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For Nonprofit Organizations there is no profit in broken relationships

NonprofitDonor attrition has always been a problem in mass fundraising, where personal touches are difficult and the ability to communicate impact is limited.  Now, widespread personal losses in recent years and the failure of institutions of all kinds to prove trust-worthy have produced a dangerous culture of mistrust.  One consequence: the relationships that nonprofits rely on to sustain programming and to keep fundraising costs down are in short supply.

Since the devastating impact of the recession in 2008 and 2009, charities have found ways to raise funds from new sources, and have--as a whole--managed a few percentage points of growth in 2010 and 2011. Fundraisers have done their job.

The problem: although ability to find new donors has kept most organizations afloat since 2009, the number of existing donors who have stopped giving has increased even more.  Put another way, organizations have been able to get first dates, but the number of ongoing relationships is in a tail spin. In 2011, for every 100 new donors to organizations, 107 people ended the relationship.

Over the last five years, the addition of new donors gained has remained strong, annually in the mid to high 50% level.  But the number of people abandoning the relationship has been higher, or at best about the same number.  Organizations are stagnating, not because they don’t know how to present their mission and attract donors, but because they can’t maintain the relationships.

As never before, it is vital that organizations focus more attention on aligning all related groups—board, leadership, staff, volunteers, program partners, members, recipients, and yes, donors—around robustly communicated vision, mission, and core values.  In addition, organizations must drill deep into the principles of developing and maintaining community, a fellowship, ‘small platoons’ around common causes.

For there is nothing more costly to an organization than a broken relationship.

Donors Gained and Lost (%) over previous year*
2007 2008 2009 2010 2011
Gained 63.9% 59.2% 54.2% 58.6% 54.9%
Lost -54.0% -57.6% -60.2% -56.9% -58.5%
Net 9.9% 1.6% -8.0% 1.7% -3.6%
Funds Gained from New Donors and Lost by Donor Attrition (%)*
2007 2008 2009 2010 2011
Gained 63.6% 13.3% 45.0% 53.5% 55.19%
Lost -56.0% -16.2% -61.1% -55.4% -55.0%
Net 7.6% -3.2% -8.1% -1.9% 0.01%

*Source:  Association of Fundraising Professionals Annual Fundraising Effectiveness Survey Report

Trust Gone Wild

The prerequisite of investment of time, money, and energy is a belief that what you invest in will be valued and will return a reward.  This holds true whether in financial markets, relationships, charitable giving, or the sacrifice of time to serve.  The return can be tangible or intangible, measured or perhaps a subjective feeling, experience, or simply the satisfaction of knowing that you “did the right thing.”

Any such transaction is based upon the presence of trust.  Trust provides the investor with confidence that the investment once made will be valued and a reward will be received.

For thousands of years, our financial systems have been built upon this foundation of trust.

That trust is disappearing beneath our feet almost daily.  It is time to do something about it.

Trust with any person or institution is based upon the Four Stages of Trust – shared values, shared vision, assumed responsibility and always delivering on your promise.

The bedrock of trust is shared values.  These values are common heart-motivations and beliefs – values like honesty, fairness, generosity, hard work, and integrity.

Over the past 15 years, we have seen the erosion of these values by Boards, Directors, CEOs and COOs of organizations, institutions and companies we have trusted.  We have trusted many of these organizations for decades, some even for centuries.

The values of hard work, honesty, fairness, generosity and service have been replaced by an unquenchable desire for power, accompanied by arrogance and greed.   The fruit of this can be read in headlines over the last decade as district attorneys have exposed leaders of both public institutions and private corporations taking advantage of our collective trust to manipulate systems, regulations, traditions and inferred promises.  It has become painfully evident they have done this to accumulate personal wealth.  They have “gamed” the system and we have been left holding the bag.

Of course, erosion of trust has always been present.  Historical records provide ample testimony of people in commerce, government and church who have manipulated systems for personal gain.

But not of the scale and breadth we have seen over the last 10 years.  Trillions of dollars have been siphoned off, diverted into back pockets, sketchy bank accounts, and hidden by intricate systems and complexities.

The result is a people who are jaded and skeptical, if not cynical.  The implication is that they have become victims and fools, manipulated by those in charge of a system of trusts, weights and balances.  Most of these leaders and those who have yet to be caught couldn’t care less.  It is precisely their avarice, arrogance and self-serving tendencies that perpetuate this destructive cycle.  Is there no end?

With capitalism, the power resides with the consumer.  Once bitten, the consumer can run away, tell friends and family, and perhaps call into question the trust, reputation and integrity of the organization and its leader.  The result is a loss of customers and revenues.  This has been the foundational basis for capitalism – the buyer’s trust that the seller will keep his promise.

