When the airlines were deregulated 25 years ago, they adopted a system known as “yield management” – offering different rates to different passengers at different times.
This allowed them to gain maximum revenue from the bulk of their available seats, yet still fly “full” by aggressive offers early and late in the process.
Cruise lines and hotels quickly followed suit. Over time they developed this system into an intricate science.
The good news is the principles of yield management are pretty straight forward, easy to understand and can be applied to the marketing challenges of nonprofits: build communication efforts by identifying the right customer and sending the right message with the right offer.
Following are steps nonprofits can take that are consistent with such high-volume, high-revenue companies:
Know your market segments
Companies using a yield management system divide their business into two basic segments; along business lines (products) and the people who buy the products (customers).
Through historical data, they align their products and customers to identify the best fit for each.
This alignment allows companies to understand their segments’ buying activities – when they buy, and how much.
And since these companies are marketing-driven, they can look at the mix of promotional efforts – timing, pricing, special offers – that deliver the best results.
In the nonprofit world, most organizations have fewer “products” or causes, but still have distinct customer segments.
Some nonprofit models use four working segments: high-value patrons, who give generously and have longer relationships; high-potential patrons, who show promise for growth; mid-level patrons; and prospects.
Even smaller nonprofits can build working demographic profiles of these segments to understand their motivations, and more importantly, how and when to reach them.
This information is critical when determining the right blend of traditional and digital media to employ.
For example, high-value patrons typically are older and less digitally connected than their younger counterparts.
There is a good chance some of these patrons – who are the financial bread and butter of the organization – may not be reached by it.
On the other hand, prospects – new to the organization – often find the quickest and easiest route to the organization through the website and social-media efforts.
Brand communication as a practical application
High-volume companies value the brand concept, but support it more practically – as a function of top-of-mind awareness.
This awareness is typically translated into a consistent presence against its segments through promotional activity.
Since consumers move in and out of buying cycles, the key to this approach is to have a regular presence in the consideration set. Said simply: out of sight, out of mind.
Nonprofits are no different. They compete for grants, contributions and audiences throughout the year, regardless of the cause.
Developing a unique position and voice in the market is critical to success, but top-of-mind plays a bigger role. In fact, most nonprofits have a unique position just by their existence.
So keeping the organization in front of key segments on a regular basis – and not just during fundraising efforts – serves their long-term interests.
Most nonprofits do not have the financial resources to run pure “brand” advertising, but all can send letters, e-mails, regular posts to their websites and Facebook pages and press releases about what they are doing, who they are serving and why it matters to the community.
Execution – a simple grid
With these principles in mind, nonprofit executives should do the following:
- 1. Take a blank piece of paper, and write your key segments at the top.
- 2. Under each segment, list their value to your organization.
- 3. Do a thumb-nail sketch of who they are – demographically, attitudinally, how they might consume media.
- 4. Consider types of messages you wish to share with them throughout the year.
- 5. Consider the best place to expose those messages for greatest impact.
At the end of this process, nonprofits will have taken a significant step toward a working yield-management strategy, and will have the foundation of their communication plan on one piece of paper.
John Klein is president of Trilithon Partners, a marketing consulting agency based in Cary, N.C.