Smashing through Reporting Silos

By Duncan Rein
October 1, 2006

Organizations that evaluate online success by looking at online revenue exclusively are likely to conclude that their online efforts are more and more successful over the next several years. The Harvard Initiative on Social Enterprise estimates that up to 30% of all donations will be raised online by the Year 2010. Therefore, it is likely that all nonprofits will see their online revenue increase, whether or not they are doing a good job online.

Are these increased online donations a result of existing constituents simply migrating to an online channel, or are they the result of new constituents connecting with the organization through the web, or existing constituents reconnecting in a different way thereby building a deeper relationship with the organization? An organization cannot answer this question without an integrated reporting framework.

Furthermore, we believe that the value of online communication efforts are often under-estimated by organizations that have not instituted a framework for integrated reporting due to the hidden boost an effective online presence gives to all offline communication initiatives. Again, one can only guess and speculate as to the magnitude of this effect until an integrated reporting framework is developed.

Introduction

More than ever, it is important for non-profit organizations to be able to evaluate the success of their online efforts, as the web is becoming more central to its organization’s overall communication and fundraising strategy. As more people spend more time on the web, organizations are seeing the need to make larger investments in time and financial resources to effectively engage with this growing audience. As investments in the web grow, so will be the importance of tracking the return on these investments.

In Avoiding Information Overload – How to Effectively Use Web Analytics, I explored eight principles for instituting an effective framework for web analytics within your organization. This article outlines principles for incorporating web data with other important offline metrics to evaluate the overall success of your online presence, including approaches and methods for estimating return on investment.

Towards an Integrated Reporting Framework

While an organization’s website oftentimes serves multiple purposes, many nonprofits evaluate the overall effectiveness of their web presence primarily in terms of online revenue. A report may be generated from an online giving system or an online shopping cart, and total online revenue is then calculated. This is then seen as the primary measure of success for the web. If online revenue is going up, that’s a good thing. If it’s going down, then that’s a bad thing.

Certainly, online revenue is a very important metric, and in many ways it can be seen as a proxy for how successful a website is. To take an extreme example, an unattractive website, with poor usability, which doesn’t effectively communicate the organization’s mission and vision, which doesn’t clearly communicate the need, doesn’t present clear giving opportunities, and is built on an unreliable technology is unlikely to generate a lot of revenue. Improvements to the website are likely to increase online transactions. Indeed, Silas Partners has seen many examples of a client’s online revenue double or triple overnight after a new and improved website is launched.

However, while online revenue is an important metric, it should not be seen as the sole measure of success for an organization’s web presence. Rather, efforts should be made to evaluate the success of the web at an organizational level in the context of an integrated reporting framework.

Effort should be made to evaluate the success of the web at an organizational level in the context of an integrated reporting framework.

This is in recognition of the reality that while it’s easy for organizations to work in silos, individual constituents see their interactions through different channels through the lens of their relationship with the organization as a whole. To take a simple hypothetical example, a committed church member hears a powerful message from a national broadcast ministry on the radio while driving to work. At the end of the broadcast, he is encouraged to visit the organization’s website, which he does when he arrives at his office. While on the website, he decides to purchase an audio series related to the message he just heard, while also sending the link of the website to five of his friends.

Which channel should get “credit” for this transaction? The radio program or the website? The answer is that both are responsible. Without the radio program, the new constituent would likely have never made it to the website. Once there, the intuitive navigation made it easy for him to find resources he was interested in. The combination of these two channels, working in tandem, led to deeper engagement with the organization.

Alternatively, a relationship could begin on the web and then flow into offline channels. To take another hypothetical example, a college student searching for answers goes to Google and types in “Meaning of Life.” He comes across the website of the same broadcast ministry. Intrigued, he listens to a message online, and is so moved by what he is hearing that he sits in front of his computer for the next five hours and listens to ten more messages. Discovering on the website that there is a listener conference coming up in his area, he decides to attend. At the conference, he continues to grow in his newfound faith, and in gratitude he commits to becoming a $30 per month donor.

Again, we return to the question of which channel should get “credit” for this transaction. The website? Or the listener event? Again, the answer is both. The two channels, working in tandem, both contributed to the ministry in this young man’s life, as well as the new relationship that was formed with the organization.

