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Developing Donor Relationships: The Role of the Breadth of Giving
Abstract
This research proposes a mechanism to develop long-term donor relationships, a major challenge in the nonprofit industry. The authors propose a metric, donation variety, which captures a donor's breadth of donations with a given nonprofit organization, controlling for the distribution of donations to different initiatives. Using donation data spanning 20 years from a major U.S. public university, the authors find that improvements in donation variety increase the likelihood that the donor will make a subsequent donation, increase the donation amount, and reduce the sensitivity of donations to negative macroeconomic shocks. In the acquisition phase, most donors give to a single initiative, and these decisions are more influenced by a donor's intrinsic motivations. In contrast, as the donor-nonprofit organization relationship develops over time, nonprofit marketing efforts have a more significant influence on a donor's decision to give to multiple initiatives. Finally, the authors conduct a field study that validates the econometric analysis and provides causal evidence that marketing efforts by nonprofit organizations can encourage donors to spread donations across multiple initiatives.
... Over the past few years, a managerial approach that considers member relationships as key organizational assets has become increasingly dominant in the priorities and practices of many nonprofit organizations (Khodakarami et al., 2015;Kim et al., 2021a). As a result, nonprofits have embraced relationship marketing and invested heavily in activities directed at satisfying donor demands and expectations, as well as in building strong relationships with donors (Boenigk and Helmig, 2013;Drollinger, 2018;Khodakarami et al., 2015). ...
... Over the past few years, a managerial approach that considers member relationships as key organizational assets has become increasingly dominant in the priorities and practices of many nonprofit organizations (Khodakarami et al., 2015;Kim et al., 2021a). As a result, nonprofits have embraced relationship marketing and invested heavily in activities directed at satisfying donor demands and expectations, as well as in building strong relationships with donors (Boenigk and Helmig, 2013;Drollinger, 2018;Khodakarami et al., 2015). Relationship marketing has been postulated as an important approach through which marketing managers can achieve customer engagement and higher levels of loyalty (Beckers et al., 2018;Kim et al., 2021b), as well as maintain or increase funds collected (Zogaj et al., 2021). ...
... With nonprofit organizations making major investments in relationship marketing initiatives, it is essential for them to obtain a better understanding of which individuals they are most likely to form relationships with. Some past work examines the role of relationship marketing in these organizations (Khodakarami et al., 2015;Kim et al., 2021a;MacMillan et al., 2005), as well as the determinants that lead donors to offer future support by contributing through membership programs for long periods of time, such as psychological involvement, commitment, trust, satisfaction (Drollinger, 2018), personal links, shared values, service, and relationship quality or relationship investment (Bennett and Barkensjo, 2005; van Dijk et al., 2019). Despite this, there is a void of research regarding the factors that indicate which individuals are more likely to become regular donors; such insights could help nonprofits develop relational or transactional marketing actions in a more meaningful way (Sargeant & Lee, 2004). ...
Relationship marketing has been key to developing stronger relationships and promoting donor continuity in nonprofit organizations. However, it is not clear whether these efforts are effective for all individuals who choose to financially support an organization. Taking a relationship orientation approach, this study investigates the effect of consenting to direct marketing on occasional donors’ decisions to become members (i.e., contributing through membership programs), and analyzes the moderating role of past donation behavior (i.e., frequency and amount). The results reveal that occasional donors who consent to direct marketing are more likely to develop a long-term relationship as members. This effect is reinforced when donors have contributed greater amounts in the past. The findings also demonstrate that, through their membership, donors consenting to direct marketing provide greater financial support on an ongoing basis. This study offers novel insights into the relationship marketing literature and provides contributions to fundraising managers.
... In order to assist nonprofits in developing effective strategies, there has been a growing interest in recent years in what leads to regular donors increasing their donations (Wang and Ashcraft, 2014;Drollinger, 2018). Most studies addressing the nonprofit service organizations domain suggest that the length of the member-organization relationship is one of the main factors helping to explain donor behavior over time (Fang et al., 2021;Khodakarami et al., 2015;Ki and Oh, 2018;Wang and Ashcraft, 2014). As a result, fundraisers have started to apply relationship marketing techniques to the enrichment of their donor portfolio and the retention of their regular members in an attempt to encourage further contributions (Atlas and Bartels, 2018;Fang et al., 2021;Khodakarami et al., 2015;Weir and Hibbert, 2000). ...
... Most studies addressing the nonprofit service organizations domain suggest that the length of the member-organization relationship is one of the main factors helping to explain donor behavior over time (Fang et al., 2021;Khodakarami et al., 2015;Ki and Oh, 2018;Wang and Ashcraft, 2014). As a result, fundraisers have started to apply relationship marketing techniques to the enrichment of their donor portfolio and the retention of their regular members in an attempt to encourage further contributions (Atlas and Bartels, 2018;Fang et al., 2021;Khodakarami et al., 2015;Weir and Hibbert, 2000). However, the literature reveals mixed evidence regarding the impact of the length of membership in an organization on commitment and identification, thus suggesting different effects on member contributions. ...
... Prior research notes that some underlying factors of these forces may be affectivebinding individuals to the service provider out of desireand normativebinding individuals to the service provider out of perceived obligation (Bansal et al., 2004). Emotional attachments or feelings of obligation form the basis of commitment and the motivation to continue supporting the organization, as well as the desire to contribute significantly (Fang et al., 2021;Khodakarami et al., 2015). The literature distinguishes between two types of commitment: affective commitment and normative commitment (Naskrent and Siebelt, 2011). ...
Purpose
The purpose of this study is to investigate whether a U-shaped relationship exists between the length of time a donor has been a regular member in a nonprofit organization and the amount donated over time. In addition, this research analyzes whether this relationship is moderated by donation frequency.
Design/methodology/approach
Using a database of 6,137 members from a collaborating nonprofit organization, a longitudinal study is conducted over an eight-year period (2013–2020). A set of ordinary least square (OLS) regression analyses are carried out to empirically test the proposed hypotheses.
Findings
This study finds a nonlinear, U-shaped relationship between donation amount and relationship length. This effect can be explained through the dynamic evolution of two dimensions of commitment: affective (decreasing over time) and normative (increasing over time). The results also reveal that these effects, however, become flatter for members who engage in more frequent donations.
Originality/value
The results provide novel insights revealing the nonlinear nature of the relationship between the length of time a donor has been a member of a nonprofit organization and the amount donated, and underscores the moderating role of donation frequency, which makes the U-shaped relationship flatter, thus increasing the amounts donated. Despite their relevance in the service ecosystem, nonprofits have been under-represented in prior work. This study offers important practical insights into the effective management of the regular donor portfolio.
... 1 A major challenge that many NPOs face is the volatility of individual giving: the literature reports that approximately half of newly acquired donors churn after they give once (Sargeant and Woodlie 2007;Khodakarami et al. 2015). In response to such instability, NPOs strive to increase repeat giving by individuals as well as to identify and retain givers who are more committed. ...
... Despite the prevalence of multiple forms of giving in practice, and the recognition that benets can have an eect on subsequent giving, previous marketing studies typically treat giving via membership and donation as a composite (Netzer et al. 2008;Van Diepen et al. 2009;Khodakarami et al. 2015;Kumar et al. 2015). Such aggregation across forms of giving masks potentially large dierences in individuals' motivations and giving behaviors. ...
... We compare the full model estimated using Equation 5, which incorporates both random eects (unobserved heterogeneity) and GP (dynamics), which we denote by M1, with more restrictive benchmark models, M2-M5. As discussed, a distinctive feature of our framework is that we allow multiple forms of giving, whereas previous research combines dierent forms of nancial giving as a composite amount (Netzer et al. 2008;Van Diepen et al. 2009;Khodakarami et al. 2015;Kumar et al. 2015 Posterior means and standard deviations related to the GP and theR statistic are shown in Table 2. As explained in the modeling section, these parameter estimates summarize the characteristics of the GP structures. ...
Nonprofit organizations (NPOs) play a central role in many economies in the form of private entities discharging a public purpose. Strengthening the fundraising capabilities of NPOs can have a large impact on their survival and effective functioning. NPOs typically elicit financial contributions through multiple forms of giving, such as donation and membership. These options enable individuals to express their altruism by giving in one or multiple forms. The authors develop a utility-based multiple discrete continuous model that provides insights into potentially large differences in individuals' giving behaviors. The model also incorporates via Bayesian Gaussian processes changes in givers' preferences for forms of giving. The authors apply their model to five years of individual giving data. They find that the effects of lifetime, recency, seasonality, and appeals on donation and membership options change non-monotonically over time, and in distinctive ways. The authors demonstrate that the model estimates help to predict who will give in more than one form in the future, and to build appeal targeting strategies. Additional marketing insights that the model provides are that fundraising attempts should emphasize participation rather than amount, and that long-lapsed members are still worth pursuing for renewal, while long-lapsed donors are less productive for repeat giving.
... Donating money is the primary way people engage with charitable services (Charities Aid Foundation, 2017). In recent years, there has been increasing interest in the factors that motivate individuals to make financial donations to non-profit organisations (NPOs) (see Khodakarami, Petersen, & Venkatesan, 2015;Kleber, Florack, & Chladek, 2016;Sargeant & McKenzie, 1999;Scharf, 2013). While motivations for prosocial behaviours such as financial donation have been explored from a number of different perspectives, why people give money to charities is complex and many gaps remain in the extant literature (Shehu, Langmaack, Felchle, & Clement, 2015;Themudo, 2009). ...
... Concern that donors will simply switch allegiance between charities rather than increase the overall donation pool means reductions in fundraising efforts are unlikely, rather the focus has shifted to the management of fundraising expenditure (Taylor & Taylor, 2013;van der Heijden, 2013). Beyond the vagaries of fund-raising, success is clearly linked to an understanding of what motivates people to give money to a charitable service (Buraschi & Cornelli, 2014;Khodakarami et al., 2015). This is the focus of our study. ...
... Charities are NPOs that provide a range of individual and community services to address diverse social needs (Salamon & Anheier, 1999). While such prosocial endeavours are admired (Lee et al., 2014;Muthaly et al., 2000), charities are dependent upon contributions from many stakeholders, including financial donations from individuals (Khodakarami et al., 2015). The motivations for giving money to charity are multifaceted. ...
