How silos can inhibit innovation, differentiation and lifetime value. Plan of action to destroy silos and work towards an integrated approach which maximise supporter value and employee engagement

1. Institute of Fundraising
July 2010

2. What we’ll cover
 What do I mean by silos
 How they destroy value
 Strategies for working in a more integrated way

3. Silos – what are they
• Organisational units defined by:-
• Product – cash giving, events, regular giving, payroll
giving, catalogue etc
• Function – Acquisition, retention, Campaigns,
fundraising, HR, services,
• Channel – DM, telemarketing, retail, web etc

4. Why formed
 They are an area of knowledge and expertise
 They’re accountable

5. Silos
3 different perspectives
• Organisational structure
• Marketing communications
• Customer centricity (or lack of)

6. Organisational structure
 Many nonprofits are structured with traditional
functional departments: services , fundraising, IT,
Communications, policy , finance, HR etc.
 Yet what often surprising is that a silo approach often
exists between depts that are supporter facing eg direct
marketing , campaigns and events.
 Often duplicating acquisition, over contacting
supporters, and implementing unrelated messaging.
 It can even happen within teams eg DM acquisition and
retention teams working in isolation.

7. Marketing communications
 Silos can create a fragmented approach to
communication with different functions often
implementing unrelated campaigns.
 Confusion and noise
 IMC “making all mediums of communication
work together to achieve a goal, whether its
fundraising or awareness ... it’s about creating a
complimentary and supportive environment to
achieve aims.”
 Consistent message through a variety of channels,
creates ‘halo’ effect.
 Wastage of resources – producing different
themes, propositions and visuals for
communications takes time and money.

8. Customer centricity
 The process of organising our
products channels and processes to
fit supporters needs instead of
around our dept silos
 And this way maximise their value

9. So how do silos destroy value for both
organisation and supporter

10. Fragmented communications
IMC is really important as audiences become more fragmented and the
media and channels they use become more diverse .
Eg Shelter a few years ago
 Different functions often implementing unrelated campaigns. The
communication of different messages has the potential to cause
confusion with our audiences.
 There was no potential for synergy.
 Opportunities – sat in silo – whoever picked up phone
 Could not be joined up to benefit the whole of Shelter.
 Wastage of resources – different themes, propositions and visuals

11. Innovation
 Saul Kaplan “the biggest value in creating ideas
will be found in the grey areas between sectors,
silos and disciplines.”

12. Innovation
 Cross team working gives you much stronger
possibility to produce innovation and new ideas
 Great ideas generally cut across boundaries.

13. Innovation
 Silos are far less likely to produce innovation
because staff can only offer products and
services that sit firmly in their silo.
 Great ideas that don’t sit neatly in silos can be
exploited.

14. Innovation
Charities have all this equity lying
around the place that just needs to be
combined to produce something of
value.

15. Differentiation – purple cows
“a brown Cow is a beautiful,
intriguing sight at first ….
think of how excited a five year
old child gets when they first see a
cow and then witness that
enthusiasm fading as they grow
older . What people want is a
purple cow.
Seth Godin

16. Best practice – can lead to brown cows
 Supermarkets, hotels,
 Best practice can iron out quirks, individuality
 DM prides itself on rigorous testing and best
practise
 Downside is all charities start offering similar
products
 Supporter experience remarkably similar
 However, Purple cows are risky
 But in longer term as supporter expectations,
technology and environment change – being
boring becomes the riskiest strategy.

17. And this destroys value
Leads to derivative products and offerings.
Acquisition more difficult, attrition rises
Decreases LTV

18. Silos damage acquisition, donor
development and retention

19. Acquisition
 Acquisition- is increasingly difficult,
 response rates are falling,
 acquisition costs are rising
 and rois dropping.
 We need to need to develop new products, offerings and channels
to attract new audiences. However these products or channels may
not sit in your area.
 Eg Direct marketing teams have traditionally used cash and rg
products to recruit new supporters.
 Now they are using campaigns and events offerings
 Eg Vertical rush event, campaigns, AITH

20. Donor Development
 To maximise roi you need to develop a
supporter journey approach to maximise LTV.
To do this you need to integrated approach.