Barriers to an Integrated Reporting Framework

So it is clear that while online revenue is an important metric, it does not tell the whole story. In the first example, a siloed approach to reporting would count the transaction as an online transaction, failing to take into account the role the radio program played in driving the listener to the website. In the second example, a siloed approach to reporting would attribute the monthly donation to the listener conference, failing to take into account the role the web played in driving the college student to come to the listener conference.

While conceptually these ideas are relatively simple, in practice, there are challenges associated with an organization developing a more integrated reporting framework. First, organizational silos contribute to reporting silos. Direct response departments within an organization, or direct mail agencies who are judged by the revenue generated by a direct mail program, are oftentimes hesitant to aggressively drive people to the web for fear that the “mail numbers” will go down. Web departments or web agencies that are focused on an organization’s online communication efforts, oftentimes do not have visibility into an organization’s database of record and can only report on revenue that is transacted through the website.

It is clear that while online revenue is an important metric, it does not tell the whole story.

In addition to organizational challenges, there are oftentimes technological barriers as well, as web platforms are disconnected from an organization’s primary database of record. Many organizations do not have a sense for the degree of overlap between their online donors and their offline donors. Since the data is siloed, this leads naturally to siloed reporting.

Finally, developing an integrated reporting framework is much more challenging and more work than a siloed approach. In a world of competing priorities, limited resources, and the rapid change accelerated by the digital revolution, many organizations simply have not dedicated the resources necessary to bring about a more integrated approach. However, as more resources are dedicated to online communication initiatives, it will become more important to track the true impact of an organization’s web presence.

Some Nuts and Bolts for an Integrated Reporting Framework

Taking the two examples outlined previously, what are some of the technology and processes that are required to accurately capture the effect of multiple channels working together in tandem to drive a transaction?

Incorporating Source Codes into Your Web Platform

In the first example outlined above, there must be some way for the website to know that the new visitor was driven to the site by the radio. The best way to capture this information is through the use of landing pages and source codes.

For instance, the radio broadcast could provide a radio specific URL (for instance radio.broadcastministry.org). This URL could point to a special landing page targeted to listeners of the broadcast. This URL could also embed a source code into the user session. Subsequent actions, such as signing up for an email newsletter, purchasing a product, or making a donation, could then be associated with the radio source code. This would allow the organization to attribute online activity to an offline source.

One example of an organization using source codes effectively is the International Fellowship of Christians and Jews. As an example, viewers of an infomercial are given a TV specific URL:
www.wingsofeagles.tv This redirects to a URL with a source code unique to the particular TV program.

This source code carries through to all online activity. On the backend, a custom report has been written to summarize activity based on source code.

Effective use of source codes does require the use of an advanced technology platform that supports the concept of source codes. Alternatively, Google Analytics source codes can be incorporated into a website, but executing this requires some technical knowledge and access to the code of your web platform. Bottom line, investments will be required, but an organization will benefit from greater intelligence as to where activity on its website is coming from.

Attributing Offline Activity to the Web

In the second example, an offline transaction was made by a constituent who initially found the organization on the web. Capturing this information is not so much a technology issue as it is a business process issue. Quite simply, there should be some mechanism for capturing the source of this offline transaction. In this case, perhaps there is a question on the order form asking how the person heard about the event. Then, a process must be instituted, whereby the new constituent is tagged in the database of record as originating on the website, even though the transaction itself was made at the web. The database of record should then be able to report by source. In this way, a transaction can be associated with the web, even if it was not made online.

Tracking Lifetime Value

In addition to tracking discrete transactions, it is also important to incorporate a concept of lifetime value into an integrated reporting framework. For instance, in the previous example of the college student, the value attributable to the web should be more than his initial gift of $30. Each subsequent gift of $30 should also be attributed as a gift from a constituent who originated on the web. Over the course of several years, his total contribution to the ministry will be orders of magnitude greater than the initial $30 gift.

With the use of source codes, it is now possible in web advertising to not only calculate cost per click, but also cost per action or cost per donation. A simple ROI calculation can be made in which the sum or all donations attributable to the ads is divided by the cost of the advertising campaign. Oftentimes, this calculation is used to measure the success of the advertising campaign.

While this does give a good proxy for the effectiveness of the campaign, again it does not communicate the full story. Someone may have clicked on the ad, come to the website, learned more about the organization, and signed up to receive an email newsletter. Six months later, having now established a relationship with the organization, he or she may become a donor. Ideally, these transactions could be tied all the way back to the advertising campaign that initially attracted the new donor.