Charities are non-profit services that address diverse social needs. As securing financial donations is critical to their continued operation, they engage in a range of fund-raising activities. Central to successful fund-raising is understanding what motivates people to give money. Thus, this research investigates the role of donors’ perceived fear and empathy, and how these influence the size of self-reported financial donations. Findings from the initial qualitative study (n = 32) informed the subsequent national quantitative main study (n = 400). Logistic regression revealed perceived fear and empathy as significant predictors, with perceived fear playing a lesser role and empathy playing a greater role in the self-reported donation of larger amounts of money to charities. These findings can assist charities with maximising their fund-raising efforts considering the growing competition for donors’ dollars, enabling them to provide a range of services which benefit society.
... Ciconte and Jacob ( [68], p. 117) refer to it as the "care and feeding" approach which begins with informing and educating donors about the NGO and how their contributions will make a difference. This approach is echoed in the findings of Khodakarami, Petersen and Venkatesan [69] who analyzed donation data gathered over two decades in a public university. They draw a distinction between intrinsic and extrinsic motivators and find that the latter, more so than the former, influenced repeat giving by donors. ...
... These may include the NGO's communication and relationship building efforts, the NGO's marketing efforts or a sense that the NGO is responsive to the donor's concerns. As the donor's relationship with the university evolved, Kodhakarami et al. [69] found donors to have learned more about new initiatives that were worth supporting and these were less related to their intrinsic motivators. It was the donors who felt appreciated and/or whose concerns were addressed by the university that were significantly more willing to donate repeatedly. ...
... Beldad, Snip and van Hoof [70] are another set of scholars to conduct a survey among residents of two cities in the Netherlands to determine the factors influencing repeat donation intention. Like Kodhakarami et al. [69] they found that repeat donations were predicated on donors' positive experience with the NGO. This positive experience meant that the "transaction" between the donor and the organization proceeded without any problem and that the donation act did not cause difficulty and inconvenience for the donor. ...
This article examines an important but relatively overlooked aspect in the field of international giving in the U.S.—individual monetary donations to Christian faith-related international nongovernmental organizations (INGOs)—and outlines the cognitive process influencing donors who choose to keep up their financial support to Christian faith-related INGOs. The propositions forwarded in this article draw on existing literature on Christian giving to international causes, INGO management, donor retention and finally, the logic of self-perception to highlight how existing donors might evaluate their repeat giving decision. The more existing donors of Christian faith-related INGOs can identify themselves with the INGO’s identity—comprising its beliefs and values, its claims to legitimacy, and performance—the more likely it is for donors to be satisfied and decide to maintain a stable relationship with the specific INGO.
... National Sports Federation managers who are selecting revenue streams can incorporate MPT principles by looking at the returns, risks, and how each revenue streams react to each other (Grasse et al., 2016). Major donors, sponsors and affiliates are investors that have contributed a substantial amount of money to the NSFs and believe that the sport governing body will strive towards its mission (Khodakarami, Petersen, & Venkatesan, 2015). While seeking other revenue streams, the NSFs managers must account for the possibility of a negative correlation between the new revenue stream and a major financial contributor (Charles & Kim, 2016;Shipway, 2009). ...
... The correlation between revenue streams is known as reactivity and understanding this volatile relationship is a strategic imperative (Shipway, 2009). A NSF manager who understands this reactive relationship between major financial contributors' belief systems will create noncompetitive positive relationships and increase the amount of total revenue (Charles & Kim, 2016;Khodakarami et al., 2015;Shipway, 2009) ...
... Assim, são criadas oportunidades de incremento da competitividade empresarial advinda do alinhamento entre ações de responsabilidade social e estratégia organizacional (Schulz et al., 2016;Khodakarami, Petersen & Venkatesan, 2015). Nesse sentido, Barbieri e Cajazeira (2010) colocam a convergência dos movimentos a favor da responsabilidade social empresarial e da sustentabilidade empresarial. ...
... Há oportunidades de competitividade empresarial advindas do alinhamento entre ações de responsabilidade social e estratégia organizacional (Schulz et al, 2016). De acordo com Khodakarami et al. (2015), como benefício da estruturação da gestão da cadeia de suprimentos tem-se a vantagem competitiva decorrente da gestão eficiente da cadeia integrada aos conceitos de sustentabilidade nas principais funções dos negócios (Simões-Coelho & Figueira, 2021). ...
O sucesso empresarial não se resume aos resultados financeiros, pondera sobre a responsabilidade socioambiental, compreendendo a visão estratégia, por vezes de sobrevivência, interessando às organizações da cadeia de suprimentos, contemplar competitividade e sustentabilidade. Tal intenção é ainda mais desafiadora em setores econômicos considerados controversos. Partindo deste entendimento, o artigo tem como objetivo investigar a ação estratégica da Empresa Focal para o desenvolvimento da gestão sustentável da cadeia de suprimentos do tabaco em folha. Para alcançar este objetivo foi desenvolvido um estudo de caso centralizado na perspectiva de uma Empresa Focal representativa do setor. A análise está sustentada na perspectiva do tripé da sustentabilidade (Tripple Bottom Line – TBL) e da abordagem da gestão sustentável das cadeias de subimentos (GSCS). Como resultado, observou-se o desnivelamento informativo referente às práticas adotadas pela Empresa Focal ao longo de sua cadeia de suprimentos, especialmente junto aos fornecedores de suprimentos críticos, que demonstram não compreender a magnitude da sustentabilidade e sua implicação estratégica.
... Furthermore, drawn by the potential of serving the more profitable segments of these markets, for-profit firms are entering many of the markets that have been typically served by commercial NPOs, most notably health care (Kessler & McClellan, 1996) and education (Khodakarami, Petersen, & Venkatesan, 2015). Studying these new market realities, some scholars and practitioners have argued that NPOs competing with for-profit organizations have an unfair advantage and create market inefficiencies due to their tax-exempt status (Lackman, 1994;Schiff & Weisbrod, 1991). ...
... Laverie and McDonald (2007) show that identity importance is a significant motivation for volunteers. Finally, incentives, organizational attachment, corporate image, and tax breaks lead to donations and voluntary work (Khodakarami et al., 2015;MacMillan, Money, Money, & Downing, 2005). ...
Competition in the nonprofit sector has dramatically intensified in the past two decades because of (1) the increased number of nonprofit organizations (NPOs), (2) the decline and diffusion of governmental support, and (3) the entry of for-profit companies into markets that traditionally have been the domain of nonprofits. In an attempt to enhance the understanding of nonprofit competition, the authors apply resource-advantage (R-A) theory, a dynamic theory of competition adapted from the for-profit business literature, to commercial nonprofits and explain how commercial nonprofits can leverage their various resources to successfully compete and deliver social value. Contributing to the understanding of nonprofit competition and the challenge that NPOs face in balancing mission and money, this paper provides a foundation for a theory of nonprofit competition that can guide future research in the area and help NPO managers as they maneuver in today’s increasingly competitive environment.
... Lacking or inappropriate feedback is one of the main reasons for donation discontinuity because it has negative effects on attitude toward the charity and donation intentions (Merchant et al., 2010a;Sargeant & Jay, 2004b). The high donor defection rate directs the attention of nonprofit organizations to relationship building to encourage repeat donation and to maintain the charity's sustainability (Khodakarami et al., 2015;Polonsky & Sargeant, 2007;Reficco et al., 2021). Feedback is an important tool for donor relationships because expressing appreciation and responding to a donor's concern can influence donors' emotions, attitudes toward the charity, and engagement in repeat donation (Bennett, 2006;Merchant et al., 2010aMerchant et al., , 2010bPolonsky & Sargeant, 2007). ...
Charitable organizations spend donated funds for programs and overhead. Donors expect their donated money to be used to help the cause rather than the overhead (i.e. overhead aversion). Donors expect feedback on the use of their donated money for helping the cause and for overhead. However, donors seldom receive proper feedback from charities, which is one of the reasons for not continuing donation. This paper highlights the importance of transparent feedback that presents information on the use of donated funds to help the cause and for overhead. Study 1 shows that attitude toward the charity is more favorable when the feedback is transparent than opaque. Study 2 shows that the transparent (vs. opaque) feedback sequentially affects perceived donation impact, charity attitude, and donation intention. Study 3 tests the framing effect of the feedback message. Donors perceive the impact of donation to be greater when the feedback on overhead presents the amount spent in terms of helping the cause than the amount spent on overhead.
... Research on prosocial behavior suggests that donors typically favor helping those in need who are socially closer to them (Al-Ubaydli & Yeomans, 2017;Touré-Tillery & Fishbach, 2013;Touré-Tillery & Fishbach, 2017;Winterich, Mittal, & Ross, 2009). Consistent with this idea, donors are more likely to give to in-group than to out-group beneficiaries (Duclos & Barasch, 2014), to those who are like them (Galak, Small, & Stephen, 2011), and to charities with which they have personal experience (Khodakarami, Petersen, & Venkatesan, 2015). Congenially, Cavanaugh, Bettman, and Luce (2015) report that 94% of donations from U.S. citizens go to local organizations, and Mittelman and Dow (2018) find that a natural disaster close to home generates almost thirty times more donations than a similar natural disaster on the other side of the world. ...
Although donors may prefer contributing to causes that help those who are socially closer to them, we propose that donating to socially distant beneficiaries makes donors feel happier. This occurs because donating to distant (vs. close) others results in an experience of greater benevolence. We further identify regulatory focus as a boundary condition of these effects. In one choice study and four experiments featuring close to 2,500 respondents, we demonstrate this phenomenon across diverse samples and varying forms of beneficiaries. Our research extends prior work examining the impact of recognition from others on charitable behavior to examine donors’ self-evaluations, and how they impact happiness.
