphonies for those “kids” to go to at all. (OK – perhaps some hyperbole. We likely won’t have zero museums. Just more empty ones.)

 

The forces of change that propel the world forward are not going away. If we don’t change our model to one that is more sustainable, then we risk going away. This is a moment when our biggest barrier to engaging emerging audiences is holding dear to our increasingly irrelevant plans and practices. We need a reset. And it’s up to all of us to put our heads together and make it happen.

 

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Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, IMPACTS Data, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 11 Comments

Six Urgent Reasons To Add Millennials To Your Nonprofit Board of Directors

Millennial board members

If your organization doesn’t have at least one millennial on its Board of Directors, then you may be setting your organization up for a difficult future. 

I cannot help but notice that the Boards of Directors of many large nonprofits are missing representatives from a critical current constituency – millennials. Strangely, this seems to especially be the case within large nonprofits (annual operating budgets >$30 million, or attendance >1 million for visitor-serving organizations)… And that’s particularly terrifying, as many smaller organizations often look to larger ones for cues to the future.

Missing millennial representatives on the board doesn’t necessarily mean that there aren’t loads of important conversations taking place about how to better engage millennials. It seems that many organizations are stuck in the mud of dialogue instead of finding traction in actually doing something constructive to meet this opportunity where it counts most. I’ve found that it’s not uncommon at many board meetings for there to be numerous Baby Boomers – and a few members of Generation X – waxing poetic about the urgent need to “engage millennials”…without any input from actual millennials.

The fact remains: The millennials aren’t coming.  They’re here now.  The time has come for organizations to sink or swim based on how effectively they engage millennials…which may be particularly hard to do when nobody tasked to govern leading organizations is actually a member of this generation. 

To be fair, there are some organizations that are moving forward and integrating millennials into their boards and strategic decision-making processes. I’m a millennial serving on the Board of Directors at the National Aquarium during an incredibly important time for the organization’s future. I’m grateful for this opportunity…but I also know that I’m one of relatively few millennials on the board of a larger nonprofit or a museum.

Don’t have at least one millennial on your Board of Directors yet? Here are six, critical reasons to call up the nominating committee and work on getting some impressive millennials aboard your nonprofit Board right now.

 

1) Millennials represent the largest generation in human history

…So not having at least one of them on your board may be a bit out of touch. Until Generation Y came along, baby boomers represented the largest generational cohort in the United States. However, at nearly 90 million strong, millennials have baby boomers outnumbered by an estimated 20 million people. As boomers age, the divide will continue to grow. This statistic alone should be more than enough to make executive leaders pause to consider the future of their organizations. Moreover, millennials will begin to tip the scales in buying power in the United States next year, and our economy will be feeling the impact by 2017.

 

2) Millennials will have primary influence on culture and society for an unprecedented duration

…So not having one on your board is delaying an inevitable future and holding back progress. I’ve written about this fact more directly before, but here’s a reminder: Millennials who have children are not having as many of them as their baby boomer parents. Moreover, Gen X (which is only roughly half the size of Gen Y) is simply too small in number to give birth to a future, large generation. Simply put, America’s birth-over-death rate is not increasing at the historic rates established by Baby Boomers. This means that millennials will remain the largest generational demographic in the United States for a much longer period of time than did the Baby Boomers – or any prior generation to date.

 

3) Millennials will significantly influence the outcomes of the next six presidential elections

…And if your organization does not get millennials involved in understanding policy-related challenges and opportunities from a leadership buy-in standpoint, you may be “voting” against your own best interests. Indeed, this depends upon millennials actually voting, but building any aspect of your organization’s survival strategy upon 90 million people not turning up for elections is a stupid strategy. Moreover, millennials will eventually dominate a very, very vast majority of all government leadership positions…mandatory government retirement policies dictate this math. Inviting millennials onto your board helps ensure that your organization’s best interests are best protected.

 

4) Engaging millennials requires immediate, strategic shifts in leadership mentalities

…Far beyond simply “using social media.” Engaging millennials isn’t merely a communication medium opportunity (especially because data suggests that millennials are not even close to the only audiences using social media). Engaging millennials requires new ways of thinking about marketing, development, human resources and operations, and even new strategic practices regarding things like membership. Millennial board members may provide valuable perspective regarding their own peer group and generational mindset.

