JOURNALOF

MARKETING
MANAGEMENT

The use of marketing metrics by British fundraising

charities: a survey of current practice
Roger Bennett, London Metropoliton University, UK*

Abstract Although most large UKfundraising charities havesubstantial marketing

departments and apply high levels of sophistication to their marketing work, little
is known about how and to what extent charities measure the consequences of
their marketing activities. This empirical study sought to identify [i) the marketing
metrics that were most commonly employed within a sample of UK charitable
organisations, (ii| which metrics were regarded as the most useful, [iii) which ones
were presented to senior managements, and [iv) which were seen as the most
important when petitioning governing bodies for increases in marketing budgets.
A model was developed to explain the degrees to which charities applied various
categories of metrics, it emerged that all the charities in the sample employed at
least some basic metrics, with 19% using a wide range of measures. The extents
of the sample organisations' employment of marketing metrics were significantly
influenced by their Levels of prior investment in marketing, the magnitudes
and formality of their forward planning systems, their donor and competitor
orientations, top management demands for accountability, resource availability,
and whether a charity employed academically well-qualified marketing staff.

Keywords Charities, Performance measurement. Marketing metrics,

Accountability, Planning and control.

INTRODUCTION

Fundraising is a core activity for a typical charitable organisation, for without a

steady stream of income a charity will not be able to complete its philanthropic work.

*Correspondence details and a biography for the author arc located at the end of the article.

JOURNAL OF MARKETING MANAGEMENT, 2007, Vol. 23, No. 9-10, pp. 959-989
ISSN0267-257X print /ISSNU72-1376 online © Westburn Publishers Ltd. doi: 10.1362/026725707X250i21
960 PUISI Journal of Marketing Management, Volume 23

Effective fundraising requires, inter alia, the use of advertising, direct marketing,
public relations, image building and reputation management, and the sale of charity
branded goods. It follows that fundraising charities need to possess excellent
marketing competencies. There is evidence to suggest however that the contributions
of marketing to the well-being of British charities are not always recognised by senior
charity managements {e.g. executive boards or governing bodies) {Burnett 1986;
Clutterbuck and Dearlove 1996; Lewis et al. 1997; Bennett and Savani 2004). It seems
moreover that, as has already occurred in the commercial sector, charities are coming
under increasing pressure to justify and account for their marketing expenditures {see
Omisakin 1997; Paton 2002; Barwise and Farley 2004; Bennett and Savani 2004),
Marketing costs have risen faster than general management expenses in all sectors
{for-profit or non-profit, see Weber 2002) and this has inevitably led to a growing
interest in the measurement of the productivity, impact and value of marketing {MSI
2001). Hence marketers are increasingly required to provide hard evidence that their
activities are worthwhile and that marketing budgets are justified.
The topic of 'marketing metrics' has been the subject of a considerable amount
of academic research in recent years. However, nearly all of the studies have been
completed in the commercial rather than the non-profit sector. This is unfortunate
because registered charitable organisations now have a combined annual income
approaching £40 billion and account for 4.8% of all UK employment {www.charity-
commission.gov.uk). Also the charity sector is particularly interesting vis-a-vis the
use of marketing metrics because 'anti-marketing bias' {see below) is known to exist
within the governing bodies of many large UK charitable organisations. Accordingly,
the study reported in the present paper sought to contribute to knowledge in the
marketing metrics area by establishing (i) which metrics are most commonly used
by fundraising charitable organisations, {ii) which metrics are regarded as most
important by managers in charities' marketing departments, and {iii) which metrics
are most often presented to the very top managements of charitable organisations {cf.
Llonch et al. 2002; Ambler et al. 2002; Barwise and Farley 2004). In addition the
research attempted to identify the metrics that charity marketing managers deemed
to be most useful when petitioning senior management for increases in marketing
budgets. It also developed and tested a model to help explain the extent of a charity's
employment of marketing metrics.

The case for marketing metrics

Marketing metrics are internal and external measurements {financial or derived from
the market place) related to marketing and its links with organisational performance.
Ambler {2000a) suggested that sound marketing metrics were those which were
precise, necessary, consistent and sufficient {i.e. comprehensive) for review purposes.
They should flow directly from marketing strategy, evolve over time, be tailor-made,
and be chosen through trial, error and experience {Ambler 2000b). However, certain
key metrics will usually be of interest irrespective of the nature of the organisation
{Ambler 2000b). Allegedly, metrics facilitate the cycle of marketing analysis, planning
and control, help evaluate past performance, and assist in the comparison of one
organisation with others. In principle, the application of appropriate metrics should
enable a charity to identify the donors it wishes to keep and develop and those it ought
to discard, the costs of acquiring and managing the right type of donor {cf. Mazur
2003), and the charity's achievements relative to rival organisations in its sector.
Also it is desirable that a marketing department's employee appraisal and incentive
schemes be evaluated against measurable outcomes {Shaw and White 1999).
 Bennett The use of marketing metrics by British fund-raising charities 961

Metrics can be used to show where a charity's revenue comes from, how and why
supporters donate, why donors might give more and more often, and how current
non-supporters could be induced to start making contributions. Knowledge of these
matters is vital for maintaining cash inflows. Moreover, a reluctance to measure
marketing activities could result in campaigns and specific advertisements not being
pre-tested or their impacts evaluated {Marchand and Lavoie 1998; Rust et al. 2004).
Another reason for the rise in interest in marketing metrics has been the recognition by
a growing number of senior managers of the importance of brand equity {Ambler and
Barwise 1998), and the fact that intangible assets account for large proportions of the
worth of many organisations. Brand equity in the charity context may be described
as an organisation's ability to raise funds over and above the level it could attract as
an unbranded organisation {e.g. as The Salvation Army rather than as a common and
unfamiliar Christian charity) {cf. Clark 1999). High brand equity reduces perceived
risk in the minds of potential donors. The construct can be measured in terms of the
public's perceptual or behavioural responses to the brand, e.g., awareness, perceived
reputation, amounts donated, and supporter lifetime value.