... The first research stream comprises studies that examine how policies and/or different marketing initiatives of an organization influence consumers' behavior and/or attitudes (e.g., Bolton, Bhattacharjee, and Reed 2015;Dority, McGarvey, and Kennedy 2010;Moore et al. 2002;Wang, Lewis, and Singh 2016;Webb and Mohr 1998). The second research stream comprises studies that evaluate how marketing efforts can be utilized for fundraising and managing donor behavior and donor relationships (e.g., Anik, Norton, and Ariely 2014;Arnett, German, and Hunt 2003;Hung and Wyer 2009;Kara, Spillan, and DeShields 2004;Khodakarami, Petersen, and Venkatesan 2015;Savary, Goldsmith, and Dhar 2015;Shang, Reed, and Croson 2008;Townsend 2017;Van Diepen, Donkers, and Franses 2009;Zhou, Kim, and Wang 2018). The third research stream comprises studies that have proposed methodological advancements in the context of NPs, with the underlying objective of improving prediction and/or understanding donor behavior (e.g., Aravindakshan, Rubel, and Rutz 2015;Dubé, Luo, and Fang 2017;Gopalakrishnan, Bradlow, and Fader 2017;Schweidel and Knox 2013;Netzer, Lattin, and Srinivasan 2008). ...
The critical role of marketing in driving nonprofit performance has been recognized for decades. However, in practice, there has been a disturbingly weak acknowledgment and/or implementation of marketing practices across nonprofits to date. Marketing is often perceived as an avoidable and costly overhead. The issue is complicated by the fact that nonprofit performance is relatively difficult to measure and may often comprise multiple tangible and intangible outcomes with different (linear and nonlinear) functional forms. Furthermore, nonprofit performance outcomes often depend on behavioral and attitudinal changes of the target segment. The authors address these challenges by presenting a methodology to link marketing efforts to nonprofits' mission-based performance outcome(s). The authors apply their approach with data from a large nonprofit and find empirical support for the notion that marketing can play a pivotal and significant role in improving nonprofits' mission-based performance outcomes. The findings help present a strong case for nonprofit leaders and policy makers to fund and treat marketing as a critical investment to drive nonprofit entities' performance.
... Donations. Prior studies on member donations to nonprofit service organizations have emphasized the role of past giving (e.g., Khodakarami, Petersen, and Venkatesan 2015;Lindahl and Winship 1992). Boenigk and Helmig (2013) find in two contexts that organizational identification and identity salience influence self-reports of loyalty but not donations. ...
Prior research has established that it is valuable for members to have strong organizational identification with nonprofit service organizations. However, research has not examined whether and how members are influenced by other members of a nonprofit. This paper analyzes how peer identification influences member retention and donations using survey data and actual member behavior. It distinguishes identification with the organization from identification with peers. The theory-based econometric model shows that the effect of a member’s peer and organizational identification on the likelihood of he/she will remain a member depends on the member’s relationship stage. Organizational identification has a large effect on member retention in the earlier periods of membership. However, for members of eight years or more, the favorable effect of peer identification becomes larger. Results also show that peer identification has a negative impact on donations whereas organizational identification has a positive effect regardless of stage of the member-nonprofit relationship. This paper also introduces a new construct, peer identity overlap, which influences peer identification. The article discusses how nonprofit service organizations can foster support and affirmation among members, value alignment among members, peer identity overlap, and organizational identification, as well as manage different stages of the relationship.
... A promotion mix mostly includes advertising, personal selling, sales promotion, publicity, word-of-mouth and public relations (Nour and Almahirah 2014;Liu and Ko 2012;Mainwaring and Skinner 2009;McClymont and Jocumsen 2003), and every activity has to be compared before and after the implementation of those marketing tools. The above-mentioned activities are closely connected with building long-term relationships with donors, which is very important in order to support the allocation of financial resources from fundraising activities (Khodakarami et al. 2015). In line with that, non-profit organisations have to start, continue or increase support for their end-service use customers by means of a portfolio of benefits (Andreasen 2012;Pratono and Tjahjono 2017;Sisson 2017;Sundermann 2018). ...
The main goal of this chapter is to determine an optimal communication mix with donors in non-profit organisations within a social marketing concept based on the reputation of an organisation. Each donor or end-user of social services or products fills the role of “non-profit organisation customers”. This relationship is influenced by trust, transparency and communication with public supporters. The case study is conducted using mixed methods based on secondary data (eight well-known concepts will be analysed), and primary data survey based on 87 interviews will be presented to determine the optimal communication strategy to minimise barriers and motivate donors to support selected non-profit projects. Four research questions will be answered, pertaining to: (1) the means of communication by which to share information about donations, (2) which communication channels are negatively ranked by donors, (3) the best concept of the communication mix in case studies, and (4) the worst concept of communication.
... Apart from dealing with crowdfunding as a new source of funding, it would be advisable to deal with managing relationships with donors and apply the calculation of the indicator based on their assessment of the particular NPO. Khodakarami, Petersen, and Venkatesan (2015) presented the principle of building longterm relations with donors, taking into consideration their life values. Hladká and Hyánek (2017) created a model of donor behavior in the Czech Republic based on the results obtained from a regression analysis of variables. ...
Worldwide the nonprofit organizations are experiencing challenging implications of austerity and financial uncertainty, which make them turn to commercial activities in order to meet the emerging survival challenges. Various key concepts describe the phenomenon of nonprofits becoming business-like. This chapter adds to the definitional clarification of the conceptual foundations of the business practices in nonprofit funding. It reviews international theoretical approaches originating in the Western environment with a view to assessing their applicability in the (post-)transitional context, while identifying the elements of their conceptual core. The emphasis of the scientific discourse on nonprofits becoming business-like in (post-)transitional countries provides a basis for investigating the generally positive, normative, and heuristic analysis of the nonprofit sector associated with insights that consider the challenging socio-economic and political environments of the Czech Republic and Slovakia.
... Such designs are better suited to establish causality and capture sensitive issues. Because research suggests that belief in a cause (Khodakarami, Petersen, & Venkatesan, 2015), age (Sargeant et al., 2006) and gender (Sargeant et al., 2006) affect contributions, we controlled for them in all experiments. ...
We conducted one field experiment and three controlled experiments to explore how to increase crowdfunding success, focusing on the relationship between individuals soliciting funds and potential contributors. Specifically, we examined how social closeness, contact frequency and trust influenced contribution likelihood and investigated the mediating effects of obligation, fear of loss of relationship and happiness. Finally, we tested whether requesting higher contribution amounts increased the average dollars contributed. We found that closeness and frequency, but not trust, increased the contribution likelihood and that feelings of obligation and the fear of loss, but not happiness, mediated the relationship. Requesting higher contribution amounts increased a person's average contribution.
... For example, the framework can specify which NPO values affect a person's first engagement with the NPO and which ones induce changes in his or her portfolio of NPOs (e.g., switching or adding an NPO). Research that explores these detailed charitable donation processes should use a longitudinal approach (Khodakarami, Petersen, & Venkatesan, 2015). Finally, future reseach can establish the relationship between purposeful donation choices and different life events (Moschis, 2007); major life events could instigate a change in the donor's NPO values. ...
Charitable donations constitute choices, and donors' values influence both the choice to donate and the selected nonprofit organization (NPO). The current study proposes a new instrument to measure NPO values. The proposed two-stage analytical procedure is novel in this research area. The first stage shows that the personal value of universalism drives the general decision to donate. The second stage reveals that donating to a specific NPO depends on the congruency between the NPO values of the organization and the individual donor's NPO values. Furthermore, distinct NPO values are relevant to donation decisions such that NPO values can attract a particular type of donor to an NPO. These findings have pertinent implications for NPOs' chosen positioning strategies as it allows NPOs to collectively guard the qualities that increase general donations and individually distinguish themselves based on the specific NPO values that ensure alignment with their own donors.
... Each stakeholder group can be defined as customers, particularly given the importance of social exchange theory (Bagozzi, 1975;Emerson, 1976;Venable et al., 2005) and symbolic consumption theory (Khodakarami, Petersen, & Venkatesan, 2015;Randle & Dolnicar, 2011;Wymer Jr & Samu, 2002) observed within the non-profit sector. The level of MO will not be uniform across these relationships (Padanyi & Gainer, 2004); in effect the NPO needs to manage each of these 'multivalent' ...
The paper critically re-examines product life-cycle (PLC) theory, developed over 50 years ago. Despite prevalence in marketing pedagogy and continued popularity within empirical research, PLC is seldom challenged. The paper identifies the organisation-centric construct underpinning the theory and highlights a disconnection between PLC theory and the recent academic insight around customer engagement.
It reconceptualises the life-cycle concept based on engagement between stakeholder and non-profit organisation (NPO), structured upon both the market orientation and social exchange constructs. The revised framework maps stakeholder engagement with the NPO through the five stages of incubation, interaction, involvement, immersion, and incapacitation. The paper concludes with identifying a roadmap for future empirical research to develop and validate the re-envisaged conceptual model. The methodology used is narrative literature review supported by secondary research from specialist practitioner reports.
... The study aims further to find out whether psychological distance influences consumers' intentions to donate for environmental and health charities, that is, one key area in social marketing research and practice (Han et al. 2017;Khodakarami et al. 2015;Savary et al. 2015). The study contributes to the literature in several ways. ...
The goal of the study is to assess the interrelationship between psychological distance
(and closeness) and environmental (and health) concepts as well as to assess the influence of primed distance (vs. closeness) on consumers’ intentions to donate for environmental and health charities. The authors conducted two studies, considering four dimensions of psychological distance. In an Implicit Association Test, they show that it is easier and more natural for consumers to pair distant (vs. close) target words with environment- related stimuli and to pair close (vs. distant) target words with health-related stimuli. An experimental study reveals that environmental (health) charities are supported more when consumers are primed with psychological distance (closeness). The studies extend the literature on Construal Level Theory of Psychological Distance by showing that psychological distance (vs. closeness) relates to the domains of environment and health, with contrasting effects. These findings have implications for designing social marketing campaigns.