21. Retention
 Rates are falling, because donors expectations
are changing and we are failing to meet their
needs.
 We need to develop messages, products ,
communications that are developed across our
organisations .

22. Resource misallocation
As fundraisers your role is to optimise your capital
and human resources to maximise income.
However if marketing investment and its
subsequent return is evaluated at dept or
product level you may be wasting resources.
True value comes from the customer – and the
business (and any metrics) must be organised
around the customer.

23. Resource misallocation
Example
You’re a DM team recruiting new supporters.
Considering inserts.
Your ‘hurdle’ rate is 2 to 1
If you get less than this the activity ceases.
First look at ‘Silo’ approach to evaluation

24. First look at ‘Silo’ approach to evaluation
Year 1Year 2Year 3 Total
RG income £50 £45 £40 £135
Investment £60 £5 £5 £70
Product RoI = 1.92 to 1 after 3 years.
Below hurdle rate
Stop doing inserts

25. Then integrated approach*
Year 1 Year 2 Year 3 Total
RG income £50 £45 £40 £135
Event income £45 £30 £25 £100
Total income £235
RG Investment £60 £5 £5 £70
E’t investment £5 £5 £5 £15
Total investment £85
Customer RoI = 2.7 to 1 after 3 years.
Above hurdle rate
Roll-out with inserts

26. Resource misallocation

27. Resource misallocation - KPIs
 Choose your KPIs carefully
 People work to the incentives and the targets they are given
– (look at what happened to the banks!)
 Each dept has its own success measures.
 Decisions are constructed from rationale positions which
individually are logical, but combined produce a
dysfunctional organisation.
 So you can end up with get wastage, duplication and low
productivity – but at dept level people are hitting kpis.
 Sometimes asking individual fundraising teams to maximise
net income can in the long term destroy value !

28. Silos can inhibit your staff’s talent and
skills
 Many of our organizational
structures are a legacy of the large
industrial companies of the past.
 Huge capital investment
 Managing ten of thousands of
staff
 Tasks broken down into simple
processes on production line
 Creativity not required
 Rigid hierarchical structures to
manage this labour
 To ensure maximum returns from
this huge capital investment.

29. Liberating talent of organisation
 Our organizations are not capital
intensive
 Value is created by the intangible
assets
 Its about attracting the best
talent and using that talent
effectively
 We now need a more
collaborative approach working
across teams
 People with different skills,
knowledge and expertise
 With a different perspectives
 Cross pollination of ideas

30. So how can you work in an
integrated way to maximise
supporter value ?

31. Customer value management (or
supporter journey approach)
 An approach that puts the customer (that
could be a company, supporter or trust ) at
centre of process – focus on their needs to
maximise value of relationship
 Maximising value will involve all depts and
divisions and collaboration is a pre-requisite

32. Build your own customer LTV models
 First evaluate current market segments and their
customer journey programmes
 Estimate their LTV
 Develop new mix of products and channels to develop
customer journey programmes to maximise LTV.
 Evaluate them, rank activity and pick those with
greatest potential to create maximum life time value,
 Test
 Measure
 Refine model

33. Build your own customer LTV models
Isn’t it complicated ?
 Often concern about how this can be done, issues
around not having sufficient customer data or having to
predict future activity.
 However, using simple assumptions does at least give
you comparative values of different groups of
customers and different supporter journey
programmes.
 Build models, test and over time, refine.

34. Benefits of this approach
 Creates a framework to work collaboratively
 Helps build buy in and team cohesion
 Creates an agreed contact plan/protocols
 Which in turn forms the basis of individual plans,
budgets and KPIs
 Now KPIs are engineer ed around what will
maximise customer life time value

35. Organisational design
 Review organisational structure – ensure
different depts and divisions are there because
they add value.
 Ditto for levels of hierarchy
 However, whatever you decide still will be need
for silo bridging strategies
 Make sure lateral working between teams is
encouraged.
 How ?