REASONS FOR NOT USING MARKETING METRICS

The difficulties associated with the practical application of metrics to the marketing
function are frequently discussed {for details see, for example, Chakravarthy 1986;
Ambler et al. 2004; Rust et al. 2004; Wyner 2004). They include the problem of
linking current marketing activities to long-term effects, the time required to collect
and analyse complex information, the fact that attitudinal measures cannot always
be related to financial returns, and the danger that excessive accountability might
inhibit marketing creativity. Attempts at evaluating marketing performance have
been criticised for employing too many measures that are hard to compare and
which possess limited diagnostic power {Bonoma and Clark 1988), and for causing
performance to depend on the specific indicators chosen (i.e. the 'that which is
measured is that which gets done' phenomenon) {see Ambler et al. [2004] p.476
for details of relevant literature). Evans et al. {2002) noted the problem of managers
tending to measure 'that which is easy to measure' rather than that which is 'insightful'
and actually needs to be measured {p.582). It is relevant to note in this connection
that 'accounting' based marketing metrics (income, cash flow, market share, etc.)
record only the history of an organisation's performance, not its ambitions, vision,
capabilities and future potential (Chakravarthy 1986). Wyner (2004) observed how
it was often the case that the contribution of marketing to financial performance
waned during periods of rapid income growth, but intensified when revenues were
falling. Hence senior management only took notice of marketing metrics when an
organisation was already in financial difficulty (see also Rogers 2003).
The effectiveness of an awareness-raising marketing campaign can be particularly
difficult to measure. Should an exercise of this type be evaluated simply in relation
to its capacity to create immediate awareness, or should the assessment include long-
term image-building and the campaign's contribution to the attraction of fresh donors
or volunteers? A campaign might fail in respect of any one of these (measurable)
targets while succeeding in others. Over what time period should the results of the
campaign be measured? Additional problems arise with respect to the interpretation
of specific measures. For instance, market share is a frequently used metric but there
is some debate as to whether it is really associated with performance (Capon et al.
962 iisiai Journalof Marketing Management, Volume 23

1996). Rates of return on mass marketing and advertising can be extremely hard to
capture (Collins 2001), and even if they are measurable it may be difficult to make
comparisons across organisations because institutional performance intentions differ.
Customer {donor) satisfaction is often employed as a key metric; yet satisfaction
does not necessarily imply loyalty, commitment or any particular form of behaviour
{Rogers 2003). Satisfaction is commonly defined in terms of an organisation having
met or having exceeded expectations, so a reduction in expectations could increase
satisfaction {Srivastava and Reibstein 2004). Ambler {2000b) noted how a satisfaction
level of 80% would be excellent if the average for other organisations in a sector was
70%; but poor if the average among competitors was 90%. Satisfaction may have
been measured only among existing donors. Thus a charity that loses its dissatisfied
donors will find that levels of measured satisfaction increase {Srivastava and Reibstein
2004).

Anti-marketing bias
A number of researchers have suggested that anti-marketing bias is common among
the top managements of many kinds of organisation. For example. Baker and Holt
(2004) interviewed 81 senior non-marketing managers in UK companies over a
three year period concluding that the respondents tended to perceive marketers as
"unaccountable, untouchable, slippery and expensive" {p.557). The interviewees
frequently alleged that marketers were not able to demonstrate a return on investment
in the activities they controlled, used jargon that other managers could not understand,
and were not prepared to accept responsibility for failure. Marketers have been
accused moreover of not expressing marketing metrics in terms of the accounting
financial language that managers in other functional areas know and understand
{Srivastava and Reibstein 2004). Anti-marketing sentiment of this nature could result
in an organisation's top management selecting especially stringent metrics against
which it appraises marketing activities (Ambler et al. 2004).

Anti-marketing bias in chanties

It has been argued that anti-marketing bias represents a significant problem in many
large UK charitable organisations (see Burnett 1986; Clutterbuck and Dearlove
1996; Lewis et al. 1997; Bennett and Savani 2004). Some members of a charity's top
management may believe emphatically that the organisation should devote nearly all
its donor income to purely philanthropical activities, not to marketing and public
relations {Catano et al. 2001). They might assume that the media will be willing
to carry charity advertisements free-of-charge, that staff {or volunteers) in other
functional areas are competent to complete marketing assignments, and that it is easy
to find commercial sponsors for marketing campaigns {Marchand and Lavoie 1998).
A marketing department might be seen as a cost (as opposed to a revenue generating)
centre that, through its glossy promotions, expensive advertising and public relations
stunts, drains resources from charitable programmes. It might be assumed that
anything gained by one charity from a successful campaign is necessarily lost by others
and that high-profile promotions merely create among potential donors feehngs that
their contributions will be spent on additional advertising, not on beneficiaries. It is
relevant to note in this context how the UK press has routinely attacked charities for
having relatively large fundraising to total expenditure ratios {see Omisakin 1997;
Paton 2002). Margolis {2001), for instance, noted the furore surrounding the press
'expose' of the fact that in 1999 the National Society for the Prevention of Cruelty
 Bennett The use of marketing metrics by British fund-raising charities 963

to Children (NSPCC) spent more on administration and marketing than on helping

children in need. (This pattern of expenditure was in fact fully justified because the
NSPCC is basically an awareness raising institution that, ipso facto, spends large
amounts on public education campaigns.)
Complications of this nature mean that measuring and monitoring the productivity
of alternative marketing expenditures is a particularly sensitive issue for a charitable
organisation. Marketing in the commercial sector has traditionally sought to improve
sales, market share and gross margins. Charity marketing has a wider range of
objectives, however, many of which are concerned with the particulars of a social
or medical problem. It is interesting to enquire as to whether the abovementioned
considerations influence the range and variety of the metrics that a charity uses.
To the extent that anti-marketing bias impels management to scrutinise inputs and
outputs to the marketing function assiduously, bias of this nature might be anticipated
to induce the extensive employment of marketing metrics (see Figure 1).