Peer‐to‐peer fundraising has become a popular funding approach for nonprofit organizations, generating quick revenue and a promising opportunity for donor base expansion by transforming peer donors into organizational donors following their peer donation. This study uses survey data from 706 participants to examine peer donors' transformation likelihood and its determining factors. Additionally, it evaluates the capacity of machine learning to predict which peer donors are most likely to transform. The results reveal that, among peer donors who lack prior affiliation with the nonprofit organization, the transformation likelihood is 14.1%, indicating a transformation rate of approximately one in seven peer donors. Regarding the determining factors, post‐donation communication with peer donors after their initial donation increased the odds of transformation threefold, while established nonprofit‐related factors, such as trust in the organization, exhibit no influence. Moreover, applying the random forest approach allowed for the prediction of the transformation with an accuracy of 79% slightly outperforming logistic regression. This study assists in identifying the donors most likely to transform, enabling fundraising managers to allocate efforts effectively and maximize fundraising success.
This chapter explores the transformative potential of disruptive innovations in non-profit governance. As technology and societal changes advance, non-profits must adapt to remain relevant and efficient. The discourse examines blockchain technology, artificial intelligence (AI), decentralized autonomous organizations (DAOs), gamification, and advanced financial models. Blockchain enhances financial transparency with an immutable ledger, boosting donor confidence. AI offers superior data analytics to understand donor behavior, optimize resources, and predict fundraising trends. DAOs use blockchain-based smart contracts for participative governance, empowering stakeholders. Gamification engages stakeholders by incorporating game elements, appealing to a tech-savvy audience. Advanced financial models like impact investing and social finance attract capital seeking both financial returns and social impact. Integrating these trends can improve transparency, stakeholder engagement, and financial robustness, ensuring sustainability and promoting societal progress.
Scholars and practitioners have long viewed an individual's age to be a key predictor of giving outcomes. Specifically, older individuals are expected to be more philanthropic than younger individuals are. Utilizing a ten‐year dataset from a Research One university in the United States, donation histories to health areas of the campus are matched with patient visit records from the university's affiliated hospitals and clinics system to empirically examine this accepted wisdom. The initial findings confirm basic expectations around donor acquisition as older prospects are acquired at higher rates than younger prospects. However, once the organization acquires and solicits donors, age's associative impact on retention rate becomes flat to negative, which indicates support for the alternative view that many younger donor prospects may have capacity and willingness to give. The role of giving purpose is also compared and contrasted among younger and older donor prospects, showing that managers of nonprofits can strategically solicit each population uniquely with targeted approaches to drive higher total fundraising success. The key results are discussed and both implications for theory and practice are derived in the process.
This study examines (1) how grant-seeking nonprofit organizations (NPOs) position themselves and (2) whether the positioning of NPOs has any connection with their grant acquisition. A content analysis of 100 websites of Indian NPOs (phase 1) helped in generating 9 hypotheses. Furthermore, 380 websites of Indian NPOs were studied using a statistical model (phase 2). NPOs were found with two different positioning strategies: (1) reliability positioning and (2) customer orientation positioning. The reliability positioning elements were recognition, transparency, collaboration, and resources. The customer orientation positioning elements were length of service, geographic spread, service variety, depth of service, and service impact. Recognition, transparency, collaboration, resources, and service variety positively and significantly influenced NPOs’ grant acquisition, and length of service and geographic spread negatively and significantly influenced NPOs’ grant acquisition.
Blood donation services seek new strategies to improve donor relationships and increase donor retention. In this study, we propose a novel strategy that employs appeals with feedback on the use of blood donors’ past donations. We theorize that this feedback increases the perceived relationship investment and, subsequently, the quality of the relationship with the blood donation service, thereby increasing redonations. An online experiment shows the positive effect of past donation use appeals on donation intention and transmission through perceived relationship investment and relationship quality. Three field studies with Red Cross Blood Donation Services confirm the effectiveness of past donation use appeals on redonation behavior compared with thank-you appeals and with a future donation use appeal. Past donation use appeals are effective for retention purposes, especially for more experienced donors and when sent shortly after the donation. Such appeals also lead to higher reactivation rates of inactive donors. In addition to having practical implications, the study contributes to the relationship and nonprofit service literature.
The creation of fundraising scenarios for state-founded universities and the selection of the most appropriate scenario is an important factor in the successful attraction of donations. The study will provide an analysis of three possible scenarios for fundraising, which have been evaluated by seven experts: representatives of patrons as private persons and enterprises, patron's fellow, a representative of the municipality, a representative of the Ministry of Education and Science, a representative of a higher education institution and a representative of a foundation. The first scenario consists of activities aimed at maintaining the existing fundraising trends. The second scenario is associated with a greater involvement of the municipality in attracting patrons to universities, whereas the third scenario comprises a greater state involvement in attracting patrons to universities. Expert opinions were processed using the Analytic Hierarchy Process (AHP) method. Choosing the best-case scenario will create an opportunity for philanthropic organizations of 12 state-founded universities to cooperate more fully with patrons in fundraising for their universities, projects and students.
Beekeeping and the production of bee products is a specific activity in which heterogeneous factors interact.
The main factors of competitiveness in beekeeping are formed at the regional level, but they are realized on a supra-
regional basis, which is why a marketing strategy is needed to develop the potential and competitiveness of beekeeping
in the Rousse district, the starting point of which is the economic and geographical characteristic of the area. There is a
discrepancy between the natural zoning of the Danube plain and the administrative and territorial structure of the Ruse
region. The aim of the study is the interdependence between the triad "natural conditions - natural resources - economy".
One of the specific tasks is related to the analysis of beekeeping by administrative-territorial units in Ruse district, and
the second is focused on the economic and market characteristics of regional beekeeping.
The hilly nature of the relief, the relatively low altitude and the great biodiversity are the factors determining the variety
of beekeeping grazing in the region of Ruse in terms of quantity and quality. The analysis revealed that it is more
professionally oriented and managed by the national, with more efficient territorial organization and development, and
with a higher relative share of organic beekeeping. These advantages determine its higher competitiveness. Now the
district of Ruse forms more than 10% of the national production of honey (over 1000 tons per year), respectively and
in proportion to the economic effect of pollination - over BGN 100 million / year. The district offers very good
opportunities and optimal conditions for the development of api-tourism, which will diversify the beekeeping farms and
provide them with more stable and higher incomes. It has significant production, educational and innovative potential,
a solid base for the formation of a regional beekeeping cluster.
Despite the popularity of not-for-profit organizations (NFPs) as a research topic, existing comprehensive reviews are rather limited, resulting in a large body of literature that lacks integration. In this review, we summarize prior research on NFPs, focusing on four key differences between for-profit organizations and NFPs: organizational goals, financial resources, human resources, and leadership and governance. Our aims are to delineate the major inroads that have been made—not only in theory testing, but also in theory building—and to identify fruitful avenues for continued inquiry.
The introduction of digital technologies in agricultural production is one of the most important elements of strategic development in the agricultural sector and rural areas in Ukraine. In agriculture, these new technologies can modernize the industry, promoting innovation in agribusiness and creating new opportunities for rural development. The introduction of digital technologies in agriculture ensures the accuracy of measurements, speed data collection and processing. Digitization in rural areas is an inevitable process that brings a number of economic, social and environmental benefits. The immediate aim of this paper is to assess the state of implementation of digital technologies in agriculture and to examine opportunities for rural development in Ukraine. Research methods: monographic, descriptive, analysis, synthesis, induction. The results indicate that only large agricultural enterprises in Ukraine are able to implement and use digital technologies. Thus, it is proposed to create an integrated digital portal for agricultural needs, combining solutions that optimize activities of agricultural enterprises: land bank management, production, crop monitoring, warehouse, procurement and supply, equipment and repairs, logistics, inventory and finished products. The article identifies technological and human barriers to introduction of digital technologies in rural areas of Ukraine. In addition it proposes strategies for development of digital literacy and skills among rural residents in Ukraine. The results of the research can have a significant impact on the development of agriculture in Ukraine, promoting digital technologies among other agricultural enterprises and ensuring the development in rural areas, attracting additional agricultural market participants and infrastructure that provide relevant information and digital services to rural residents.
Nowadays, integrating new technology into all management processes leads to significant evolution, particularly in the logistics business, which is one of the fourth industrial of Industry 4.0. Blockchain, an emerging idea, provides for the decentralized and unchangeable storing of verified data as integrated technology. The shipping industry has had to look for innovative ways to keep the accelerated growth of the planet on track, in the face of development threats and vulnerabilities from the mild development of foreign markets, expanding protectionism, correcting natural guidance, the current episode of COVID-19 pandemics. One of the successful innovations in blockchain technologies was to promote a computerized market change. It is also making the utilization of blockchain innovation in the maritime industry will empower quicker, more secure and more productive businesses. The objective of this study is to review sustainable in supply chain management through blockchain technology in the maritime industry. This work was done by discussion of literature by classifying the application according to the operation in the shipping process.
With the popularity of user-generated content (UGC), an increasing number of studies have investigated its impact on business performance. However, prior studies were limited to a single platform and showed the effects of UGC of a platform, for example, customer textual comments or customer numeral ratings, on sales/reservation of the same platform. In practice, users often refer to a UGC, for example, Instagram, and purchase it on other platforms. To incorporate the spillover effect, we considered the restaurant industry because it has active participation across various channels. Using topic modelling, we first identified from Instagram four topics of users’ interest regarding a restaurant, such as location, nightlife, food and celebration. From fixed effects models’ estimation, we found that (a) recommendation and mention of Instagram have positive effects, and (b) comments of location and food also have positive significant fixed effects, but (c) the impact of Instagram volume is curvilinear and positive significant effect the sales. Since the curvilinear effects may come from reverse causality, that is, higher reservation, might bring more customers and comments on social networking service (SNS) (echo verse effect in our paper). Therefore, we further analysed two-way Granger causality and panel vector autoregression to identify the endogeneity, and the results showed the existing Granger causality loop between OpenTable review and Instagram post volumes.
Research suggests that children develop best in families. However, millions of children live in residential care centres worldwide. Many residential centres desire to transition their programs from a residential to a family-based model of care, but face barriers surrounding funding and donor support. Little research exists on how organisations address these concerns. The current article investigated the financial impact of transitioning to a family-based model of care, donor engagement practices used in this process, and changes in donor support resulting from the transition. Twenty-six organisations that had fully or partially transitioned their model completed a brief survey. Data revealed an initial increase in cost per child, but long-term the cost of services decreased. Further, findings suggested that involving donors early and using multiple methods and types of communication led to better long-term donor support. Based on these findings, five recommendations were made for organisations planning to transition their care model.