 

5) What your organization actually DOES is more important than ever before

…And aiming to be seen as an organization welcoming millennials without actually welcoming millennials where it counts may actually be detrimental to your bottom lines. We live in a world now where everybody (not just millennials) increasingly look to real-time platforms to make decisions. People want to assess an organization’s promise, reliability, trustworthiness, and impact on their own – guided largely by perceived transparency. If your organization is actively trying to engage millennials, then it’s doing something smart (for the reasons mentioned above), but if it’s doing it without also empowering millennials where it counts (in the Board Room and the future of your social mission), then the story is incongruent. Thanks in large part to the web, we live in a “show vs. tell” world – and if what you say doesn’t match what you do, people are likely to notice.

 

6) Millennial board members can help connect your organization directly to millennial donors

…Because millennial board members can be every bit as valuable as other board members. Despite a strange want to promulgate the concept that millennials never do and never will actively contribute to nonprofit organizations, data suggests that most millennials actually do contribute. Yes, millennials donors exist and your organization is probably messing a lot of things up trying to engage with them even if you think you’re doing it right. (Here are six sad truths that I have learned as a millennial donor.) But the good things about adding other, more diverse members to your board are still true for millennials: insight, connectivity to the right people, an “in” with a valuable group of up-and-comers, and fresh perspectives.

 

With all of these reasons why it is absolutely critical to add quality millennials to your nonprofit’s board of directors, it makes me wonder why I don’t have many friends on the boards of larger nonprofits at all? It begs the question, “What are current board members of nonprofits so afraid of?” Change? Shifting tides? Loss of power? Diminished relevance?

Generational change and progress are inevitable – and they are horrible reasons to cripple the evolution of mission-driven organizations. The new first imperative of power should be not to retain it but, instead, to share it. That is the stuff of a true and worthy organizational legacy.

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page (or ) Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, Millennials, Sector Evolution, Trends 2 Comments

The New Trickle Down Effect: Why Nonprofits Are Innovators for Industry

teaching innovation

The company for which I work annually invests millions of dollars to help nonprofit organizations better understand and engage with their donors and visitors… and nonprofit leaders should know why.

It’s been a while since I wrote about myself, so I hope that you won’t mind my taking a moment to point out a trend: Inevitably, after talking shop with readers of “Know Your Own Bone” (but who may not know much about IMPACTS), there’s an awkward moment of silence before I’m asked, “So, why do you do what you do, and how does it…work?”

It sounds like a strange question, but I’ve come to understand exactly what they are asking.

Here’s a bit more about my “day job,” but, on “Know Your Own Bone,” my mission is to make accessible “big data” and data-informed analysis to nonprofit organizations for free (i.e. no advertisements, promoted opinions, sales pitches, etc.) Of course, this response often begs a few follow-up questions: How can I do this and feed myself? And how is this not detrimental to IMPACTS?

It’s no secret that there isn’t generally a massive pile of cash associated with helping nonprofits, and yet I work with a for-profit company that invests millions of dollars to help organizations better understand their market opportunities. It almost risks sounding like an example of “Do as I say, not as I do” – except, it’s decidedly not.

Nonprofit organizations are infinitely complex, and helping to understand how the market engages with that sector has proven incredibly valuable to the other sectors that IMPACTS serves. Indeed, when it comes to innovation, some of the best R&D happening in our space is being pioneered by nonprofits. For once, the “Next Practices” are trickling down from the nonprofit sector to the corporate world.

Here’s why:

1) Motivating visitation and/or giving decisions relies on understanding a series of complex behaviors

While it’s true that nonprofit organizations are not always the quickest to evolve, they rarely get the pat on the back that they deserve for working in an industry that can be exponentially more complex than that of most private enterprise.

Consider this visitor-serving organization example: Getting someone to visit a museum (or theater, symphony, science center, botanic garden, aquarium, historic site, etc.) requires an understanding of many multi-faceted, high-barrier motivations and behaviors. To get to a museum, for instance, a family would need to decide the visit would be worthy of their time, prioritize that experience over every other leisure time pursuit (including staying home and relaxing!), find an open day in everyone’s schedules, get the family dressed and into the car, drive to the museum, park, pay for that parking, play real-life Frogger hustling across a busy street, pay for admission, explore the facilities with the kids until they get tired, stop for snacks (if the kiddos get cranky), avoid (or embrace) the gift shop, then return to the car and fight traffic on the way home…

(Pant, pant…) There is a lot about consumer behavior to understand there…and we haven’t even yet begun to consider the philanthropic motivations that play an important role in helping nonprofits thrive. Perhaps now one can start to understand how – when compared to motivating engagement with nonprofit organizations – getting someone to buy a car, go to a movie, or even vote for a political candidate seems downright simple!