SELECTION OF METRICS

Several taxonomies of marketing metrics have been developed. For instance, Barwise
and Farley (2004) identified five primary marketing metrics which, when adapted for
use in non-profit situations, may be listed as (i) market share of donations within a
sector, (ii) perceptions of the quality of a charity's services, {iii) donor retention, (iv)
donor segment profitability and {v) donor lifetime value. Market share is a widely
employed metric in the commercial world, allegedly because of its connections with
cash flow and an organisation's long term financial viability. For this same reason it
seems reasonable to speculate that a charity's share of total donations in a specific
sector should be equally salient to its marketing management. Metrics connected
with donor lifetime value can be used to justify expenditures on relationship
marketing activities and to compare the yields from donor retention with returns
from new supporters. Clark's {1999) review of the pre-existing academic literature
on marketing metrics identified the following generally used headings: revenues,
market share, customer satisfaction and loyalty, and brand equity (which was often
associated with 'reputation' and 'image'). Davidson {1999) added revenue trends,
market trends, and trends in unit volume {income per donor in the present case).
Market trends concerned customer {donor) numbers and levels of retention. Shaw
and White {1999) included '"desired thoughts and feelings" in the list of the marketing
outcomes that organisations ought to measure, e.g., liking, commitment, awareness,
relevance to the individual, and {perceived) differentiation from rivals {p.877).
According to Evans et al. {2002), ''strategic" metrics encompassed costs, gross margin
per customer (donor); recency, frequency and monetary value (of donation); and
customer {donor) satisfaction (p.583).
The effectiveness of donor acquisition activities could be measured via, for
example, the method suggested for use in the commercial sector by Sheth and
Sisadia {1995) whereby the revenues attributable to ''marketing that brings in new
customers" is divided by the costs of donor attraction and then adjusted by a donor
satisfaction index {p. 13). Donor retention might be evaluated in a similar manner but
measuring revenues and costs for existing donors, adjusted by a donor loyalty index
{i.e. a measure of 'donor churn'). The overall enhancement from a specific marketing
initiative could be assessed from a weighted combination of the acquisition and
retention measures with the weights reflecting the relative importance to the charity
•I2I2| Journal of Marketing Management, Volume 23

of donor acquisition and retention.

It is clear from the above that charity managers may select from a wide variety
of marketing metrics. The specific measures chosen, according to Ambler (2000b),
Johnson and Gustafsson (2000) and Rogers (2003), should depend on the strategies
and the objectives of the organisation. A review of the outcomes to previous surveys
in the marketing metrics field {notably those of Bauly 1994; Clark 1999; Kim et al.
2001; Llonch et al. 2002; Ambler 2004; Rust et al. 2004) generated the items shown
in Table 1, which lists metrics under four headings commonly mentioned in the
academic marketing literature (i.e. accounting, perception, satisfaction, advertising
effectiveness). Table 1 also includes the results concerning the use of these metrics
by the organisations responding to the present study, as described in later sections.
These results refer to the percentages of the charities that actually employed each
metric, the respondents' perceptions of the metric's importance, whether the metric
was presented by marketing staff to a charity's top management and whether the
metric was deemed useful when petitioning top management for an increase in an
organisation's marketing budget.

TABLE 1 Use of metrics

%of
organisations
%of using the metric
organisations and presenting Usefulness
U5ing the importance' it to top for justifying a
metric (mean value) management budget increase^
1. Accounting

Recency or frequency of 92 3.25 U 2.22

donations
Income per donor 100 3.31 58 3.0
Share of the donor market 77 2.90 11 3.09
within the charity's sector
Penetration of specific kb 2.01 2.11
segments of the donor
market
Number of new donors 100 3.10 62 3.11
recruited per period
Donor acquisition costs 89 2.99 UU 1.90
Donor retention costs 70 2.53 19 1.85
Donor lifetime value 55 2.24 9 2.A3
Marketing spend per donor 86 3.26 55 1.55
The current value of the 28 1.96 6 1.66
charity as a brand
Marketing expenditures i3 2.30 49 3.16
of other charities in the
sector
Cont'd...
 Bennett The use of marketing metrics by British fund-raising charities 965

%of
organisations
%of using the metric
organisations and presenting Usefulness
using the Importance* it to top for justifying a
metric (mean valuel management budget increase^
2. Perception
Public awareness of the 57 2.1 9 3.05
chanty and its services
Public perceptions of the iO 2.01 11 2.91
charity's image/reputation
Perceptions of the attributes 46 2.38 U 2.04
of the charity
Recognition of the chanty as 27 1.85 5 1.94
a brand
3. Satisfaction
Overall donor satisfaction 74 2.51 29 1.44
with the charity's activities
Donors' feelings of loyalty 28 2.29 & 1.39
and/or commitment to the
charity
Donors' satisfaction with 39 2.37 13 2.99
the quality of the charity's
interactions with them
4. Advertising effectiveness
Recall 65 3.11 3 1.11
Ad-likeability 67 3.11 1.38
Advertising expenditure 100 3.33 8 2.98
relative to donations
Frequency of advertising 20 2.58 3 2.77
exposures needed to
generate a donation
Proportion of total 32 2.01 U 2.75
advertising expenditure
within the charity's sector
accounted for by the
charity in question
Generation of word-of- 6 1.66 0 0
mouth

* Four-point scale: 4 = regarded by the marketing department as a very important metric; 1

= regarded as relatively unimportant. Only charities that used the metric were included in
the calculation.
I Four-point scale: 4 = extremely useful; 1 = not useful.
966 ^ ^ Journalof Marketing Management, Volume 23

Use of metrics to justify marketing budgets

Marketing executives in charities sometimes have to ask their top managements
or boards of governors for increases in their budgets. The present study invited
participants to indicate the metrics they used or would use in order to argue the case
for additional resources. A number of factors that organisations typically take into
consideration when determining marketing budgets have been identified (see Abratt
et al. 1994), viz: market growth and market share targets, organisational financial
targets, competitive pressure, economic environment, and cost pressures. Ambler
(2004) reported three main categories of reason advanced by marketing managers
when seeking increased budget allocations: financial, practical and 'business model'
(p.3O), especially the first rwo. Financial justifications involved the provision of
evidence that marketing expenditures would provide a "decent payback compared
with other ways of using the money" (p.30). Practical reasons. Ambler continued,
relied more on emotion than financial rationality. Practical appeals were based
on hope for the future, trust developed through a good track record of achieving
objectives, or fear of competitors. Other 'practical' devices included the presentation
to senior management of results from market research studies; drawing comparisons
with other organisations possessing bigger budgets; and developing worse-case
scenarios of what would happen if the budget was not increased. The business model
approach, in addition to connecting marketing inputs with financial performance,
took non-financial metrics into account. It demanded an understanding of the real
causes of cash inflows (brand equity for instance) so that, rather than being seen as
a cost, marketing would be regarded as the ""harvesting of cashflow" (Ambler 2004
p.32).
Comparisons with rival organisations can be important when bidding for bigger
budgets (Weber 2002; Murphy 2005). An intensification of the fundraising activities