Cet article a pour objectif de mieux comprendre le comportement de don des alumni vis-à-vis de leurs universités dans un contexte d’ouverture croissante de fondations universitaires. Il identifie les motivations et freins aux dons et questionne plus précisément l’attachement à l’université et son effet sur les dons réalisés. Après avoir exploré la littérature sur les facteurs de don aux établissements d’enseignement supérieur et la théorie de l’attachement, une étude qualitative constituée d’entretiens a été conduite auprès de 25 anciens
étudiants d’universités. Cet article met en évidence les facteurs d’attachement et de non-attachement à l’université, liés à l’identité,
la nostalgie, la situation géographique, l’enseignement reçu et l’esprit de cohésion. Il montre qu’un alumnus attaché à son université aura tendance à davantage soutenir financièrement et bénévolement son
université. Enfin, il explique que plusieurs motivations (réciprocité, soutien à l’éducation et à l’insertion professionnelle, défiscalisation) et freins (insatisfaction, peu de moyens financiers, aide par les impôts, autres priorités) influencent le don à l’université. Les universités doivent favoriser « la pédagogie par projets » qui est un facteur de cohésion de groupe. Elles doivent également accompagner et soutenir les étudiants dans leur scolarité et insertion professionnelle
ou les impliquer davantage dans la vie universitaire afin d’améliorer l’attachement et favoriser les éventuelles donations.
The critical role of marketing in driving nonprofit performance has been recognized for decades. However, in practice, there has been a disturbingly weak acknowledgment and/or implementation of marketing practices across nonprofits to date. Marketing is often perceived as an avoidable and costly overhead. The issue is complicated by the fact that nonprofit performance is relatively difficult to measure and may often comprise of multiple tangible and intangible outcomes with different (linear and nonlinear) functional forms. Furthermore, nonprofit performance outcomes often depend on behavioral and attitudinal changes of the target segment. The authors address these challenges by presenting a methodology to link marketing efforts to nonprofits’ mission-based performance outcome(s). The authors apply their approach with data from a large nonprofit and find empirical support for the fact that marketing can play a pivotal and significant role in improving nonprofits’ mission-based performance outcomes. The findings help present a strong case for nonprofit leaders and policymakers to fund and treat marketing as a necessary investment to drive nonprofit entities’ performance. Implications for conceptual, practical, and substantive contributions and future research directions are discussed.
Identity is a useful lens to understand donation behavior. However, studies have typically conceptualized and examined donor identity as a generic, unidimensional concept. Through in‐depth interviews with 52 blood donors, this study sets out to discover if there is more complexity to donor identity, and what implications this might have for marketing communications, in the context of donation of the self (e.g., blood, organs, time, and effort). We use sentiment polarity and amplification analysis of inductive themes to uncover distinct patterns reflective of four different donor identities. We label these the Savior, Communitarian, Pragmatist, and Elitist, which are underpinned by theories of gift‐giving, sharing, pragmatism, and signaling, respectively. The typology offers a theory‐building mechanism to anticipate the effects of marketing stimuli on donation behavior. We conclude by presenting four theoretical propositions, for which we provide preliminary empirical evidence. The survey data is suggestive of action readiness for donation behavior when a marketing communication message is aligned with its intended donor identity.
Spendenfinanzierte NPO stehen in einem kostenintensiven Wettbewerb um Spendengelder. Im Zentrum stehen dabei meist die Gewinnung von Neuspendern und die Spenderbindung. Weniger Aufmerksamkeit wurde der Abwanderung und der Rückgewinnung von Spendern gewidmet, obwohl gerade in diesen Bereichen grosses Potenzial verborgen liegt. Insbesondere im deutschsprachigen Raum gibt es dazu kaum Untersuchungen. Auf der Grundlage einer 2010 publizierten, empirischen Studie zur Spenderabwanderung (vgl. Hunziker 2010) werden in diesem Beitrag die möglichen Abwanderungsgründe von Spendern diskutiert und klassifiziert. Darauf aufbauend werden die sechs identifizierten Typen der Spenderabwanderung präsentiert, für welche jeweils spezifische Massnahmen zur Verhinderung der Abwanderung und zur Rückgewinnung getroffen werden können. Abgewanderte Spender weisen vielfach eine positive Einstellung zu erneuten Spenden auf und können somit oft zurückgewonnen werden, wenn die NPO gezielte Rückgewinnungsmassnahmen ergreift.
The authors examine political ideology as it influences how people distribute their donations across multiple charities. Findings from five studies indicate that liberals and conservatives donate similar overall amounts of money, however, liberals tend to give to a greater number of charities, people, and causes overall while giving less to each (breadth). Conservatives tend to donate to fewer charities, people, and causes overall while giving more to each (depth). Using the Model of Moral Motives, conservatives’ endorsement of social order led to their focus on smaller groups and protecting members of these groups as they give with depth. In contrast, liberals’ endorsement of social justice led to their focus on eliminating broad inequality as they give with breadth. However, these ideological tendencies can be reversed as conservatives gave with breadth when protecting social order and liberals gave with depth when equality was restored.
Volunteers are crucial to the functioning of nonprofit organizations. Thus, researchers in various disciplines investigate volunteer performance, broadly defined as the value of individual volunteers’ activities for the accomplishment of organizational goals. Yet a comprehensive overview is still missing. To structure this fragmented literature, the systematic review presented herein covers the antecedents and dimensions of individual volunteer performance in the light of organizational success discussed in 75 academic articles. With an integrated framework of volunteer performance, derived from theoretical considerations of organizational success and the ability–motivation–opportunity framework, this article suggests a systematic classification of current scientific knowledge about the antecedents and dimensions of volunteer performance. In turn, this review offers two instructive research avenues helping to develop a holistic picture of the antecedents and dimensions of individual volunteer performance. © 2017 International Society for Third-Sector Research and The Johns Hopkins University
Spendenfinanzierte NPO stehen in einem kostenintensiven Wettbewerb um Spendengelder. Im Zentrum stehen dabei meist die Gewinnung von Neuspendern und die Spenderbindung. Weniger Aufmerksamkeit wurde der Abwanderung und der Rückgewinnung von Spendern gewidmet, obwohl gerade in diesen Bereichen grosses Potenzial verborgen liegt. Insbesondere im deutschsprachigen Raum gibt es dazu kaum Untersuchungen. Auf der Grundlage einer 2010 publizierten, empirischen Studie zur Spenderabwanderung (vgl. Hunziker 2010) werden in diesem Beitrag die möglichen Abwanderungsgründe von Spendern diskutiert und klassifiziert. Darauf aufbauend werden die sechs identifizierten Typen der Spenderabwanderung präsentiert, für welche jeweils spezifische Massnahmen zur Verhinderung der Abwanderung und zur Rückgewinnung getroffen werden können. Abgewanderte Spender weisen vielfach eine positive Einstellung zu erneuten Spenden auf und können somit oft zurückgewonnen werden, wenn die NPO gezielte Rückgewinnungsmassnahmen ergreift.
This paper investigates the potential effect of allowing donors to target voluntary giving to specific government organizations on government’s ability to generate additional revenues. We design a ‘real donation’ lab experiment to compare giving to general revenue with donor-targeted giving to specific causes. Results show that granting donors control over the use of their funds more than doubles giving to government. A comparison with private organizations that serve similar functions shows that targeting significantly shrinks the disadvantageous gap in voluntary contributions to government. We argue that creating new mechanisms to facilitate voluntary giving has the potential to enhance revenue during fiscal crisis, especially when donations can be targeted for specific programs.
Spurred by the consumer demand for companies to be socially responsible, cause-related marketing (CM), in which fund raising for a cause is tied to purchase of a firm's products, has become popular in recent years. The authors demonstrate the conditions in which CM campaigns that allow consumers to choose the cause that receives the donation lead to greater consumer support than those in which the company determines the cause. They show that choice in this context is helpful as long as it increases consumers' perception of personal role in helping the cause. Specifically, allowing consumers to select the cause in a CM campaign is more likely to enhance perceived personal role and, thus, purchase intentions (1) for those consumers who are high (vs. low) in collectivism and (2) when the company and causes have low (vs. high) perceptual fit. Finally, the authors show that under certain conditions, choice may have a negative impact on perceived personal role and consumer support of CM campaigns.
Firms are challenged to improve the effectiveness of cross-selling campaigns. The authors propose a customer-response model that recognizes the evolvement of customer demand for various products; the possible multifaceted roles of cross-selling solicitations for promotion, advertising, and education; and customer heterogeneous preference for communication channels. They formulate cross-selling campaigns as solutions to a stochastic dynamic programming problem in which the firm's goal is to maximize the long-term profit of its existing customers while taking into account the development of customer demand over time and the multistage role of cross-selling promotion. The model yields optimal cross-selling strategies for how to introduce the right product to the right customer at the right time using the right communication channel. Applying the model to panel data with cross-selling solicitations provided by a national bank, the authors demonstrate that households have different preferences and responsiveness to cross-selling solicitations. In addition to generating immediate sales, cross-selling solicitations also help households move faster along the financial continuum (educational role) and build up goodwill (advertising role). A decomposition analysis shows that the educational effect (83%) largely dominates the advertising effect (15%) and instantaneous promotional effect (2%). The cross-selling solicitations resulting from the proposed framework are more customized and dynamic and improve immediate response rate by 56%, long-term response rate by 149%, and long-term profit by 177%.
A recurring question in the literature concerning diversification is what is the minimum number of securities required to achieve adequate diversification. The problem is that studies on this topic assume equally distributed holdings. In reality, portfolios are not evenly divided. The purpose of this paper is to evaluate the ability of five different measures of diversification to provide meaningful information about the degree of diversification of an unevenly distributed stock portfolio. The complement of the Herfindahl index was found to be the best of the five measures and its explanatory power was deemed to be adequate for general use.