Our system of capitalism and trust in each other is under assault.

It is time for CEOs and leaders of government organizations and nonprofits to step up and make a promise.  It is time to once again state intentionally the values that are shared among the organization’s leaders, its representatives, its partners and its stakeholders to reweave together the fabric of trust.  It is time to demonstrate that the values they hold consistently drive the choices they make, and to prove, indeed, that some of us are different. Some of us are trustworthy.

Eight reasons why your business may not be growing

You know you need to grow.  You need to innovate. And you need to change.

But how?  To what?

What’s blocking your growth?

  • Lack of internal trust?
  • Missing a robust sales pipeline?
  • Unable to sell value?
  • A resistant culture?
  • Misallocation of resources?
  • Missing or outdated strategy?
  • Misalignment with a changing market?
  • No real innovation or product development plan?

In our experience, we’ve identified eight issues that indicate that your organization may be out of sync:

1. Trust issues: Trust in another means you’re willing to invest and take a risk with them.  It is the glue for a team.  A lack of trust in an organization is like throwing sand in the gears.

When trust breaks down, collaboration slows, complexity expands, and costs go up.

Trust is built upon shared values, shared vision, assumed responsibility and always delivering on your promise.

2. Pipelines issues: As organizations grow, strong sales talent rises to the top.  A dependency upon the personal skills of individuals then creates relief when they can magically fill the pipeline.

Relying on individual heroics to make the sales quota creates crises, undermines morale, and puts customer loyalty at risk.

Great organizations nurture disciplined sales processes to create interest, engagement and demand.  In this situation, the organization grows with the talents of a strong sales staff but is not held hostage by their personal client relationships. The company and brand have a predictable, sustainable process to fill the pipeline.

3. Value issues: Perceived customer value of an organization’s products and services is the foundation for pricing, loyalty, referrals and peer-to-peer advocacy.  When value is low, lower pricing and commoditization occur.  This is the beginning of a destructive cycle that you cannot win – the demand for continually lower prices.  Low prices, while they may make a customer happy in the short term, can never be low enough.

When customers don’t recognize a unique value, engagement slows, loyalty disappears, pricing drops, margins fall, and advocacy is non-existent.

Great organizations are constantly listening and developing new ways to solve customer frustrations – in effect, delivering value.  The value is communicated and reinforced at every point of customer contact.

4. Culture issues: At first, every organization starts out focused on meeting each individual customer’s needs.  As organizations mature, they institutionalize to increase cost efficiency.

As organizations institutionalize, they lose flexibility.  Entrepreneurial spirit, innovation and responsiveness are eroded in the interest of creating predictability.

With this strengthening of the organizational structure comes resistance to change, aversion to risk, and departmental silos that keep structures fixed and predictable.

A culture of self-preservation erodes transparency, cooperation, and creates silos.

Great organizations intentionally infuse a strong structure with creativity, breaking down existing barriers, encouraging new business ideas, and investing in emerging leaders.

5. Resource issues: There is never enough money, enough time and enough talent to take advantage of every opportunity that lies before the CEO.  CEOs and COOs are tasked with identifying the best investment of these limited resources to produce the greatest long-term result. Without a roadmap to growth, loud internal voices with limited understanding can influence resource allocation and handicap growth.

Poor allocation of resources creates bottlenecks and uncertainty, limits emerging leaders and saps energy.

A great organization continually refines their growth strategy among their team to ensure that the investments they make will result in predictable growth.

6. Strategy issues: Markets constantly change and with them customer demand, opportunity and predictability.  A focused growth strategy and roadmap are essential for deploying resources and tracking progress to goal.

Without a clear strategy, opportunity is overlooked, vision is obscured, and passion to grow is frustrated.

A great organization is continually refining their business growth strategy, analyzing market trends and the organization’s performance against short-term and long-term opportunities.

7. Market issues: As a leader, it is way too easy to see only the trees in front of you and lose the perspective of the forest.  Consequently, your organization relies on the vision and understanding of your strategic leadership to point to the path of growth.  If you’re out of step with the market, your entire organization can be lost.   Disconnects are apparent at the field level, while the organization is focused on internal matters rather than customer opportunity.

Without the voice of the customer, fragmentation grows, innovation is lost, and staff blames others.

A great organization continually seeks the voice of the customer to ensure a reality check.  They push this voice of the market down through the entire organization to ensure alignment with customers’ needs, to address their frustrations, and to seize emerging opportunities.

8. Innovation issues: Without innovation, every organization struggles with being commoditized.  The heart of innovation is a clear understanding of the voice of the customer – their needs, frustrations and where opportunity lies.