TABLE 2 Justifying budget increases

VI 1 51 NI
Comparisons with other charities 34 iO 16 10
Comparisons with average 30 39 20 11
performance in the charity's
sector
Predicted income growth and/or 17 18 40 25
other financial targets
Predicted rates of return on 33 41 19 7
specific activities
Activities of competing 25 30 20 25
organisations
Predicted improvements in the 9 9 33 49
charity's image or reputation
Predicted improvements in 9 11 32 52
donors' feelings of satisfaction
with or commitment to the
organisation

Key: VI = very important metric; I = important metric; SI = slightly Important; NI = not

important. Figures are percentages.
 Bennettlhe use of marketing metrics by British fund-raising charities 967

of other charities in a particular sector could imply a drop in an organisation's donor

income unless it commits additional resources to marketing (see Bennett 2003 for
information on the competitive behaviour of charitable organisations). Moreover,
there are dangers associated with over-reliance on existing customers (donors) in
situations where competition is increasing (Murphy 2005), implying the need
to spend more money on prospecting for new customers (donors). Weber (2002)
recommended the comparison of an organisation's marketing performance with
the average for the sector within which it operates, followed by the exploration of
gaps under various headings. Then future performance (e.g., for a three year period)
should be forecast (i) assuming no extra marketing expenditures, and (ii) assuming
the implementation of various activities. In addition to the items shown in Table 1,
eight further queries were incorporated into the survey instrument in an attempt
to capture the abovementioned possibilities. Seven of these are listed in Table 2;
the eighth was an ad hoc item worded 'When asking for increases in our marketing
budget we rely more on emotional appeals and senior management's trust in our
abilities than on the presentation of financial statistics' (cf. Ambler 2004).

A SUGGESTED MODEL

As well as investigating which metrics were used most frequently by charitable

organisations the research also attempted to establish the main antecedents of decisions
to employ an extensive range of metrics. Since metrics are needed to implement
systems for marketing planning and control, the academic literature in the planning
and control area (as well as the general field of marketing performance measurement)
was examined to identify candidate explanatory variables. The following potential
determinants of the degree to which a charity uses marketing metrics emerged from
this review.

Demands for accountability

Growing requirements for marketers to justify and account for marketing expenditures
have been noted in many sectors across several countries (see for example Shaw
and White 1999; Ambler 2000c; MSI 2001; Barwise and Farley 2002; Weber 2002;
Rust et al. 2004). If a charity's top management demands that the organisation's
marketing spend be explained and fully vindicated, it is to be expected that the
charity's fundraising executives will want to put before the senior management a
comprehensive set of metrics which demonstrate the merits of marketing activities.
This might be greater the higher the degree of anti-marketing bias among the
members of a charity's top management (cf. Ambler et al. 2004). It is posited that
anti-marketing bias is both a cause of senior management demands for accountability
(see above) and a moderator of the possible link between the latter variable and
the extent of a charity's use of metrics. In other words, the impact of the demand
for accountability on the application of metrics will be higher in an organisation
with top managers who are biased against marketing than in a charity where the
top management does not exhibit anti-marketing sentiments. Thus it is argued
that fundraising managers in a charity where anti-marketing bias is evident will be
particularly anxious to demonstrate their worth via metrics.
968 Hujsi Journal of Marketing Management, Volume 23

Mission rigidity .• ,
Frequently, organisations are subject to institutionalised expectations regarding
the targets they pursue (Suchman 1995). Often these expectations derive from a
mission statement, the strict conformity to which increases the need to attain
specific objectives and to remain within carefully delineated and numerically defined
constraints. However some organisations define their scope, aims and mission more
narrowly than others. A priori it seems reasonable to presume that the existence of
a narrow and precise mission could affect the level of an organisation's enthusiasm
for applying marketing metrics and hence the degree to which metrics are employed.
An inflexible mission implies perhaps a heavy commitment to measuring the
organisation's progress towards the fulfilment of this rigidly formulated mission and
thus the establishment of concrete milestones to assess achievements (Clark 2000).
Also a narrowly defined mission might be associated with extensive investments in
and commitment to specific marketing projects, which then become highly salient
within the organisation {Bonoma and Clark 1988). Hence the organisation may
come to focus its attention heavily on mission-related metrics (cf. AJdrich and Fiol
1994). This implies a positive connection between mission rigidity and the extensive
use of marketing metrics.

Market orientation
The presence of market orientation within an organisation can encourage the
extensive use of marketing metrics, especially vis-d-vis the gathering of marketing
intelligence on customers (donors) and competing organisations (Ambler et al.,
2004). Numerous studies completed in the charity fundraising sphere have noted
the taking up by charities of marketing philosophies and sophisticated marketing
techniques (for details see Hibbert 1995; Balabanis et al. 1997; Bennett and Gabriel
1999; Bennett and Sargeant 2005). Allegedly, the marketing philosophy or concept is
implemented via the adoption by an organisation of 'market orientation' (Kohli and
Jaworski 1990; Narver and Slater 1990), which has three basic dimensions: customer
orientation (donor orientation in the present context), competitor orientation
and the interfunctional integration of an organisation's marketing efforts. Market
orientation supposedly enables an organisation to identify customers' needs correctly
and hence to provide greater customer value (Kohli and Jaworski 1990; Narver and
Slater 1990). The mechanism through which this occurs is said to involve systemic
and extensive attempts at finding out what the market wants (i.e., the functions of
marketing research and 'market intelligence generation' in Kohli and Jaworski's
[1990] formulation). Thus, market orientation implies a heavy focus on 'continuously
finding ways of meeting customer exigencies and providing customer-perceived value'
(Paulin et al. 2000 p.330). All this requires the measurement of marketing inputs and
outputs and implies thereby a keen interest in and the widespread application of
marketing metrics.