It is becoming increasingly apparent from the literature that marketers need to consider customer-level information when they
generate a marketing strategy for the firm. In this article, the authors develop a customer-focused framework that uses a
marketing strategy with an overall objective of maximized financial performance. This strategy is driven by seven customer-level
marketing tactics and shows how actual customer data can be used to generate an actionable marketing strategy leading to optimal
levels of profitability, customer equity, and shareholder value. In addition, the authors discuss a successful implementation
of this strategy for several business-to-business and business-to-consumer firms and offer insights as to how to customize
an implementation strategy for any firm, along with presenting potential challenges a firm may encounter during the implementation
process. Several suggestions for future research are offered to explore and harness this newly available evidence.
The authors examine the effect of relational constructs (e.g., satisfaction, trust, and affective and calculative commitment) on customer referrals and the number of services purchased, as well as the moderating effect of age of the relationship on these relationships. The research reported, based on data obtained from a large sample of customers of an insurance company, combines archival and survey data. The results provide evidence that supports the moderating effect of relationship age on the relationship between satisfaction, affective and calculative commitment, and the number of services purchased.
The authors examine the influence of customer future-focused considerations, over and above the effects of satisfaction, on the customer's decision to discontinue a service relationship. The authors find that expected future use and anticipated regret infiuence this decision. Understanding and managing these future-focused considerations is critical to successfui dynamic customer reiationship management.
Endogeneity arises for numerous reasons in models of consumer choice. It leads to inconsistency with standard estimation methods that maintain independence between the model's error and the included variables. The authors describe a control function approach for handling endogeneity in choice models. Observed variables and economic theory are used to derive controls for the dependence between the endogenous variable and the demand error. The theory points to the relationships that contain information on the unobserved demand factor, such as the pricing equation and the advertising equation. The authors' approach is an alternative to Berry, Levinsohn, and Pakes's (1995) product-market controls for unobserved quality. The authors apply both methods to examine households' choices among television options, including basic and premium cable packages, in which unobserved attributes, such as quality of programming, are expected to be correlated with price. Without correcting for endogeneity, aggregate demand is estimated to be upward-sloping, suggesting that omitted attributes are positively correlated with demand. Both the control function method and the product-market controls method produce downward-sloping demand estimates that are similar.
Fund-raising expenditures represent an important strategic decision for nonprofit managers inthe face of scarce donor resources. Privately, nonprofit managers weigh the trade-off between reaching new donors and increasing the implicit price of output to its constituents. Socially, competition among nonprofit firms for donations may produce an excessive level of fund-raising. This article empirically examines nonprofit fund-raising decisions, privately and socially, under varying market conditions. Analysis of financial data reveals that as markets become more competitive, nonprofits follow their private incentives by reducing their fund-raising expenditures. However, the author finds evidence that, collectively, nonprofits may spend an inefficiently high share of their revenues on fund-raising. As such, the author offers alternatives to the common practice of collective fund-raising through institutions such as the UnitedWay. Implications of the study include increasing price transparency to improve market discipline or raising legal and financial barriers to entry.
This study measures the construct validity of an objective (entropy) approach to measurement of diversification strategy. Results indicate strong convergent, discriminant and criterion-related validity for the entropy measure of diversification. In particular, support for the entropy measure of diversification strategy was demonstrated through associations with the Rumelt subjective measure of diversification (convergent validity); size, debt and R&D intensity (discriminant validity); and accounting and market-based performance (criterion-related validity). Using structural equations modeling, the study reports strong standardized validity coefficients with a diversification factor (0.87 for the entropy and 0.94 for Rumelt's measures). The objective (SIC count) measure exhibits a low standardized validity coefficient (0.44) with the diversification factor. In a discriminant validity test, 70 percent of the variance in the entropy measure is unique to diversification while only 2.8 percent and 7.6 percent are unique to leverage and size, respectively. However, only 6.3 percent of the variance in the SIC count measure is unique to diversification. The study suggests that it may be more appropriate to use the diversification factor with both the entropy and Rumelt subjective measures for maximum accuracy (however, using either alone would be acceptable). Also, the results suggest that the SIC measure may be appropriate in more limited circumstances.
The need to understand the relationships among customer metrics and profitability has never been more critical. These relationships are pivotal to tracking and justifying firms' marketing expenditures, which have come under increasing pressure. The objective of this paper is to integrate existing knowledge and research about the impact of customer metrics on firms' financial performance. We investigate both unobservable or perceptual customer metrics (e.g., customer satisfaction) and observable or behavioral metrics (e.g., customer retention and lifetime value). We begin with an overview of unobservable and observable metrics, showing how they have been measured and modeled in research. We next offer nine empirical generalizations about the linkages between perceptual and behavioral metrics and their impact on financial performance. We conclude the paper with future research challenges.
Reflecting the importance of variety-seeking in consumer choice, there has been an explosion of research in the marketing literature on this topic in the past decade. The goal of this paper is to provide an integrative review of the key findings. In particular, a conceptual, integrating framework for understanding the reasons why consumers seek variety is presented. Within this context, the implications of this research for retail and service management are discussed as well as a review of the measurement tools and predictive models of variety-seeking that have been proposed in the last decade.
In this article, I introduce the user-written command craggit, which simultaneously fits both tiers of Cragg’s (1971, Econometrica 39: 829–844) "two- tier" (sometimes called "two-stage" or "double-hurdle") alternative to tobit for corner-solution models. A key limitation to the tobit model is that the probability of a positive value and the actual value, given that it is positive, are determined by the same underlying process (i.e., the same parameters). Cragg proposed a more flexible alternative that allows these outcomes to be determined by separate processes through the incorporation of a probit model in the first tier and a truncated normal model in the second. Also, tobit is nested in craggit, making the latter a popular choice among "two-tier" models. In the article, I also present postestimation syntax to facilitate the understanding and interpretation of results.
Reflecting the importance of variety-seeking in consumer choice, there has been an explosion of research in the marketing literature on this topic in the past decade. The goal of this paper is to provide an integrative review of the key findings. In particular, a conceptual, integrating framework for understanding the reasons why consumers seek variety is presented. Within this context, the implications of this research for retail and service management are discussed as well as a review of the measurement tools and predictive models of variety-seeking that have been proposed in the last decade.
Why do people give to others? One principal driver involves one's identity: who one is and how they view themselves. The degree to which identities are malleable, involve a readiness to act, and help make sense of the world have significant implications determining whether and how much people give. Drawing on the Identity-Based Motivation model (IBM; Oyserman, D. (2009). Identity-based motivation: Implications for action-readiness, procedural-readiness, and consumer behavior. Journal of Consumer Psychology, 19.), we provide a tripartite framework to help advance the research on the psychology of giving.
Intrinsic and extrinsic types of motivation have been widely studied, and the distinction between them has shed important light on both developmental and educational practices. In this review we revisit the classic definitions of intrinsic and extrinsic motivation in light of contemporary research and theory. Intrinsic motivation remains an important construct, reflecting the natural human propensity to learn and assimilate. However, extrinsic motivation is argued to vary considerably in its relative autonomy and thus can either reflect external control or true self-regulation. The relations of both classes of motives to basic human needs for autonomy, competence and relatedness are discussed.
Corporate volunteering programs are important channels for expressing care and compassion, but little research has examined when and why employees sustain involvement. Integrating work design and volunteering theories. I introduce a model that explains how depleted task, social, and knowledge characteristics of jobs trigger compensatory motives during initial volunteering episodes. When these motives are fulfilled by volunteering projects, employees repeat participation, internalizing volunteer identities-contingent on pressure. matching incentives, recognition, managerial support, and targeted causes.
Journal of Democracy 6.1 (1995) 65-78
As featured on National Public Radio, The New York Times, and in other major media, we offer this sold-out, much-discussed Journal of Democracy article by Robert Putnam, "Bowling Alone." You can also find information at DemocracyNet about the Journal of Democracy and its sponsor, the National Endowment for Democracy.
Many students of the new democracies that have emerged over the past decade and a half have emphasized the importance of a strong and active civil society to the consolidation of democracy. Especially with regard to the postcommunist countries, scholars and democratic activists alike have lamented the absence or obliteration of traditions of independent civic engagement and a widespread tendency toward passive reliance on the state. To those concerned with the weakness of civil societies in the developing or postcommunist world, the advanced Western democracies and above all the United States have typically been taken as models to be emulated. There is striking evidence, however, that the vibrancy of American civil society has notably declined over the past several decades.
Ever since the publication of Alexis de Tocqueville's Democracy in America, the United States has played a central role in systematic studies of the links between democracy and civil society. Although this is in part because trends in American life are often regarded as harbingers of social modernization, it is also because America has traditionally been considered unusually "civic" (a reputation that, as we shall later see, has not been entirely unjustified).
When Tocqueville visited the United States in the 1830s, it was the Americans' propensity for civic association that most impressed him as the key to their unprecedented ability to make democracy work. "Americans of all ages, all stations in life, and all types of disposition," he observed, "are forever forming associations. There are not only commercial and industrial associations in which all take part, but others of a thousand different types -- religious, moral, serious, futile, very general and very limited, immensely large and very minute. . . . Nothing, in my view, deserves more attention than the intellectual and moral associations in America."
Recently, American social scientists of a neo-Tocquevillean bent have unearthed a wide range of empirical evidence that the quality of public life and the performance of social institutions (and not only in America) are indeed powerfully influenced by norms and networks of civic engagement. Researchers in such fields as education, urban poverty, unemployment, the control of crime and drug abuse, and even health have discovered that successful outcomes are more likely in civically engaged communities. Similarly, research on the varying economic attainments of different ethnic groups in the United States has demonstrated the importance of social bonds within each group. These results are consistent with research in a wide range of settings that demonstrates the vital importance of social networks for job placement and many other economic outcomes.
Meanwhile, a seemingly unrelated body of research on the sociology of economic development has also focused attention on the role of social networks. Some of this work is situated in the developing countries, and some of it elucidates the peculiarly successful "network capitalism" of East Asia. Even in less exotic Western economies, however, researchers have discovered highly efficient, highly flexible "industrial districts" based on networks of collaboration among workers and small entrepreneurs. Far from being paleoindustrial anachronisms, these dense interpersonal and interorganizational networks undergird ultramodern industries, from the high tech of Silicon Valley to the high fashion of Benetton.