A dramatic example of this in the business world is an example from CareerBuilder.com, highlighted in a recent edition of Marketing Sherpa. Most employers who clicked on a web ad didn’t buy services on the first visit, leading to low ROI when measuring immediate response. As a result, CareerBuilder was getting ready to discontinue web ads altogether, but not before running a rigorous test to try to quantify long-term response.

According to CareerBuilders’ E-Commerce Marketing Manager, “For one paid search team, there was maybe $10K in immediate revenues. When we evaluated it after 15 days, it was $120K. When we looked at the delayed impact 30 days out, there was about $1.2 million. Going further out to 45 days, it was over $3 million. It blew me away when I saw this.”

Obviously, beginning to measure lifetime value of various marketing efforts requires time, patience, and even more legwork. The salient point is that oftentimes the true value of a marketing effort cannot be measured until months, or even years, after the campaign. This further reinforces the importance of consistent reporting and analysis over an extended period of time, as well as consistent business processes for capturing the source of each new constituent

Attaching a Value to Every Action

Related to the importance of not focusing exclusively on immediate response is the ability to attach a dollar value to every online action, even those which are not commerce oriented. A new visitor to a website may choose to first sign up for an email newsletter or become an online member before deciding to donate six months later. An integrated reporting framework that takes into account lifetime value will over time allow an organization to calculate the value of a new online constituent. As a back of the envelope calculation, an organization could isolate all new constituents that originated on the web and calculate the total revenue generated by that group over a period of time. This will give a ballpark estimate for the value of a new online constituent.

This can then be used to test different approaches to online marketing. For instance, many organizations who evaluate success solely on immediate response will design campaigns driving people to a giving page. A better approach may be to drive them a page where they can sign up for a free offer, and begin a relationship with a new constituent that will lead to donations and revenue down the road. A good estimate of the value of a new online constituent will be required to be able to evaluate the relative success of such a campaign.

Relation to Constituent Relationship Management

Certainly, an integrated reporting framework is one component of an integrated strategy for constituent relationship management. For an in-depth discussion of the recent collision between the web and offline constituent relationship management databases read our Intergrating the CRM and the Web white paper.

Reporting on Different Segments

Even with effective use of source codes and an integrated reporting framework, there will be value attributable to the web and other marketing channels that is not able to be captured at the point of sale. Especially in the context of an effective integrated communication strategy, a new constituent and/or a transaction may be influenced by four or five different channels working in tandem. Even if an organization does everything right, it is limited in its ability to estimate the relative effect of each channel.

In the context of an effective integrated communication strategy, a new constituent and/or a transaction may be influenced by four or five different channels working in tandem.

One way to estimate the multiplicative effect of different channels working together is to segment your database and run reports by segment. As a simple example, one could imagine creating three segments: constituents who interact with your organization exclusively through offline channels, constituents who interact exclusively through online channels, and constituents who interact through both online and offline channels.

I have encountered some people who discount the value of the web, claiming that it is simply siphoning off transactions that were previously made through offline channels. Others are convinced that every dollar of online revenue is new revenue for the organization, as it is coming from a new, younger demographic.

What is the reality for your organization? How much overlap is there between online and offline constituents? Likely, the true reality will be somewhere in the middle of the two extremes, but don’t take anyone’s word for it. Do the legwork to segment your database to ascertain the size of each of these three segments.

Once you have performed this segmentation, then measure total revenue and total activity across all channels (both online and offline) for each group of constituents. You will likely find that online constituents are more active and more engaged than those interacting exclusively through offline channels. Furthermore, you will likely find that the most active constituents are those who are interacting through both online and offline channels. Organizations that have performed this kind of analysis have found that the annual revenue per constituent for this group can be double the annual revenue per constituent for the offline only constituents. Is all of this discrepancy attributable to the web? Probably not. But it is not a stretch to imagine that interactions on the website over the course of a month made a constituent more likely to respond to a direct mail piece.

In this way, it is likely that there is a great deal of value a website brings to an organization that is not immediately obvious by looking at online giving reports. There is hidden value, which can be several times greater than the online revenue numbers themselves, as the online channel bolsters and reinforces offline communication efforts, making them more effective and maximizing the return on investments that are already being made.

If you would like to find out more about how to implement these strategies and ideas in your organization, please take a moment to let us know a little about your needs.