Resource stack
Resource considerations might affect the degree to which a charity applies marketing
metrics. Specifically, the presence within an organisation of resource slack could mean
that staff, software and computing systems, and other resources are readily available
to complete (time-consuming) duties associated with the measurement of marketing-
related activities (cf. Fletcher et al. 1996; Cooper 1998). It has been argued that the
 Bennett The use of marketing metrics by British fund-raising charities 969

presence within an organisation of substantial amounts of uncommitted resources

greatly facilitates the development, introduction and use of business systems (Fletcher
et al. 1996), extending perhaps to methods for measuring marketing inputs and
outputs. Resource slack may be especially important if organisation-specific metrics
are to be devised within a charity, as the existence of uncommitted resources allegedly
enables organisations to experiment, explore new ideas and options, and correct and
bear the costs of errors (Damanpour 1991). Also the availability of slack resources can
assuage individual managers' anxieties regarding possible budget reductions should
the application of the metrics they have chosen to employ (maybe metrics devised
in-house) fail to improve performance (cf. Fletcher er al. 1996). In the present study,
resource slack is assumed both to exert a direct impact on the degree to which a
charity uses metrics and to moderate upwards the effects of (i) top management
demands for accountability, (ii) mission rigidity, and (iii) market orientation, on the
extent to which metrics are employed.

Organisotional foctors

Centralisation of control
If decision making within an organisation is centralised in the hands of people at
the apex of a vertical command system it could be that senior management demands
detailed metrics to enable it to exercise tight centralised control (Baak and Cullen
1994). Centralisation requires the development of formal, precise and definite
control procedures throughout an organisation, implying thereby the employment of
metrics (Fletcher et al. 1996). A centralised management system relies heavily on the
efficient flow of information relevant for decision making and the rapid translation of
decisions into action, without compromises or bargaining between groups or specific
individuals (Mone et al. 1998). Tightly controlled centralised organisations need clear
and detailed benchmarks and targets, monitoring, and the regular and methodical
comparison of achievements against objectives (Graham and Pizzo 1996). Hence a
positive direct connection between centralisation and metrics use is proposed.

Extent and formaUty of planning systems

Charities that engage in extensive planning might be expected to employ metrics
more extensively than charities that eschew planning. Marketing planning requires
forecasts of future donations, predictions of returns on various projects and activities,
estimates of income streams from capital investments, etc. Hence it demands
detailed information on activities, trends and environments, plus benchmarks against
which operations can be assessed. Extensive use of metrics might be anticipated in
organisations that (i) operate extensive planning systems (Ambler et al. 2004), and
(ii) exhibit a high degree of formality vis-d-vis their planning systems (Graham and
Pizzo 1996), as it is possible for a non-profit to plan ahead but only in a casual and
intuitive fashion and without referring to any facts or figures (Bennett 2002).

Employment of academically well-qualified marketing staff

According to Rogers (1983) the greater the depth of the occupational skills
embedded in an organisation's employees and the better these skills are integrated,
the more sophisticated is the organisation's decision making. Rogers (1983) defined
occupational skill in terms of the degree to which employees (especially managers)
970 I B f f I Journal of MarketJng Management, Volume 23

possessed high levels of functional knowledge and expertise and expressed this
through 'professional' approaches to their work (p.91). It was evidenced by the
calibres of employees' levels of education (particularly function-specific education)
and formal training. Educationally sophisticated managers would weigh up the
advantages and drawbacks of alternative courses of action more carefully than poorly
educated managers (implying the systematic use of metrics when making decisions),
and higher professional standards would be applied as decisions were implemented
(Fletcher et al. 1996). Managers with formal vocational qualifications have been
found to be more likely than others to read professional journals and magazines
(Walker 1981) and to belong to professional bodies that disseminate information
on the latest theories, approaches and methods and new developments in relevant
fields (Swan et al. 2000). Thus a professionally qualified marketing manager may
have greater access to marketing knowledge (both in published sources and through
face-to-face contacts with knowledgeable peers) and perhaps thereby will be more
inclined to employ marketing metrics.

Size and age of the organisation

Large charities may be better equipped to operationalise the application of marketing
metrics than are small charities because they might possess the staff, computer
hardware and software and general business management infrastructure necessary for
the task (Damanpour 1991; Cooper 1998). Charities that have been in existence for
long periods may have had greater opportunity to acquire knowledge and experience
of the effective application of marketing metrics than younger organisations.

Environmental turbulence
Competitive intensity
Many UK charities function within highly competitive fundraising environments (see
Hibbert 1995; Bennett 2003; Bennett 2005 for details of studies supporting this
proposition). Intense competition has been found to induce organisations (including
nonprofits - see Bennett 2002) to engage in extensive forecasting and forward
planning (Whipp et al. 1997; Wilson 1999). This in turn would imply a greater
use of marketing metrics by charities which face strenuous competition from rivals.
Moreover, several studies have concluded that intense competition tends to drive up
marketing expenditures (see Rust et al. 2004), again suggesting a higher propensity
to employ metrics.

Environmental volatility
Competitive intensity can contribute to environmental volatility, i.e., 'a combination
of radical and frequent change with a significant level of perceived uncertainty'
(Wilson 1999 p.2O). Opinions differ however on the consequences of environmental
volatility for organisational behaviour. For example, Eisenhardt (1985) found that
the more difficult it was to evaluate the results of marketing the greater the tendency
to exercise tight control over marketing expenditure. Thus, organisations operating
in complex, volatile and uncertain environments might be expected to use metrics
extensively. Also, volatility could impel organisations to devote more time and effort
to forward planning and predicting various possible future scenarios (measured
presumably through standard marketing metrics). On the other hand, volatility may
 Bennett The use of marketing metrics by British fund-raising charities 971

induce them to adopt casual approaches to planning, forecasting and evaluation on

the grounds that endemic uncertainty makes it impossible to plan ahead in meaningful
ways (Wilson 1999; Cooper 2000). In these circumstances a management may
conclude that there is little point in attempting to measure outcomes (Mone et al.
1998). For operational purposes however it is posited that environmental volatility
will exert a positive impact on the extent to which a charity uses marketing metrics.