 

2) Understanding those behaviors and motivations informs other industries

Contrast the task of motivating the behavior of visiting an organization with the task of, say, motivating that same small family to enjoy a specific television show in pajamas in the comfort of their own home. If you are a member of the entertainment industry trying to get folks to watch a show – or even sign up for an “on demand” entertainment delivery platform, there is much less to understand and far fewer barriers to engagement.

Understanding why folks behave (or, for that matter, do not behave) in the interests of nonprofit organizations provides IMPACTS with incredible data and insight attendant to extremely complex behaviors, the transitive applications of which frequently inure to the benefit of comparatively less-complex behaviors such as, say, watching television.

Yes. What you work hard to understand and do in your day-to-day jobs at your organization actually informs how other industries do business…because the behaviors that nonprofit organizations motivate are complex and understanding them sheds light on the “hard to measure” aspects of human behavior and motivation. Unlocking the key to complex human behaviors and motivations is the secret sauce in many a corporation’s recipe for success…and the pioneers in this research are often nonprofits.

 

3) People. Planet. Profit. (You actually have THREE bottom lines)

Nonprofit, visitor-serving organizations must not only sustain themselves (some more than others), but they must also serve their communities (people) and social missions (planet). That’s a whole lot to think about compared to private entities – which, generally, are primarily obligated to the single bottom line of profit.

At the risk of some simplification, “profit” is relatively simple to figure out. People and planet – ostensibly selfless business motivations – are a little more inscrutable. And, yet, in our modern era where corporate social responsibility is increasingly good business, there is a growing need to better understand the more intricate aspects of human behaviors.

Again, this doesn’t even touch upon the topic of philanthropy – the motivations of which defy traditional utility curves.

Most simply put, nonprofit organizations are metaphorically juggling three balls at once…while many corporate entities are consumed by the one ball that they have up in the air. Add to this circus the fact that, well, two of your juggling balls are rather strangely shaped. (I love bad metaphors.) Understanding the expertise that goes into juggling three balls at once helps make the work of those with only one or two balls a whole lot easier.

 

4) Nonprofiteers are better than they think (but the imperative to evolve remains urgent)

Visitor-serving organizations, like many nonprofits, can get a bad rap. They are sometimes called slow-moving or culturally antiquated. Negative substitution of audiences is making increasing attendance difficult and long-siloed structures impede abilities to be agile and adaptive. CEOs of nonprofits are generally paid less than their for-profit peers, and retaining talent in a highly-competitive market can be a struggle.

However, consider again that visitor-serving organizations work every day to motivate a series of complex behaviors intended to inspire folks to act in the best interest of not only themselves, but of their larger communities. While some organizations have become accustomed to patting themselves on the back for achieving mediocracy, it’s important to keep in mind that, in many ways, the continued relevance of nonprofits and visitor-serving entities in the face of many challenges is quite a remarkable feat!

I think people who work in nonprofits are the best kinds of fighters. That’s why I’m lucky to get to work with them and that’s why I feel passionate about hounding my company to continue to help them.

 

5) Much of the data conceptually belongs to you

Providing data and insight in a transparent, open-fashion feels like a good practice. Doing the right thing is a reward unto itself. And, in terms of the means of effectuating knowledge transfer, “giving away” information for free is the very nature of blogging.

I don’t think it’s fair to gather information about human behavior regarding visitor-serving organizations and simply sit on it for monetary purposes. Luckily, the company for which I work doesn’t think that either. So I get to share some of it here. I am grateful for that.

The more information I share, the more I hope that I can garner your trust and provide aid as a valuable resource. If I can do that, the data will be more helpful…and the changes we are seeking will have greater impacts in our communities.

Leaders of nonprofit organizations: pat yourselves on the back. What you’re doing is hard, important, and paving the way. 

Data proves it.

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page (or ) Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 4 Comments

The New Realities of Advertising Costs (Hint: You Are Getting Less Than You Think)

Budget expenses

Many nonprofit organizations misunderstand the increasing costs of advertising – and it’s costing them dearly.

