 |
 |
|---|---|
| Primary focus: financial efficiency of one-time marketing events | Primary focus: relational value of long-term marketing strategies tailored to specific individuals or groups |
| Marketing events are what is to be observed and analyzed | People are what is to be observed and analyzed |
| Questions are about immediate (short-term) financial efficiency | Questions are about lifetime (long-term) potential and development of value |
| Questions are structured and quantified to be answered with traditional statistical methods | Questions are structured to be quantified and answered with longitudinal statistical methods |
| Results are interpreted in the financial description of the marketing events such as response rates, transaction characteristics, profit and loss, return on investment and outcomes related to performance forecasts | Outcomes are interpreted in the descriptions of individuals or specific groups of people and the programs, initiatives and offers that create value in each stage of the development of value over time |
| Long-term financial planning is reduced to the sum of one-time transactions (as in a budget) rather than understood as the gestalt which is greater than the sum of the parts | Long-term strategic planning is more the gestalt of the lifetime relationship than the sum of one-time transactions |
THE LIFEVALUE PARADIGM
Why talk about paradigms? When we talk about the LifeValue Paradigm we are using paradigm in its broadest sense as a philosophical framework for the discipline which determines the direction and methodology of our inquiries. A marketing or fundraising paradigm is a specific set of assumptions and view of reality that:
- Defines what is to be observed and analyzed
- Describes what kind of questions are to be asked relative to those assumptions
- Delineates how the questions are structured and quantified, and
- Determines how the results should be interpreted.
Often old paradigms (or "the way we've always done it") have limited progress. Great leaps forward actually come when paradigms are challenged and changed. Old paradigms must be abandoned and new ones embraced in these painful but ultimately productive shifts. This progress is more revolutionary than a simple path charted by analytics and the scientific method.
The challenges facing the leaders of both commercial and nonprofit organizations will not be resolved by more precise execution of what has been the standard marketing and fundraising of the past. Old paradigms must be abandoned and sacred cows led to slaughter. Breakthroughs in the new, multichannel, multigenerational world will not be possible with old approaches. The fundamental split between the marketing and development approaches of the past must be repaired and invigorated. If this is not a revolution it is at least a radical shift to a new unified paradigm.
THE CLASH OF PARADIGMS
The fundamental paradigms or assumptions used by many companies and organizations are often a motley mixture of what was done in the past and a patchwork quilt of nonsystematic approaches to the marketing and fundraising enterprise. Taking a more strict approach to the enterprise, focusing on a single (and fundamentally new) paradigm provides a systematic framework for focused analysis. In a field where the term analytics is loosely applied whenever an approach to any problem is explored statistically, little attention has been given to changing how direct marketers think. We need a revolutionary paradigm shift!
Statistical analysis is purely trial and error without the framework of a paradigm which directs it to useful findings. Even science does not progress by crunching away at data. Science leaps forward when a paradigm shifts and data is organized and viewed in an entirely new way. Systematic inquiry produces powerful results when it is done within a solid – and in this case, revolutionary — framework.
Failure to understand the contribution of a well-defined paradigm in a direct marketing program can be the single greatest barrier to significant progress. Piecemeal analysis will not enable an organization to change its financial position significantly enough to redefine its future in these perilous times.
« The chart on the left highlights the differences between traditional Financial Marketing and LifeValue Marketing.
LifeValue is about people and the way people and relationships change in the progression of life. The development of LifeValue becomes observable behavior in the interaction of a person with a company or organization and its product or mission over time. LifeValue Marketing is more about people and intensely personal interaction than about money and financial transactions. Financial measures may provide a quantitative measure of the relationship but qualitative measures are infinitely more personal.
Understanding people and predicting how interaction will develop LifeValue for each individual or group is essential to the LifeValue Paradigm. Selecting and matching people with programs will ultimately allow an organization to create strategies to interact with targeted groups of people in a way that creates the highest value to be created by a finite marketing budget.
Thomas Kuhn in his book, The Structure of Scientific Revolutions (1996), talks about paradigm as "a specific way of viewing reality and a methodology appropriate to that view" in the history of science. Kuhn's thesis is that science does not develop in a systematic application of the scientific method. Although marketing and fundraising are not normative science, the concept of paradigm is very useful in changing the way nonprofit organizations manage their resources.
How and Why Donors Bond to a Nonprofit
We can speculate about why individual donors bond to specific causes or nonprofits. STRATMARK believes that the development of an individual donor's relationship to a nonprofit – its mission, its leader and how his or her money is used – is deeply personal, individual, emotional and value driven.
In focus groups donors frequently refer to emotional complexes from their past – often rooted in the experiences of their parents, family or close friends. In some cases these feelings and attitudes are remarkably deeply felt and intensely personal.
It is not surprising that donors who come from families that have faced hardship and hunger often bond themselves to causes that feed the hungry. It is also not surprising that donors who have been touched by diseases or disabilities are often the most fervent contributors to causes that are dedicated to research, treatment or help to those hurt by similar diseases or disabilities. People whose lives and families have been transformed by faith or healing often bond to religious leaders or religious organizations.
Deep-rooted emotions, faith, memories and kinship are often the most significant determinants of the way donors bond and develop in their relationships to nonprofit organizations. Individuals are often joined by others in this bonding relationship to the organization. They often express the same need for affiliation, helping others, identification, advocacy or other determinates of bonding. Many of these individuals are at the same stages of life and relate to the organization in similar ways. Once identified, these groups of individuals can be viewed as cohort groups on the same life journey with a particular nonprofit organization.