Past investments in marketing

A charity that has already invested substantial resources in major marketing
programmes and projects will have incurred significant opportunity costs and
is likely to have orientated its structures and organisational systems towards the
marketing function (Mone et al. 1998; Clark 2000). To the extent that large amounts
of money have been sunk into marketing activities it is reasonable to presume that an
organisation will be anxious to measure and monitor the outputs to its investments.
Mone et ai. (1998) found that heavy prior spending on a certain line of activity led
to "'narrow mind sets" and an '"efficiency orientation" consistent with the desire to
undertake frequent evaluation of the line of activity involved (p.l21). Accordingly, it
is hypothesised that a positive connection exists between investment in the marketing
function and financial performance (cf. Bonoma and Clark 1998; Clark 2000). It is
relevant to note moreover that top management's interest in measuring marketing's
contributions to income and expenditure may rise dramatically during periods of
financial poor performance (Wyner 2004). Downswings in revenues have frequently
been found to prompt managers to investigate marketing budgets closely with a view
to cutting expenditures, especially in areas where costs have risen sharply (media
purchase expenditures for instance) (see Weber 2002). It is further hypothesised that
poor financial performance simultaneously causes (i) a higher level use of marketing
metrics, and (ii) greater demands for accountability on the part of a charity's top
management (leading in turn to the extensive application of metrics).
Figure 1 illustrates the suggested model emerging from the literature review and
the hypothesised directions of the relationships among the variables.

MEASUREMENT OF VARIABLES

Anti-marketing bias within a charity's top management was measured by five items
adapted from Gaski and Etzel's 'Attitude towards marketing' inventory as shown in
Section A of the Appendix. (Unless otherwise indicated, questionnaire items were
evaluated using five-point scales: 5 = strongly agree; 1 = strongly disagree.) A
factor analysis of the five items revealed a unidimensional solution (lambda = 3.21,
Cronbach's alpha = .82), so the items were averaged to form a single scale for use in
subsequent analysis. The intensity of senior management's demands for accountability
was assessed through the participants' responses to three statements specially
devised for the present study, as shown in Appendix section B. These intercorrelated
significantly (R> .64 in all cases) so the items were combined into a single scale.
Mission rigidity was measured via modifications of five items suggested by Lewin
(2001). A factor analysis of the five items revealed that all items loaded significantly
(i.e., with values exceeding .4) on the same factor {X = 3.59, a = .78) and thus were
composited. The three components of market orientation (competitor orientation,
donor orientation and interdepartmental dissemination of marketing information)
972 Journal of Marketing Management, Volume 23

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were evaluated by modifications of the nine items (three for each construct - see
Appendix sections D to F) of Deshpande and Farlay's (1996) 'short form' market
orientation inventory. The original instrument was devised by Deshpande and
Farlay [1996] to act as a parsimonious device for assessing an organisation's market
orientation in key areas. Its brevity makes it ideal for use in a questionnaire that has
to cover several other constructs. As in previous applications of this well-established
instrument, the responses were significantly intercorrelated for each construct {R >
.55). Hence composite scales were created for each set of items.
Resource slack was measured through three items based on Fletcher et ai's (1996)
approach to this issue (Appendix section G). Three further items adapted from
Fletcher et al. (1996) were employed to evaluate the levels of education and training
of a charity's marketing employees (Appendix section H). As expected, each of the
abovementioned sets of items was substantially intercorrelated (R > .72 and R > .71
respectively), justifying their aggregation to form two new composite variables. The
extent and degree of formality of a charity's marketing planning system was assessed
through five items (two measuring extent [Appendix I (i) and (iii)] and three measuring
formality) based on Bennett (2002). A factor analysis of the five items generated two
distinct and significant factors (A., = 1.96), X^ = 1.51) pertaining respectively to
'formality' and 'extent'. Accordingly the relevant item sets were composited (R >
,64 in all cases). Centralisation of control was evaluated via three (intercorrelated: R
> .69) items adapted from McCabe (1987) that were composited into a single scale.
Competitive intensity and environmental volatihty (Appendix K) were measured by
six items informed by Wilson (1999) (three for each construct). Item K(a)(iii) did
not correlate significantly (p < .1) with the others in the competitive intensity scales,
so just the remaining two were composited (R = .73). All the volatility items were
substantially intercorrelated (R > .72) and hence were aggregated. The degree of a
charity's prior investments in marketing was evaluated through three items adapted
from Bonoma and Clark (1988). One of these (Appendix L [ii]) did not correlate
significantly with the others (p < .1) so only items L (i) and L (iii) were used in the
composite formed to reflect this construct. Ad hoc items were used to measure charity
size (number of employees) and period of existence (number of years). Financial
performance was assessed through a single item worded "Relative to other charities
in our sector our financial performance over the last couple of years has been less
than satisfactory". Although self-reported evaluations of financial performance are
subject to criticism, a substantial body of empirical research supports the proposition
that the subjective perceptions of the financial successes and failures experienced by
organisations expressed by key informants {such as marketing managers) within them
generally represent fair assessments and correlate closely with actual performance
(see Dees and Robinson, 1982; Pearce et al. 1987; Venkratraman and Ramanujam
1987; Ambler and Kokkinaki 1997 p.667; and Clarke 2000 for details of relevant
literature). For each of the Table 1 items (excluding l[b] [e] and 4[c]) a charity was
coded at value zero if it did not use the metric and one if it did, and the results subjected
to a Principal Components Categorical Variables analysis using the PRINCAT facility
of SPSS 11. This generated nine eigenvalues greater than unity. The variances of the
individual items were relatively evenly spread across all ten components, indicating
that there was no general tendency for charities to employ specific genres of metrics
to the exclusion of others.
974 l U i y Journal of Marketing Management, Volume 23

The dependent variables i:

The main dependent variables used in the study comprised measures of the extents of
the employment by the sample organisations of accounting, perception, satisfaction
and advertising effectiveness metrics. Separate analyses were completed in respect of
each of these measures. It was not possible to generate a meaningful overall measure
of the extent of metrics use, because certain charities scored highly on some of the
individual measures but zero on others. Thus for example a number of charities
employed accounting metrics extensively, yet did not measure public perceptions of
their charities (Table 1 section 2) at all. The aggregation of the categories in these
circumstances could have produced misleading results.

Accounting metrics
As 100% of the organisations measured income per donor and donor recruitment
over time (see Table 1.1 [b] and [e]) these items were not included in the extent of use
of accounting metrics scale. A charity was coded at value one if it employed just one
of the metrics listed in Table 1.1, at value two if it used two of the metrics, and so on
up to value nine if it also applied all of the remaining metrics. None of the charities
failed to employ a single one of these nine metrics; a quarter used between one and
three; half between four and six; and a quarter between seven and nine.