It’s that season when organizations are preparing their budgets for the upcoming year. For many of us in the communications space, tis the season of spreading tough-love  in the hope that nonprofit organizations don’t hamstring themselves with a flawed “save one’s way to prosperity” approach to budgeting for marketing expenses – especially social media and advertising. Increasingly, advertising is not an optional expenditure – it is a basic cost of doing business for any organization that relies on the time, engagement, or concern of audiences (…which happens to be most organizations).

When it comes to budgeting for a necessary advertising investment, a tremendous challenge confronting many nonprofit organizations is a reliance on precedent behaviors to inform our future planning efforts. The advent of digital technologies amplified by an increasingly platform agnosticism market have rendered many of the traditional “rules” of advertising obsolete. The communications world – and, in turn, the advertising world – is in a period of significant revolution and reinvention. A dogmatic beholdenness to the past is likely to leave an organization forever behind.

Here are two important points that your organization should keep in mind when it comes to the basic cost of advertising:

 

1) The cost of advertising has increased dramatically in recent years and many organizations are not keeping pace with inflation

Though you may be spending more, you are probably getting less return on your advertising investment than you were a few short years ago. The few percentage points that organizations add to their advertising budgets each year is simply insufficient when contemplated in the context of the escalating costs of advertising.

For instance, in my experience, even forward-thinking organizations keep their annual ad budgets relatively stable (“Hey, this is how we’ve always done it!”) and will sometimes add 5-10% if there’s a special program or campaign taking place that they’re trying to promote. The thing is, while organizations think that they are spending more (because they are actually spending more), they are increasingly getting less.

Take a look at the chart below. The chart indicates examples of observed advertising costs during the last five years.  For relativity purposes, the escalating cost factors have been standardized and charted as index values.

 IMPACTS cost of advertising

“Blended CPM” indicates the growth in costs “blended” across all media types (i.e. broadcast, radio, print, digital, outdoor, etc.) as observed by the actual media plans of twelve IMPACTS clients.  CPM is an acronym representing the Cost per One Thousand impressions.  Thus, the average observed costs to advertise have increased by 41% in the five-year duration ranging from years 2010-2014.

As additional examples of advertising costs, within the same five-year duration, the chart indicates that the costs of a 0:30 second advertisement during the Super Bowl and Grammy Awards broadcasts have respectively increased by 60% and 105%.

We are living in an increasingly personalized world that emphasizes speed and convenience. We can simply TiVo, Apple TV or On-Demand our way out of most ads on our favorite television shows because we watch these shows at our convenience. Because of this, programs that folks watch live (e.g. sports, news, award shows, etc.) command premiums when compared to the costs of similar programming a relatively few short years ago.

In the simplest terms: Yes, on average, your organization will need to have increased its advertising budget by at least 40% in order to match your advertising efforts of five years ago. If you’ve added less than 40% to your budget, then your organization may actually be achieving less advertising impact than you were in 2010.

In the end, it’s a lesson in business and economics: You cannot just throw a bit more money at something year over year and get mad when you don’t get correspondingly “more” in return. If you’re not increasing the budget at the rate of what things cost, then you’re actually getting less. This lesson seems particularly challenging for nonprofit boards to understand when they are confronted with a proposed increase in the advertising budget. “So, if we spend more money on advertising, how much more support will we get?” is a perfectly reasonable question posed by many a board member. However, the question from board members probably ought to be, “If we don’t sustain significant investments in our audience acquisition strategies, how many visitors will we lose…and what will be the costs of trying to re-acquire them in the future?”

 

2) The first thing that organizations often cut is marketing (despite the increasing importance of funding in this area)

Compounding matters is the fact that – despite an abundance of the well-publicized reasons why it is a terrible idea – many organizations trying to balance budgets still seem to cut the marketing budget first.

This may be particularly relevant for visitor-serving organizations (museums, theaters, symphonies, gardens, aquariums, zoos, etc.) as these types of organizations are having a rough time meeting attendance goals. The anxiety associated with this causes organizations to deny data and do a lot of dumb things (and maybe some more dumb things) that will hurt them even more in the long run, and cutting marketing budgets in the Information Age is another one of them.

It’s a tough pill to swallow for traditionalists and specialists within organizations, but marketing is increasingly important for the survival of your organization. For many of the most successful organizations, marketing is at the center of strategic conversations. It’s a big change for many entities! And, organizations aren’t solely deciding that this should be the case…the market is deciding for them. As I say in nearly every post: Organizations can sometimes determine importance, but the market determines relevance.