The norms and networks of civic engagement also powerfully affect the performance of representative government. That, at least, was the central conclusion of my own 20-year, quasi-experimental study of subnational governments in different regions of Italy. Although all these regional governments seemed identical on paper, their levels of effectiveness varied dramatically. Systematic inquiry showed that the quality of governance was determined by longstanding traditions of civic engagement (or its absence). Voter turnout, newspaper readership, membership in choral societies and football clubs -- these were the hallmarks of a successful region. In fact, historical analysis suggested that these networks of organized reciprocity and civic solidarity...
It is a common trend in the retail industry for catalog retailers to mail multiple catalogs, each promoting different product categories. The existing catalog mailing models do not address the issue of optimizing multi-category catalog mailing. We address this research gap by introducing a model that integrates the when and what components of a customer's purchase decision into the how much component (number of catalogs) of a firm's cross-selling strategy. In addition to comparing the impact of category-specific versus full product catalogs in generating sales in a specific category, the study also finds relative impacts of various category-specific catalogs. We jointly estimate the probability of purchase and purchase amounts in multiple product categories by using multivariate proportional hazard model (MVPHM) and a regression based purchase amount model in a Hierarchical Bayesian framework. The model accounts for unobserved heterogeneity, and uses a control function (CF) approach to account for endogeneity in catalog mailing. The results from the Genetic Algorithm (GA) based optimization suggest that the catalog mailing policy as per the proposed model would be able to generate 38.4 percent more customer lifetime value (CLV) from a sample of 10 percent of the households as compared to the current catalog mailing policy of the retailer by reallocation of the catalogs across customers and mailing periods based on their propensity to buy.
People who make regular and significant donations to charity normally give to more than one organization, and in over three quarters of all cases they support substantially different types of cause (e.g., a human service charity in conjunction with an animal charity). Unfortunately, nothing is known about the antecedents of donors' decisions to give simultaneously to different genres of cause. The present research examined this matter in relation to a person's “main” charity (i.e., that to which the individual had given the most money during the previous 12 months) and their “second” charity (i.e., that to which the donor had given the next highest amount). Only people who had made sizeable donations to their main and second charities were included in the investigation. The study queried the stimuli that triggered support for a donor's main charity and second charity, and the motives behind decisions to give to particular kinds of cause.
I investigate how social embeddedness affects an organization's acquisition and cost of financial capital in middle-market banking-a lucrative but understudied financial sector. Using existing theory and original fieldwork, I develop a framework to explain how embeddedness can influence which firms get capital and at what cost. I then statistically examine my claims using national data on small-business lending. At the level of dyadic ties, I find that firms that embed their commercial transactions with their lender in social attachments receive lower interest rates on loans. At the network level, firms are more likely to get loans and to receive lower interest rates on loans if their network of bank ties has a mix of embedded ties and arm's-length ties. These network effects arise because embedded ties motivate network partners to share private resources, while arm's-length ties facilitate access to public information on market prices and loan opportunities so that the benefits of different types of ties are optimized within one network. I conclude with a discussion of how the value produced by a network is at a premium when it creates a bridge that links the public information of markets with the private resources of relationships.
This article examines the impact Of social capital on philanthropy. Based on extensive information on individuals' embeddedness in various dimensions of social capital gathered in the Social Capital Community Benchmark Survey, two measures Of social capital are extracted from the data via factor analysis. One relates to individuals' associational networks; the second relates to their trust in others and in their community. These measures are then incorporated into models of religious giving, secular giving, and volunteering. The estimates confirm the importance of social capital in explaining the generosity of individuals. When social capital is included in giving equations, the direct influences of human capital (education) and religiosity fall, raising the question of whether previous understanding of their importance as determinants of giving and volunteering was overstated or, alternatively, whether the extent to which religion and education foster personal philanthropy by fostering associational networks and norms of trust and cooperation has been under-appreciated.
Much empirical work in the social-movements literature has focused on the role of social ties in movement recruitment. Yet these studies have been plagued by a troubling theoretical and empirical imprecision. This imprecision stems from three sources. First, these studies are generally silent on the basic sociological dynamics that account for the reported findings. Second, movement scholars have generally failed to specify and test the precise dimensions of social ties that seem to account for their effects. Finally, most studies fail to acknowledge that individuals are embedded in many relationships that may expose the individual to conflicting pressures. This article seeks to address these shortcomings by means of an elaborated model of recruitment that is then used as a basis for examining the role of social ties in mediating individual recruitment to the 1964 Mississippi Freedom Summer Project.
The phenomenon of cross-buying by consumers enables retailers to cross-sell their products and increase revenue contribution from existing customers. The effectiveness of cross-selling can be greatly improved by identifying the drivers of cross-buy and using them to target the right customers. In this study we identify exchange characteristics such as average interpurchase time, ratio of product returns, and focused buying, and product characteristics such as category of first purchase, as important drivers of cross-buy. The impact of marketing efforts of the firm on cross-buy is also identified. The results of the study have important implications for academicians in understanding what drives cross-buying as well as practitioners to help design more effective cross-selling strategies.
The foundation for a model of motivational synergy is presented. Building upon but going beyond previous conceptualizations, the model outlines the ways in which intrinsic motivation (which arises from the intrinsic value of the work for the individual) might interact with extrinsic motivation (which arises from the desire to obtain outcomes that are apart from the work itself). In a modification of the prevailing psychological view that extrinsic motivation undermines intrinsic motivation, this conceptualization proposes that certain types of extrinsic motivation can combine synergistically with intrinsic motivation, particularly when initial levels of intrinsic motivation are high. Such synergistic motivational combinations should lead to high levels of employee satisfaction and performance. Two mechanisms are proposed for these combinations: extrinsics in service of intrinsics, and the motivation-work cycle match. Personality and work-environment influences on motivation are discussed, and implications are outlined for management practice and management development.
A probabilistic model of consumer purchase behavior for frequently purchased, low cost items. The concept of maximum entropy is used to specify the model. The only empirical data required are market shares; all other brand selection statistics, such as repeat and switch rates, are derived quantities.
While an extensive literature examines the diversification-performance relationship, little agree- ment exists concerning the nature of this relationship. Both theoretical and empirical disagree- ments abound. This study synthesizes findings from three decades of research to address major theoretical issues that remain open to debate. We derive three competing models from the literature and empirically assess these using meta-analytic data drawn from 55 previously published studies. The results of our tests indicate that moderate levels of diversification yield higher levels of performance than either limited or extensive diversification. Thus, we provide support for the curvilinear model; that is, performance increases as firms shift from single- business strategies to related diversification, but performance decreases as firms change from related diversification to unrelated diversification. The results also indicate major effects from variation in diversification and performance operationalizations. Copyright © 2000 John Wiley & Sons, Ltd.
Using a sample of 645 nonprofit organizations in Canada, the authors construct and validate a regression model to explain predisposition to collaborate. Organizational factors such as size and type (feminist or not) were found to be related to the extent of formal collaborative activity. However, the strength of these factors as predictors of behavior was amplified or reduced by the intervening perception of the impact of environmental changes. In addition, the perception of these pressures was shown to intensify the motivation to collaborate, which in turn increases the probability of engaging in formal interorganizational activity. This study contributes to the body of knowledge about collaboration because previous research has not investigated the influence of a combination of factors on collaborative behavior.
This paper argues that it is important to choose the right donors to recruit, in order to boost average lifetime donation values. This choice needs to be made by making decisions, before donor recruitment, based on data that are available in the market. A case history is shown, based on a group of charities asking for cash donations, to demonstrate how such decisions may be reached. Finally, there is a discussion about implications for direct mail, other recruitment media, and for charities' fundraising organisations.Copyright © 2000 Henry Stewart Publications.
Several industrial organization studies, using diversification index measures, examined corporate diversification and economic performance and failed to find any significant relationship between them. Rumelt and other strategy researchers used a semisubjective classification scheme and uncovered a systematic relationship between diversification strategies and performance. This study combines the strengths of the index approach, namely, simplicity, objectivity and replicability, with the essential richness of Rumelt's methodology. Using the Jacquemin-Berry entropy measure of diversification and the line-of-business data, this study finds that firms with predominantly related diversification show significantly better profit growth than firms with predominantly unrelated diversification.
The issue of why individuals choose to support charity has been the focus of considerable research in the disciplines of economics, psychology, social psychology, sociology, anthropology and more recently, management and marketing. This paper draws together extant work, developing a content model of giving behavior that fundraisers may use to inform their professional practice. A number of specific propositions are developed from the literature to assist in this goal. The paper provides summary tables of existing empirical studies categorized by the dimensions of the model, explores ambiguity in research findings, and concludes by highlighting opportunities for further research
Copyright © 2007 John Wiley & Sons, Ltd.
The authors evaluate the usefulness of customer lifetime value (CLV) as a metric for customer selection and mar-keting resource allocation by developing a dynamic framework that enables managers to maintain or improve cus-tomer relationships proactively through marketing contacts across various channels and to maximize CLV simulta-neously. The authors show that marketing contacts across various channels influence CLV nonlinearly. Customers who are selected on the basis of their lifetime value provide higher profits in future periods than do customers selected on the basis of several other customer-based metrics. The analyses suggest that there is potential for improved profits when managers design resource allocation rules that maximize CLV. Managers can use the authors' framework to allocate marketing resources efficiently across customers and channels of communication.
Peer to peer (P2P) microfinance connects philanthropic citizens with poor entrepreneurs in the developing world. Although its popularity has grown exponentially with the creation of several competing online platforms, very little is known about how individual lenders behave and whether their priorities differ from those of traditional development practitioners. This paper presents evidence on how individual lenders choose between borrowers, and how lenders' preferences relate to the objectives of the microfinance sector. Using data from Kiva.org, we present estimates of the impact of publicly visible project characteristics on funding speed. Results suggest that Kiva lenders rationally consider indicators of the likelihood of repayment as well as borrowers' need. Smaller loans, groups and women get funded faster as do loans to sectors of activity with low entry costs. Meanwhile, loans requested to finance education and health projects or those advertised by NGOs with better risk ratings, and lower default and delinquency rates, fund faster. The results imply that policy makers and practitioners who seek to use microfinance as a poverty alleviation tool should invest in the P2P approach.