Other measures
Scales for the 'perception', 'satisfaction' and 'advertising effectiveness' measures of
the extents of metrics use were again constructed by counting the number of metrics
employed within a particular category. The resulting scale for 'perception' indicated
that 19% of the organisations did not apply any metric whatsoever to assess the
public's perceptions of their charity, 64% used one or two of the Table 1.2 metrics,
while 19% employed three or four. Within the 'satisfaction' scale, eleven per cent
did not employ a single measure of donor satisfaction, 61% used one or two of the
metrics, and 23% employed all three. Every charity in the sample measured advertising
expenditure relative to donations, so Table 1.4 item (c) was not considered when
forming the intensity of use of advertising effectiveness metrics scale. Thereafter it
emerged that just four per cent of the organisations did not apply any metric for this
purpose, 68% employed one or two, and 26% used three or four, with two per cent
applying all five.
Excluding the items for which all the charities in the sample used the metric, 19%
of the organisations could be said to employ a substantial number (i.e., to fall in the
upper regions of the abovementioned divisions) of metrics in all four categories.
This result is broadly comparable with the figure of 23% reported by Ambler et al.
(2004) in their survey of commercial enterprises (although Ambler et al. examined a
different assortment of metrics).

THE STUDY

A questionnaire was drafted and pre-tested and the final version distributed to the
heads of fundraising in the UK Charity Commission's top 750 charities, ranked in
terms of annual donor income. The sampling frame was restricted to the top 750
UK charities by income because in 2005 they accounted for over 60% of the total
 Bennett The use of marketing metrics by British fund-raising charities 975

of £36.3 billion raised by the sector. (Two-thirds of the UK's 166,514 registered
charities received less than one per cent of aggregate income - see www.charity-
commission.gov.uk). The pre-test involved the face-to-face administration of the
draft questionnaire to three senior fundraisers in three UK charities and a mail-out to
charities numbered 750 to 800 in the abovementioned list. Ten replies were received
the perusal of which, together with the outputs to the interviews, led to the rewording
of certain items to improve their charity and precision. The final questionnaire was
mailed to the 750-strong sampling frame together with a stamped reply envelope, a
covering letter, and incentives in the form of bookmarkers and coasters. After two
follow ups, 210 replies were received (28%). There was no evidence of early or late
response bias'. Responses came from charities operating in all the major divisions of
charitable organisation (medical, healthcare, social welfare, animals, children, disaster
relief and international development, etc.) with no single sector predominating. The
charities in the sample had a median of 363 full-time employees (mean = 1090
employees, range 23 to 9052) and a median donor income of £18.6 million (mean
= £64.1 million, range £8.2 million to £161 million). On average they had been
in existence for 56 years (median = 38 years, range 6 to 206 years). These figures
are comparable to those applying to the top 750 UK charities as a whole (see www.
charitiesdirect.com/ind_iOOO.asp).
Section one of the questionnaire carried routine queries regarding the charity's
size and sector plus the items listed in Tables 1 and 2. Alongside the Table 1 items
was a grid with columns that asked the respondent to tick off (i) whether the charity
used the metric and if so how important (four-point scale) it was deemed to be by
members the charity's marketing department, (ii) whether the metric was presented
to the charity's very top management (cf. Ambler 1999) and (iii) how useful that
particular metric was regarded as a device for petitioning top management to increase
the charity's marketing budget. This section was followed by the further Table 2
queries regarding the arguments used to justify budget increases. The next part of the
questionnaire contained the items pertaining to the constructs listed in the Appendix
to the paper.

RESULTS

Descriptive results
Table 1 indicates that, as might be expected, all the charities in the sample measured
income per donor (item lb), numbers of fresh donors per period (le) and the ratio
of adspend to donations (4c). Otherwise, the most commonly used metrics were the
recency and frequency of donations (employed by 92% of the organisations [item
la]), donor acquisition costs (89% [If]), marketing spend per donor (86% [li]),
market share (77% [Ic]), and evaluations of overall donor satisfaction (74% [3a]).

The average values of the responses of the first 40 and last 40 questionnaires received were
compared and did not differ in any meaningfully significant ways. Additionally a slip was
mailed to 100 non-respondents asking the recipient to tick off the reason for not having
replied. Seventeen slips were returned, the analysis of which (in conjunction with letters
received from charities declining to participate) revealed that the main reasons for non-
participation were that it was the organisation's policy not to complete questionnaires, that
the person was too husy, or that the recipient had lost the questionnaire. Hence there was
no evidence of systemic response hias.
976 Q Q Journalof Marketing Management, Volume 23

The metrics employed least often were brand recognition and brand value (27% [2d]
and 28% [lj] respectively), loyalty and commitment (28% [3b]) and 'share of voice'
(32% [4e]). Word-of-mouth effects of marketing activities were hardly ever measured
(six per cent [4f]).
Respondents in charities that used a specific metric were asked to rate the importance
with which the metric was regarded by managers within the organisation's marketing
department. Column two of Table 1 shows the mean values of the replies. Most
of the metrics that were seen as highly important by marketing departments were
(predictably) often the same as those that were used most frequently, viz: marketing
spend and income per donor (li and lb), recency and frequency of donations
(la), and number of new donors per period (le). Adspend relative to donations
(4c), advertisement recall (4a) and advertisement likeability (4b) were also deemed
important. The measurement of the value of a charity as a brand (lj) and of brand
recognition (2d) were not viewed as important metrics.
There was a correspondence between the metrics that were considered to be
important within the marketing department and those most commonly presented to a
charity's top management, except for the three advertising metrics (4a) (4b) and (4c),
which were deemed important by many marketing departments yet rarely reached the
top level of a charity. The Pearson correlation between columns two and three of Table
1 was R = .47, p = .02 (Kendall's Tau = .310, p = .037). Removal of the advertising
metrics items appearing in section 4 of Table 1 substantially increased the value of the
correlation coefficient to R = .704, p = .001 (Kendall's Tau = .642, p = .000). This
latter Pearson correlation of 0.704 is quite close to a coefficient of R = 0.8 obtained
by Ambler et al. (2004) for the same variables in their study of the use of marketing
metrics in the commercial sector. The main metrics looked at by top managements in
the present sample comprised income and marketing spend per donor, the number
of new donors per period, marketing expenditures of rival charities, and donor
acquisition costs. None of the perception or advertising effectiveness items of Table
1 (sections 2 and 4) were commonly presented to top managements. Only eleven
per cent of the senior managements of the sample charities were given information
on (donor) market share, while just six per cent received data on the organisation's
penetration of specific donor market segments. Other low scoring items were donor
loyalty and commitment (4%), brand value (6%), donor lifetime value (9%), and the
recency and frequency of donations (14%). These outcomes differ considerably from
those obtained by Barwise and Farley (2004) during their survey of the marketing
metrics presented to the boards of directors of commercial enterprises. Barwise and
Farley found that market share figures were reported to the boards in 79% of the
sample firms; customer satisfaction metrics in 77%, and loyalty/retention figures in
64%.