Mix one part “not keeping up with the cost of advertising” with one part “cutting your marketing budget” and watch your audience awareness dwindle to record lows. For those persons in the nonprofit sector who may continue to balk at the idea that they need to spend more to acquire, engage, and communicate with their audience than they did five years ago, I ask you: What makes advertising exempt from the most basic laws of inflation? Again, these cost increases are the most basic costs of doing business.

 

For marketers, it is a tough road ahead: The “This is how we’ve always done things” and “Last year plus five percent” approach to budgeting and media planning that permeates many organizations is an increasingly doomed strategy. In a way, this post isn’t exclusively about marketing or advertising. It’s about a new way to think about the constantly evolving world that we live in. The world waits for no one. We need to keep pace or risk being left behind.

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page (or ) Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Digital Connectivity, Financial Solvency, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends Comments Off on The New Realities of Advertising Costs (Hint: You Are Getting Less Than You Think)

Facebook is Firing Nonprofits (And Why We Are Dumb to Let it Happen)

Facebook Firing

If your organization refuses to spend money on Facebook, then you aren’t firing Facebook. Facebook is firing you. And that’s way worse for you than it is for Facebook.

It’s not news anymore: Facebook has changed its algorithm to make its platform increasingly “pay to play” for organizations. A lot of organizations are upset about this change – after all, nonprofits tend to be cash-strapped entities and paying to boost posts on Facebook represents an unplanned expense into uncharted territory. (How much should we be spending? How do we develop an annual budget for something that keeps changing?! Where will this money come from?)

The result seems to be that many organizations are simply accepting their new lack of organic reach and not boosting posts or otherwise exploring paid ways to get on the “winning” side of Facebook’s algorithm. In a nutshell, many folks (unfortunately) seem to be saying, “We just can’t afford it, so Facebook is less important to us.”

Wait – Hold up! Is social media any less important to your potential constituents and donors? Nope. In fact, data suggest that social media is the strongest and most valuable communication channel in existence today.

What’s interesting about the reaction that some organizations are having is the astounding lack of business savvy or even baseline market awareness associated with the perspective. It is truly shocking to watch. If you’re not experimenting with boosting posts than you’re not firing Facebook, Facebook is firing you…and that hurts you way more than it hurts Facebook. In fact, if your organic reach is still decreasing, then Facebook wants you gone because it thinks you are noise cluttering up newsfeeds with stories that simply aren’t engaging.

I have no affiliation with Facebook. I specialize in overall engagement strategy (that specifically results in increased likelihood of long-term solvency) and do not receive any of my salary for knowing Facebook “tips and tricks” (which become outdated very quickly anyway). I have absolutely no reason for arguing that nonprofits should be experimenting with Facebook boosting aside from my experiences with my clients these last several months – both those that are boosting and those that are not.

Here is some perspective:

 

1) Organizations became acclimated to an economic inefficiency (which is dangerous because such inefficiencies do not last long).

The hardest part about the increasing “pay to play” concept on Facebook seems to be the idea that Facebook was “free” and now it isn’t. First of all, social media is not and never was “cheap” or free – but the issue here is that organizations didn’t need to pay the platforms directly.

Facebook plays an important role in shaping organizations’ reputations, allowing for personal interactions and “touch-points” with constituents, giving organizations a real-time voice, and aiding in perceived levels of transparency and mission impact. Facebook has played a starring role in changing not only the way that businesses and nonprofits work, but it has shaped market expectations about our brands. Facebook has, in many ways, changed the world.

Think about it: In order for the market to have changed so deeply, social media platforms needed to be “free” to enlist and engage the participation of massive numbers of organizations and consumers alike.  (Otherwise, the initial cost to participate may have been an insurmountable barrier to trial.) Because we could all “play,” we all had a role in making the market what it is today – an audience more interested in trust, transparency, and personalization than ever before. But now we live in that changed world and businesses are getting a LOT of free communication and top-of-mind opportunities from Facebook.

Organizations are no longer all that important to Facebook for its solvency. Now Facebook is more important for the solvency of our organizations. Of course, market inefficiencies eventually come correct. We don’t expect to engage with traditional one-way communication platforms for free (TV ads, radio spots) – so it was only a matter of time before two-way communication channels (which are proven to be more effective in driving desired actions on behalf of organizations) demanded payment as well.