When innovation slows, customers lose interest, differentiation is lost, margins fall, and competitors win.

A great organization pushes the voice of the customer down to every nook and cranny within the company.  Employees, partners and staff hear, take notice and begin to think differently and creatively, about ways they can better serve the market.  Innovation is the result.

The VALCORT Process is proven to address all these issue quickly, efficiently and effectively, providing a framework for internal trust, customer engagement, pricing to value, innovation and growth.

What’s holding you back?  Take the ROI Survey now.

A Leader’s Secret Sauce – Heinz Kohut’s secret for leading change

Creating business transformation and market growth

Heinz Kohut, noted 20th century psychologist and behaviorist, gave us insight into leading people to change.

He, along with his colleagues and peers, found the old adage to be true:  “You can lead a horse to water, but you can’t make him drink.”

Unfortunately, many managers and leaders don’t believe this.  As a result, too many leaders and managers promote their thinking, their solutions, their products, their perspective and dump it on the listener expecting them to hear, accept and adopt their proposition.

People don’t do this.

While its true that when people respect a leader who has demonstrated success they give more credence to the proposition, they do not simply accept and adopt it.  For them to accept and adopt the proposition it must make sense to them, and fit into their own view of the world.

Kohut came face to face with the reality that for people to change, people have to WANT to change and arrive at their own conclusions about the why, how and what.  With this as a premise, he identified a sequenced series of interactions that can lead a person to want to change, accept a proposition and make a sustainable change.

Simplistically, he set out three conditions or interactions that must be established.

  1. Common structure –
    1. This condition references a shared environment.  In Kohut’s view a structure could take many forms.  It could be a physical space like a room or gym, a social structure like a family or community, or an organizational structure like a business culture, club or a academic institution.
    2. Kinship/Twinship –
      1. Kinship is a shared life experience. Whether constructive or destructive, we have had an experience, emotion, elation or frustration that we can observe in another and resonates with us.   Empathy is a natural result.
      2. Trust and trial –
        1. When one has arrived at the truth about the situation, frustrated and in pain, we begin to seek a solution from someone else who has had a similar experienced.  Thus, a common structure provides a way to discuss the influences causing the dissatisfaction, and kinship provides the empathy from another opening the door for me to ask, “what would you do.”  That trust provides the basis for action – emotional and cognitive –to relieve the frustration with another’s potential solution.

His research and life work proved this out – change can occur when people are led through these steps.

Trust, then is built through this process, to the point where the individual trusts that you, the leader, has a proposition that works for them, solving their problem.

The implications for leaders and marketers is clear. Intuitive sales people have known it all along:  Before you can provide a solution, you make sure the prospect knows you understand his problem, that you have experienced similar situations and that your proposition worked for you, and can work for them.

These stages of trust building are essential for moving anyone to make a change.  The greater the impact of the change, the deeper the process and the more time required to establish that trust.

I have distilled Kohut’s approach into The Four Stages of TrustSM.

  1. Shared values (common structure)
  2. Shared vision (Kinship/twinship)
  3. Assumed responsibility (trust and trial)
  4. Always delivering on your promise (trial success)

Anytime change is proposed, trust is required.  Building this trust always is built upon these four stages whether intentional or intuitively communicated.

Of course, the more intentional a leader or marketer can be about this process, the faster and deeper the trust can be established, trial created, leading to change for good.

The CEO’s new glasses (Lens of the Market)

The CEO’s new glasses (Lens of the Market)

One of the most difficult tasks in leadership is pointing the ship and keeping it focused every day, week, month and year, upon reaching a critical destination. To review: Having a clear understanding the values and vision of the organization (V of VALCORT) is essential for creating trust and getting others to join in the quest. Without clarity of this, people can’t understand your direction, buy-in, and invest their own passion, time and energy in accomplishing the vision. Without clarity,...

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Assets (Marketing Assets)

Assets (Marketing Assets)

The core of growth is the ability to build and nurture trust.   The Four Stages of Trust is the blueprint to guide anyone into a high-trust relationship that creates change and fuels growth.  The Four Stages of Trust are: Shared Values Shared Vision Assumed Responsibility Always delivering on your promise In an organization, we will assume for the moment that we have established shared values with a customer, and following that  we have moved on to discuss and define a shared vision (the V ...

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Are values an acquired taste?

Are values an acquired taste?

While I enjoy a cup of coffee every day, I know that I need to drink water. Water sustains life, coffee is a substitute, albeit a fine one. Growing up in my father’s house, tea was always the beverage of choice. Now I have to say, my first impression of a swig of coffee was bitter, harsh, strong. It wasn’t my “cup of tea.” But I soon learned that wooing my wife required daily conversation over coffee, bread and cheese. And I acquired a taste for it that continues with a daily morning cup wi...

