Outlook for Nonprofit Marketing Budgets Looks Brighter

Anyone who has had the pleasure of working with or for a charity knows that budget season is a time of high-tensions.  It’s as if you are throwing a birthday party for a bright-eyed, excited child only to find that the cake is too small.  Seriously, dreams are about to be crushed.

There are solutions:  A) Tell the less popular kids that there is simply not enough cake for them and send ‘em home pouting. B) Make another less-than-willing peer give up a portion of her slice in order to even out the distribution. C) Divide the slices unevenly and give larger pieces to the kids who will cry the loudest and the smallest to those who will simply stare at their shoes and grimace.

Truly, all of the above will lead to post party apocalyptic chaos, squabbling, and, ultimately, to a group of frowning faces.  Marketers, within any business, know that the weight of the budget axe will fall largely upon their department’s funding.  When top CMOs were surveyed in 2009, the model predicted marketing budget cuts across the board, for all businesses, by %20 (Forrester Research).  For strained nonprofits, dependent upon donation revenue, this number was likely much higher.

There is a green light at the end of the tunnel as recently, according to the New York Times Article “Marketing Budgets Rise for Some Giants,” dollars are flowing back into the budgets of large super companies.  According to the article PepsiCo plans a budget increase of $100 million…. Since some are probably grumbling about how that huge number in no way reflects their business, know that the giants tend to lead the market trends.  The economy is picking up speed and dollars, loosely packed, may begin falling back into strained marketing budgets.

In the meantime, back at the party, kids will continue to quarrel and compete for a respectably-sized slice of cake. The clever kids know of a few ways to stack the deck….  The most important is to make sure to communicate the strategy a marketing department has for increasing revenue both clearly and quantifiably.  Although much of marketing is overhead, it directly impacts revenue.  Marketers must think about quantifying the marketing need and setting objectives that clearly illustrate how not cutting, but increasing, a marketing budget will result in higher profitability.

Promotional product marketing is an effective way to inexpensively build a nonprofit brand and capture revenue.  When you take this new variable into consideration, your argument for more dollars becomes even stronger.  I mean, which of your budgetary competitors can say our marketing efforts will increase donation revenue by $X, build brand equity by %Y, and actually create a new revenue stream of $Z.  Let’s see just how well the folks down the hall in finance can argue with that.

Effective Communication: Lessons From Netflix

Okay, so the Netflix debacle is definitely not a recent story fresh off the presses, but before you dismiss us as being behind the times, we’d like to invite you to read a quote from a communication Netflix produced for its shareholders (focus on the very last sentence):

“$7.99 for unlimited streaming and $7.99 for unlimited DVD are both very aggressive low prices, relative to competition and to the value of the services, and they are the right place for Netflix to be in the long term. What we misjudged was how quickly to move there. We compounded the problem with our lack of explanation about the rising cost of the expansion of streaming content, and steady DVD costs, so that … many perceived us as greedy. Finally, we announced and then retracted a separate brand for DVD. While this branding incident further dented our reputation, and caused a temporary cancellation surge, compared to our price change, its impact was relatively minor.”

-“Netflix Loses 80,000 Customers in Quarter” mashable.com

Taking a look back since August when the sudden drop of 80,000 customers occurred, Netflix is certainly still a top competitor in the content streaming world. In fact, Netflix posted above forecasted earnings for Q3 despite all the drama. We live our lives by the numbers, but it is important to make sure we step back and scrutinize those misleading little digits and find the whole story.

The bottom line is that ALTHOUGH Netflix’s bottom line is doing relatively well, its customer base is none too pleased with the company’s lack of effective communication. In the article by Sam Laird of Mashable.com, “Amazon Wins, Netflix Loses in Holiday Customer Satisfaction Study” Laird points out that the effects of the miscommunication have gone far beyond that fateful August decision. Customers remember feeling distrust and Netflix’s reputation has suffered long-term damage.

The mistake is not so much that Netflix changed its pricing structure (companies do this all the time); it is that the company botched engagement with its audience on the proposed changes. The communications department failed to give warning, take into account customer feedback, and create a dialog with their audience to ensure an understanding of the proposed changes. Do you remember the fifth “P” from our first blog? Once again, the human “people” communication factor was severely overlooked and social media caused the crisis to go viral.

I think you all know where the lesson is here, but if you are already half asleep or would just rather us tell you, well…here it is: technology mandates that your messaging involves both communication to your audience and audience feedback. The second element is where you can build a relationship with your consumer base through interaction. You can get insights into the opinions, likes, and dislikes of your customer simply by communicating and listening.

Whether you are a nonprofit designing a promotional product line, or a film festival gearing up for your festival’s events management, clear communication with your customers not optional; it is marketing law. Make sure that your customers are part of the communication process and not simply receptors of your messaging.

Let us leave you with a few tips we’ve bumped into along the way:

  1. Tell the Truth:If you say your product is recyclable make sure that it is. Period.
  2. Tell the Whole Story: If your product is recyclable, share your materials, which parts are recyclable, and how it is recyclable. Check out Recycled, Recyclable, and Green…Oh My for more info.
  3. Nonverbal Communication Is Worth 10,000 Words:The designs you select for your product do, and will, have an impact on the way your customer perceives you.
  4. Engage Your Audience: Use your social media, your website, your product, and your event to communicate the nature of your brand and your value proposition. Feedback from your customer base is important so answer questions, create a dialog, and augment your message if need be.
  5. Engage Technology: Your company website or Facebook page is a great way to find out just how your customers perceive you. Leave the focus groups to the market research stats gurus and do a bit of your own sleuthing by browsing your comments. You may find your next great promotional idea from within that dialog.