One hundred and fifty-eight bankers, accountants and corporate lawyers, aged under 40 years, earning more than £50,000 annually and working in the City of London were questioned about their attitudes and behaviour in relation to charitable giving. A conjoint analysis of the respondents' preferences revealed strong predilections for certain types of charitable organisation; for ‘social’ rewards in return for donating (invitations to gala events and black tie dinners for example); and for well-known charities with established reputations. ‘Planned giving’ whereby donors receive tax breaks and other financial incentives to donate (as increasingly practised in the USA) did not represent a significant inducement to give so far as this particular sample was concerned. Overall the results suggest that young affluent male City employees constitute a distinct market segment for charity fundraisers, with unique characteristics that need to be addressed when developing donor products. Copyright © 2004 Henry Stewart Publications
Herniter’s entropy model for brand purchase behavior [see J. D. Herniter, J. Marketing Res. 10, 361-375 (1973)] has been generalized for Renyi’s measure of entropy which is a more general concept than Shannon’s measure of entropy used by Herniter and which includes Shannon’s measure as a limiting case. The generalized model considered here is more flexible than Herniter’s model sine it can give different marketing statistics for different products and it can give these statistics even when only some of the brands are considered.
In a relational approach to fundraising, nonprofit-making organisations have the task of developing profitable relationships with their supporters. This approach requires the definition of ‘lifetime value’ in order to assess its performance.
Yet the paradox of calculating a lifetime value is that the only accurate definition of any particular individual's value can be made once they are no longer a donor – when they have died or have stopped giving. At this point they may appear of no use. However, it is by understanding past donors that present donors can be understood in terms of their existing and potential ongoing value.
This paper, building on recent debate and research within the sector,[Sargeant, A. and McKenzie, J. (1998) ‘An Investigation of Donor Lifetime Value’, Paper presented to ICFM Conference, University of Warwick.] refers to the practicalities of creating and using not one, but a variety of measures from information sources that exist within such organisations. The paper specifically explores the way measures can be created and used. It raises a number of the practical issues involved in terms of accounting definitions and information availability. Understanding and using the value measures of supporters are key to ensuring that this relationship is dealt with in the most effective way for the organisation. Copyright
Dramatic increases in an organization's revenue may be achieved through comparatively modest increases in donor loyalty. To achieve such increases, it is necessary to move away from what the author calls a focus on transactions to a focus on relationships to minimize donor defection.
Many service organizations have embraced relationship marketing with its focus on maximizing customer lifetime value. Recently, there has been considerable controversy about whether there is a link between customer satisfaction and retention. This research question is important to researchers who are attempting to understand how customers' assessments of services influence their subsequent behavior. However, it is equally vital to managers who require a better understanding of the relationship between satisfaction and the duration of the provider-customer relationship to identify specific actions that can increase retention and profitability in the long run. Since there is very little empirical evidence regarding this research question, this study develops and estimates a dynamic model of the duration of provider-customer relationship that focuses on the role of customer satisfaction.
This article models the duration of the customer's relationship with an organization that delivers a continuously provided service, such as utilities, financial services, and telecommunications. In the model, the duration of the provider-customer relationship is postulated to depend on the customer's subjective expected value of the relationship, which he/she updates according to an anchoring and adjustment process. It is hypothesized that cumulative satisfaction serves as an anchor that is updated with new information obtained during service experiences. The model is estimated as a left-truncated, proportional hazards regression with cross-sectional and time series data describing cellular customers perceptions and behavior over a 22-month period.
The results indicate that customer satisfaction ratings elicited prior to any decision to cancel or stay loyal to the provider are positively related to the duration of the relationship. The strength of the relationship between duration times and satisfaction levels depends on the length of customers' prior experience with the organization. Customers who have many months' experience with the organization weigh prior cumulative satisfaction more heavily and new information (relatively) less heavily. The duration of the service provider-customer relationship also depends on whether customers experienced service transactions or failures. The effects of perceived losses arising from transactions or service failures on duration times are directly weighed by prior satisfaction, creating contrast and assimilation effects.
How can service organizations develop longer relationships with customers? Since customers weigh prior cumulative satisfaction heavily, organizations should focus on customers in the early stages of the relationship—if customers' experiences are not satisfactory, the relationship is likely to be very short. There is considerable heterogeneity across customers because some customers have a higher utility for the service than others. However, certain types of service encounters are potential relationship “landmines” because customers are highly sensitive to the costs/losses arising from interactions with service organizations and insensitive to the benefits/gains. Thus, incidence and quality of service encounters can be early indicators of whether an organization's relationship with a customer is flourishing or in jeopardy. Unfortunately, organizations with good prior service levels will suffer more when customers perceive that they have suffered a loss arising from a service encounter—due to the existence of contrast effects. However, experienced customers are less sensitive to such losses because they tend to weigh prior satisfaction levels heavily.
By modeling the duration of the provider-customer relationship, it is possible to predict the revenue impact of service improvements in the same manner as other resource allocation decisions. The calculations in this article show that changes in customer satisfaction can have important financial implications for the organization because lifetime revenues from an individual customer depend on the duration of his/her relationship, as well as the dollar amount of his/her purchases across billing cycles.
Satisfaction levels explain a substantial portion of explained variance in the durations of service provider-customer relationships across customers, comparable to the effect of price. Consequently, it is a popular misconception that organizations that focus on customer satisfaction are failing to manage customer retention. Rather, this article suggests that service organizations should be proactive and learn from customers before they defect by understanding their current satisfaction levels. Managers and researchers may have underestimated the importance of the link between customer satisfaction and retention because the relationship between satisfaction and duration times is very complex and difficult to detect without advanced statistical techniques.
In the last decade, marketers have primarily focused on keeping customers. Only recently have they become aware that creating value by cross-selling additional services is also an important aspect of customer relationship management. In this article we investigate how satisfaction and payment equity, defined as the perceived fairness of the price, affect cross-buying at a multiservice provider. We also consider its competitors’ performance on these factors. Our results show that the effect of satisfaction differs between customers with lengthy and short relationships. It also shows that payment equity negatively affects cross-buying for customers with long relationships. However, if the prices of the supplier are perceived as fairer than the prices of the competitor, the customers’ probability of cross-buying increases.
More than 200 donors participated in a framed field experiment which consisted of a series of decisions about how to divide a gift between a set of similar charities. Most subjects simultaneously gave to multiple charities with similar missions even when the social benefit of gifts to different charities were not equal, as proxied by the matching rates applied to subjects' gifts. Taking each subject's preferences over the set of charities as given, these choices resulted in substantial inefficiencies: subjects forfeited social surplus (matching funds) equal to 25% of the value of their gifts. Suggestive evidence indicates that warm glow utility derived from the act of making a gift, which can lead to a love of variety even among similar charities, and risk aversion over the social value of charitable gifts are both important factors motivating donors who make socially inefficient gifts. Additionally, few subjects were willing to pay for information that could have enabled them to increase the social benefit of their gifts, although many of these subjects also forfeited potential personal gains in an investment decision, casting some doubt on this interpretation. The possibility that the personal value of information might not be equal to the social value might help explain why there are so few rigorous evaluations of aid programs: such evaluations are costly to charities and might not be valued by donors.
The magnitude of the interaction effect in nonlinear models does not equal the marginal effect of the interaction term, can be of opposite sign, and its statistical significance is not calculated by standard software. We present the correct way to estimate the magnitude and standard errors of the interaction effect in nonlinear models.
Philanthropy is one of the enduring areas of economic research. Why would people work hard only to give their earnings away? The paper explores the theoretical foundations, as well as the empirical and policy research on philanthropy. This paper reviews over 25 years worth of economic research, and points to the many challenging new questions that remain.
A theoretical model is provided in which an individual's social network enhances the consumption benefits from the public good. We find conditions under which investments in network enhancing infrastructure would encourage individuals to donate time and money to charity. An empirical investigation of the link between networks and private philanthropy is undertaken using the Canadian National Survey of Giving, Volunteering and Participating. We find strong evidence that networks promote donations of time and money.
This research examines the combined influence of three causal mechanisms shaping interpersonal dynamics. Sharing a demographic characteristic has been shown to strengthen a relationship between people. The initial explanation for this positive effect emphasized the importance of individual preferences for social contact. Similar people share common interests, which makes them more attractive as exchange partners. More recent explanations have highlighted the important role of identification and competition. Identification increases the tendency for strong ties to develop among similar people, while competition reduces that tendency. I argue that tie strength is a function of all three mechanisms: a baseline level of interpersonal attraction, a positive identification effect, and a negative competition adjustment. Identification and competition vary with the number of people sharing the focal attribute to define a predictable association between sharing the focal attribute and the strength of a network connection. Predictions are tested with tenure and tie-strength data from a small research and development firm. Analysis indicates that having the same tenure has the predicted effect on communication frequency. The implications of the findings are discussed for homophily research in particular and demography research in general.
The concept of embeddedness has general applicability in the study of economic life and can alter theoretical and empirical approaches to the study of economic behaviors. Argues that in modern industrial societies, most economic action is embedded in structures of social relations. The author challenges the traditional economic theories that have both under- and oversocialized views of the conception of economic action and decisions that merge in their conception of economic actors atomized (separated) from their social context. Social relations are assumed to play on frictional and disruptive, not central, roles in market processes. There is, hence, a place and need for sociology in the study of economic life. Productive analysis of human action requires avoiding the atomization in the extremes of the over- and undersocialized concepts. Economic actors are neither atoms outside a social context nor slavish adherents to social scripts. The markets and hierarchies problem of Oliver Williamson (with a focus on the question of trust and malfeasance) is used to illustrate the use of embeddedness in explicating the proximate causes of patterns of macro-level interest. Answers to the problem of how economic life is not riddled with mistrust and malfeasance are linked to over- and undersocialized conceptions of human nature. The embeddedness argument, on the contrary, stresses the role of concrete personal relations and networks (or structures) in generating trust and discouraging malfeasance in economic life. It finds a middle way between the oversocialized (generalized morality) and undersocialized (impersonal institutional arrangements) approaches. The embeddedness approach opens the way for analysis of the influence of social structures on market behavior, specifically showing how business relations are intertwined with social and personal relations and networks. The approach can easily explain what looks otherwise like irrational behavior. (TNM)