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The scent of a brand.

So you’re talking with a stranger and as you begin to talk, you realize the parallels in your life.  You were here, doing this.  He was in a different place doing something similar.  You attended this concert, and he attended the same event in a different city.  You share some of the same likes and preferences.  It’s amazing!

This values to values connection is deeply rooted as an intuitive part of our psyche.  It is a “scent” we give to others in conversation, appearance, mannerisms that allows people to quickly learn about us, connect and build friendships. And if these values go deep and wide, the connection can last a lifetime.  Of course, when we’re out of sync with another, you can’t leave the room fast enough.

We learn to trust another when the fundamental values we hold sync with another.  When they break down, we question, judge and limit the relationship.

Similarly, as a brand or organization, the values we project are revealed in our programs, products, our sales people, channel partners, our service reps, our communications, advertising, websites and social media—all hints to our customers and the broader world of who we REALLY are.

Managing these perceptions is ultimately the job of the CEO.  Trust in the company, its leaders, its vision of the future, and its investments in people, products, programs and innovation provide a “scent” and reveal the true heart of the company.  Prospects and customers may lock up and become a friend for life, or may not like what they observe and just purchase and move on.

The power to build lifelong customer advocates is based on the CEO’s values and his or her ability to articulate them and expected associated behaviors, drive them through the organization, out the door and engage customers with similar values on their front porch.

This is the power of connection -- the fundamental cornerstone of shared values that create trust and reliance between people, and create glue and advocacy between people and the brands they love.

Who cares about values?

Values are the ground-zero of decision making.  We purchase based on what we value.  We sacrifice time, money and resources to have what we value.

Values are the heart motivation that cause people to make choices and take action.  They are based on beliefs or ideals about what is good or or bad and desirable or undesirable. Values can be lasting and intrinsic, such as the inherent value of life, friendship, community.  They can also be secondary, or learned and adaptive values such as wealth, mobility, or fitness.  Values inform us in the decisions we make influencing our purchases, attitudes, behaviors.    Values can change over time and across a lifetime.  For example, the values an adolescent holds may be very different from the values the same person holds as an eighty year old.

Intrinsic values, like the preservation of life for example, can also be twisted, impacted by another’s beliefs, behavior and actions. An abusive parent, can twist a child’s perspective of the value of their life, impacting their a natural respect for another. A terrorist may be willing to trade his life and murder others based on a desirable future in an unknown afterlife, all this influenced by another teacher or mentor.

Politicians have an ability to project certain values that resonate with others in society, attracting them to their cause.  These shared values, generate a shared vision of what could be, driving people to choose and support them.

Ultimately, as business leaders we are in the business of serving our customers, helping them choose products and services that bring life and health.  Anything other than this is hedonistic, existential and hopeless.

As marketers and communicators dedicated to serve our customers, we must focus on understanding both the timeless and changing values of our target audiences.  We must focus on how our products and services actually reinforce these life-giving values inherent in everyone.

Classic selling of product or service features and benefits is shiny-object selling -- trendy and short-lived.  Great companies make a values-to-values connection creating deep engagement, trust, loyalty, and advocacy.

Can Lance Armstrong Live Strong?

Lance Armstrong came clean and admitted that he had lied, bullied and annihilated people for the cause of winning sports events.  Call it self-preservation, if you will, but it became apparent that to him that winning is not worth compromising everything.

In fact, as the stories unraveled, it became apparent that the admiration of fans, his economic stability, and his competitive opportunities were drying up as people came to realize they couldn’t trust him.  In other words, winning isn’t everything.

Celebrities, politicians, leaders believe they have earned people’s trust and then too often betray it, with personal gain eroding personal integrity.   The decisions and actions one takes reveal where anyone’s values lie.

Trust is funny that way.  People want to trust those that have risen to stature and success.   We believe that they share our work ethic, our sense of right and wrong, and our commitment to loyalty and integrity.  We found out Mr. Armstrong did not.

Mr. Armstrong found out that what he values, namely winning and dominating at any cost, is not the primary value held by people who generally admired him.  Fairness, loyalty, integrity once again has been proven to be more important to us as a society than even a disciplined work ethic, remarkable physical achievement and winning at any cost.

In the end, while being recognized world-over for his outstanding achievements and showered with millions of dollars, he’s actions revealed he was morally, relationally and ethically bankrupt.

The good news is that we are a forgiving people.  If Mr. Armstrong turns and takes action to reveal personal remorse, nurturing personal values of loyalty, humility, service, and integrity people we be willing to trust him once again.  Does he have the will to learn from this?  Is he disciplined enough to change?

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