Charity Financials Insider

Joined up resources

23 April 2010

Phil Callaghan looks at how CRM can help charities get more from their databases and have a better dialogue with their stakeholders

With competition in the not-for- profit sector now as fierce as the private sector, organisations have to take a more strategic and streamlined approach to stakeholder engagement. Databases are at the very core of this but how many not- for-profit organisations are utilising them? Customer relationship management (CRM) is a widely recognised and implemented strategy for managing and developing the interactions with existing and potential customers – in the non-profit world this includes donors and potential donors. Technology is used to organise, automate, and synchronise business processes – principally sales/fundraising activities, but also those for marketing, customer service, and technical support.

Provenance of CRM

During the 1980s, CRM systems were mainly glorified database marketing operations so that organisations could collect specific client data for certain groups in order to talk to their clients on an individual basis. However, this tended to remain the domain of large corporations processing high volumes of data and technology which had not been developed for tailored, more specific requirements of smaller businesses.
But by 1990, academics and practitioners were noting the correlation between customer retention and its successes. The technology was being used to give back to customers not only in terms of the obvious goal of improved customer service, but in incentives, gifts and other perks for customer loyalty. Examples of this included air miles schemes, retail loyalty cards and a range of other resources that are based on CRM tracking of customer activity and spending patterns. CRM was now being used as a way to target customers in a more relevant way (which improved sales) as well as increase customer service.

Relationship marketing

The link between relationship marketing was being researched and the reports were encouragingly successful. These findings were really the catalyst from idea, to solution, to user adoption[1]. There is no doubt that once a relationship is established customers, clients and stakeholders are less likely to defect and move allegiance, provided they continue to receive high quality service[2]. CRM allows messages to be tailored for specific groups which capitalises on your database information by identifying supporters that are most likely to give – either financially or in other ways such as volunteering.

Key management information

Knowledge management has been defined as the process of capturing the collective expertise and intelligence in an organisation and using these to foster innovation; so CRM is strongly related to management information. Theory and knowledge is all well and good but it’s worthless without long-term and dedicated support both internally and externally. IT applications are vital tools that allow the organisation to implement its strategy[3]. To a certain extent, new developments may drive organisations to adapt their strategies as they go along, but the key starting point is always organisational philosophy – in a charity’s case, its charitable objects.
Many organisations rarely understand who their most profitable supporters are or which supporters will help the organisation’s ultimate success. Fewer still understand if their processes enhance ‘supporter retention’. For example the charity that takes a ‘robust’ approach to collecting a legacy from a legator’s executors could unwittingly sabotage a future long-term donor relationship with the legator’s family [4]. Being on top of the ‘touch points’ and the ‘moments of truth’ [5] when your organisation interfaces with potential supporters is crucial.

Joining up

Answering these questions may require a re-think of your organisational strategy and culture – in short every function in the organisation must be willing to adapt. However, while the organisational implications are huge, adopting a CRM strategy doesn’t require an immediate restructure, for most this process is evolutionary. The mindset leap of all those that will use CRM is the most significant alteration.
The problem facing most organisations evolves from the fact that information is used and dealt with in different ways and, for many different purposes, rather than a joined-up perspective. Every day working teams collect a great wealth of information and many organisations are struggling to manage and utilise this data to its fullest potential.
Subject to data access permissions, any individual should be able to access all information important to help a client, engage a supporter or exceed relationship experience. By building up client, donor or member profiles, organisations can assess the true value it gives and receives from its clients and supporters. At one level, it allows each department to perform its function more effectively by automating parts of the process and giving employees better information. While at a more strategic stage, it allows senior management to understand the way the organisation functions, to measure performance effectively and to achieve more success by better targeting. See figure 1.

Maintaining a coherent and consistent message, at every client engagement opportunity can be difficult especially across all departments and activities. Any contradictory messages are asking for trouble! This situation can be avoided with a CRM system through co-ordinated efforts.

CRM technology

Over the last five years there has been an explosion of CRM software applications. However, much of this technology has existed for many years, and with the rise of social media, CRM strategies are being adapted to join up that rich information allowing clients to drive and manage relationships – a powerful strategy to truly engage and thoroughly meet their needs. From the pioneering but unwieldy 1980 versions CRM systems are now user friendly, more intuitive and enable more empowerment. They should be configured to speak the way your organisation speaks – using the same terms and references.  
The technology has moved from CRM to ‘X’RM which is a much broader term – anything relationship management. XRM runs through CRM but it allows users to recognise that CRM systems can manage much more than clients and suppliers. It is now so intuitive that it can manage whatever you may need – projects, constituents, assets, patients, employees, compliance, grant management and so on...
Using deep-rooted integration, CRM can offer a true view about what you are managing through it. This will help to build the profiles described earlier and start to gain more differentiators. Effective integration will affect systems from finance to stock, and is one of the biggest challenges today. It’s like pulling together random footballers from various clubs and trying to get them to work as a coherent team.
Integrating a robust IT strategy involves far more than simply installing front office applications, because information needs to be gathered from across the orgnisation, linking together disparate systems and/or legacy systems becomes a major priority. Information is what drives an organisation and it comes from many different sources. Building an IT system that gathers multiple data sources isn’t easy and a proven approach is to include a layer of software which receives and interprets data for each application on the system.
CRM will only be successful if it forms part of a larger network with other systems and it needs to be at the heart of everything a not-for- profit does. Although the technicalities of the process are an IT issue, it is essentially the business managers who understand the principles and implications, and they should be fully committed before embarking on a major CRM project.
All in all CRM can’t be ignored. It needs to be well thought out, tailored to individual aims and objectives, championed from the top down and fully integrated. If all of these four things are done, then CRM can be the key to meeting and exceeding not- for-profit goals and targets.
[1] See ‘A strategic framework for customer relationship  marketing’ by Adrian Payne and Penny Frow in  The Journal of Marketing, vol 69, issue 4, October 2005 published by the American Marketing Association
[2] See  Adrian Sargeant’s article ‘The retention  challenge’ in Caritas, issue 1, December 2007
[3] See David Locke’s article ‘Making IT count’ in  Caritas, issue 9,  August 2008
[4] See Claire Routley and Nigel Magson’s article ‘A dead  cert’, based on a Help the Aged legacy marketing case  study is a useful illustration of CRM got right.  See Codicil, Autumn 2008, pages 12 to 16
[5]  Epitomised by Jan Carlzon, Scandinavian Airlines  boss, in his 1987 book, Moments of truth
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Phil Callaghan

Phil Callaghan has been managing director of Caltech since 1999. Prior to setting up the company, he was one of the key technology advisors for Business Link in Leeds where he gave advice on technology
for organisations.

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