36. Culture and leadership
 Vision
 A united purpose that helps people work
together
 Values – collaborative working is one of Shelter
key values
 KPIs – develop shared metrics with other depts
to reinforce customer focus and collaborative
working

37. Evaluation*
Staff must be evaluated on collaborative working
 At interview stage
 121s
 Appraisals – part of 360 evaluation
 Job descriptions
 And part of PDPs

38. Start small
 Look at your own team first – breaking down
those internal silos
 Then look at partnership with another team
and grow from there
 Eg Shelters contact strategy grew out of
informal agreement between DM & campaigns
team.

39. Find out other teams objectives
 Find out other teams business needs
 Identify mutual interests and potential for working
collaboratively
 Offer something – make first move
eg DM team
– recruit campaigner s
- services marketing, through our F2F teams
- event recruitment
- Digital advice
- cross sell opps in telemarketing, mobile site, emails,
newsletters etc
 Encourages culture of reciprocation
 Builds trust

40. Encourage x-dept working
 A culture where staff have the freedom to
communicate with everyone
 Meaning informal as well as formal teams can be
created
 Eg Formal - Integrated messaging working group –
x divisional group with formal roles and
responsibilities, senior management buy in
documentation etc
 Eg Informal - Huddles – informal meetings called
by project managers – anyone can come along.
 Temporary teams that are created for short time to
solve a problem and then disband.

41. Encourage x-dept working
 Lunchtime seminars and presentations to
exchange information
 Team building events
 Hot desking
 Staff shadowing

42. Systems to breakdown silos
 Integrated database
 Data-captured consistently and with DP statements to
allow supporters to flow through organisation .
 Contact management – teams unlikely to share data
unless they know that ‘their’ supporters will be managed
probably.
 Contact protocols - typically these govern the frequency
and type and gaps between communications .
 Contact plans
 Supporter journey approach
 Plans budgets and KPIs which support integrated
working

43. Sell it
 Present to different parts the organisation
 Personalising approach to different depts and their
different business needs
 Individual level too
 ,People want to work this way and not be stuck in one silo
 Its more fun wording together to solve a problem
 Career development
 Fortunately seems to be the way the culture is moving too
 People want to co-create, collaborate, and share
 Internet encouraging this with social media, wikis, flickr ,
on-line platforms

44. Integrated Marketing communications
Establish proposition , visuals and creative that works for whole
organisation
 Eg Shelter
 Customer insight – focus groups
 Establish what messaging resonates
 Using this insight to create agency brief
 Five agencies pitched and came up with concepts
 Which we tested with consumers
 Brief must ensures that -
 ideas meet organisational needs – campaigning, fundraising,
 And creative idea works across different channels and mediums
 Focus on idea - not who created it
 Not just ATL agencies in pitch,

45. Use the internet to foster greater collaboration
 Increasingly not for profits are
developing online platforms where
customers can manage their
relationship
 Give supporters news, feedback and
engaging content.
 amend personal details,
 identify project interest,
 Donate, volunteer, campaign, sign
up to events,
Anywhere, 24 hours a day, 7 days a
week

46. For example
 CRUK ‘Myprojects’
 CARE ‘Mycare’
 Shelter’ myshelter’

47. In other words these platforms are
• Customer centric
• They recognise that supporters
can engage in many different
forms (donate, volunteer,
campaign etc.)
• Cuts across silos – I choose what
products I want, they are not
chosen by the dept that 'owns'
me
To create these sites depts
within the organisation have
to work collaboratively to
provide the systems and
content required.

48. Conclusion
• Silos can inhibit : -
• Innovation
• Differentiation
• Acquisition, donor development, Retention
• Misallocation of resources
• Talent and ideas not fully exploited
• Supporter engagement

49. Conclusion
• Look at :-
• Organisational structure
• Culture and values
• Integrated Marketing communications
• Focus on supporter & journey
• Think about what you individually can do
• Keep at it!
 Any questions ?
Matt Goody
mattg@shelter.org.uk