In short, organizations got used to an unsustainable market inefficiency. And the rules of economics underscore that those inefficiencies don’t last long.

 

2) Organizations increasingly understand the need to move from quantity of fans to quality of fans on Facebook. So does Facebook.

By now you’ve probably heard a lot about vanity metrics and why your number of fans is less important than having fans that care about your organization and are willing to act in its interest. This type of thinking is especially important for development and membership departments within nonprofit organizations. (Oh, and here are eleven ways you can start focusing on quality over quantity right now).  We are getting it. We are increasingly paying as much attention to “going deep” with our messaging as we are to “going broad” because we know it’s better for the actual, long-term health of our organizations.

Facebook gets that, too. It’s less about having tons of organizations on Facebook making noise (quantity) and more about the right organizations on Facebook that help achieve Facebook’s long-term strategic plans. 

Simply, there are two kinds of “quality” organizations for Facebook: organizations that provide consistently compelling content (because it keeps people logging onto Facebook and checking their newsfeeds), and organizations that pay them. An organization that pays them and provides compelling content is a double win because they pay Facebook to show stories in people’s newsfeeds that people actually want to see. Those seem to be the organizations and businesses increasing in reach right now. Also, it seems that when you boost a post, Facebook sees the increased engagement and gives you a bit of a bump in organic reach when you next post. These are smart business moves for Facebook – they are rewarding their best customers. This strategy makes perfect sense for any enterprise. We want quality over quantity now, too – even within our own Facebook fans!

But let’s look at this in a less-rosy way: If you’re not boosting, you are generally less likely to secure higher levels of engagement (thanks to Facebook’s algorithm), and then you will slowly slip from the newsfeeds of even your quality fans over time. Of course, you can alternatively only post the most engaging of content and go viral with your messaging all the time and you’ll have no problem (which is far easier said than done). Harsh truth: You’re being fired from your most effective communication channel for being bad at it. And you’re letting it happen.

If you have the money to send endless amounts of direct mail which data suggest are increasingly less effective, then perhaps you can spare some of the budget to talk with your audiences instead of talking at them.

 

3) There may not be a business incentive for Facebook to make exceptions for nonprofits

Consider: Audiences are increasingly sector agnostic and your voice is being drowned out by for-profit companies that, in some cases, have incentive to do what you do better than you do it because – thanks in part to the culture of transparency and customer empowerment we’ve created with social media – corporate social responsibility pays off.

Perhaps Facebook will come up with a program for nonprofits that aids in increasing reach for cash-strapped organizations that promote social good. But even then, it is in Facebook’s best interest to make sure that stories that folks don’t care about don’t end up in users’ newsfeeds. If your organization has “dropped out” or stepped back from creating compelling content, you may not be able to gain the traction back to demonstrate that your content is indeed compelling.

 

4) There remains a market inefficiency and this may be the best time to experiment with boosting posts

There is still an economic inefficiency and it’s in our best interest to keep capitalizing on it. Specifically, the buy-in to boost and keep organic reach a bit higher is in flux. Right now may be the best time to play with boosting posts because now is a period of experimentation in terms of quantifying the costs of accessing audiences on Facebook. Until Facebook gets a firm handle on what is the sustainable and appropriate cost of reach, then there is an opportunity for organizations to also engage in relatively low-cost experiments to help inform their future engagement strategies.

So, experiment! See what happens when you boost to your geographic area, or boost to your current fans, or boost based upon interest. Experiment and take note. Arguably, the cost to reach audiences may be lower than it will be in time.  More to the point, the cost to reach audiences may amount to less using Facebook than it is on other communication channels. The point is: You won’t know the opportunity and the outcome until you complete the experiment.  And, it is better to start experimenting now – when the cost of the experiment remains relatively modest – then at a later date when the costs may inflate.

 

We are in a time of change, and it is in the best interest of nonprofit organizations to begin to cultivate an internal structure that is agile and allows for opportunities to quickly capitalize on economic inefficiencies. But it is also critical that we think through our actions – especially the most important ones that affect our relationships with our constituents (and, thus, our bottom lines).  Instead of retreating or focusing on their own, independent next moves, organizations may benefit from considering WHY platforms are making changes. What they uncover may be equally critical for their own survival. 

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page (or ) Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Community Engagement, Digital Connectivity, Financial Solvency, Nonprofit Marketing, Trends 4 Comments