Metrics to justify budget increases

The respondents were asked to rate the metrics that they believed would be most
useful for the purpose of soliciting senior managements for increases in marketing
budgets. Table 1 gives the results, which indicate that metrics relating to donor
recruitment (le), market share (lc), and the general public's awareness of the charity
and its services (2a) were seen as the most valuable for justifying appeals. It seems
therefore that, whereas figures on market share were not routinely presented to
top management, they were shown conspicuously whenever it became necessary to
petition for a budget increase. Table 2 lists the supplementary questions pertaining
 Bennett The use of marketing metrics by British fund-raising charities 977
I

to budgetary matters. It can be seen from Table 2 that 74% of the respondents
regarded comparisons with other charities (2a) as either important or very important
when rationalising budget increases; while 69% saw comparisons with the average
performance of other charities in the organisation's sector (2b) as important or very
important. Other metrics viewed as important or very important for budget bargaining
purposes were figures concerning the behaviour of competing organisations (2e,
55%), and predicted returns on specific activities (2d, 74%).
These outcomes are compatible with the assertions of Abratt et al. (1994),
Weber (2002), Ambler (2004), and Murphy (2005) that, typically, issues involving
competition in the marketplace and the recent activities of rival organisations represent
major elements of a marketing department's claim for additional resources. They also

TABLE 3 Parameter estimates (t-vatues in parentheses) —

Test of the model for extent of use of:

Advertising
Accounting Perception Satisfaction effectiveness
metrics metrics metrics metrics
Top management demands
for accountability
Poor financial .202 .211 .199 .223
performance in 13.91) (1.98) (2.02] (2.44)
recent periods
Poor financial
performance
Prior investments -.212 -.229 -.207 -.214
in marketing [2.021 (2.00) (2.91) (2.77)
Extent of use of marketing
metrics
Prior investments .199
in marketing 11.99]
Top management .303 .3W .211
demands for 14.181 (5.01] (2.22)
accountability
Competitor .267 .299 .342
orientation (3.151 (4.^5) (4.97)
Donor orientation .228 .303 .198
(2.98) (3.98) (2.00)
Donor orientation .OOA .003 .002
times by Resource (3.93) (2.88) (3.07)
slack
Employment of .333 .341 .401 .407
qualified staff (3.371 (4.77] (5.57) (4.99]
Extensive .255
planning systems (2.98)
Highly formal .202
planning systems (1.99)

GFI > .85; AGFI > .8 and RMSEA < .05 in all four estimations.
978 KZljt Journal of Marketing Management, Volume 23

match the conclusion of Armstrong and Collopy (1996) that competitor orientation
causes managers to 'over invest' in marketing, consequent to their focusing heavily
on 'comparative measures such as market share' (p.188). The finding that market
share was an important metric in this regard matches that of Abratt et al. (1994).
Ambler (2004) suggested that the presentation of predicted financial returns on
specific marketing projects was crucial for a successful appeal for a bigger budget.
This is also confirmed by the present study (see Table 2d). Ambler (2004) argued
that emotional appeals for additional resources based on a marketing department's
excellent past record and aspirations for the future could also be important. In the
current investigation, however, only six per cent of the respondents strongly agreed
and just ten per cent agreed with the statement *When asking for budget increases we
rely more on emotional appeals and senior management's trust in our abilities than
on the presentation of financial statistics'. This suggests that emotional appeals may
not be a particularly useful way of petitioning for extra funds for marketing in the
charity sector, although it must be recognised that the respondents may have been
reluctant to admit that they had in fact employed emotional appeals when submitting
bids. It could have been the case that some applications were socially and emotionally
based, but that the people involved rationalised their behaviour post hoc in more
objective and 'scientific' manners. The items regarded as least important when asking
for a bigger marketing budget were marketing spend per donor (li), retention and
acquisition costs (If; Ig) advertising recall (4a) and likeability (4b), and issues to do
with donor satisfaction and loyalty (3a; 3b) and with brand valuation (lj).

Test of the madel

Tbe model depicted in Figure 1 was tested sequentially employing the extent of
the use of each of the four categories of metric as the main dependent variables.
As some of the variables were not normally distributed the regression coefficients
and associated standard errors were computed via the bootstrapping procedure of
the AMOS 5 package. Table 3 presents the results (showing only the statistically
significant relationships [p<.051). It can be seen from Table 3 that significant links
occurred between poor financial performance in recent periods and top management's
demands for accountability (confirming the suggestions of Rogers 2003; and Wyner
2004), and between prior investment in marketing and sound financial performance.
This last result is consistent with the proposition that marketing activities enhance
financial performance (see Webster 1992; Jaworski and Kohli 1993; and Hooley et
al., 1999 for details of the literature concerning this matter). However, poor financial
performance did not of itself stimulate the use of metrics. Rather the influence of
this variable was indirect via the mediating role of top management's demands for
accountability consequem to poor performance.
Six variables exerted significant influences on the extent of a charity's use of
accounting metrics. The impact of prior investments in marketing in this regard
reflects perhaps the desire to protect these major investments (which are likely to have
been developed and decided with the involvement of the charity's top management
[see the Appendix section L) and hence the wish to monitor marketing outcomes
carefully and extensively. Top management's demands for accountability increased
the propensity to use metrics (as expected a priori, see Omisakin 1997; Barwise and
Farley 2004; Rust et al 2004) as did both the extent and the formality of a charity's
forward planning system. Organisations that employed well-qualified marketing staff
were more likely than others to use accounting marketing metrics extensively. The
same was true for charities that exhibited competitor orientation (which implies a
 Bennett The use of marketing metrics by British fund-raising charities 979

concern with matters such as market share, penetration of market segments, costs
and revenues relative to rivals, and other quintessentially accounting metrics) (cf.
Ambler et al. 2004). Well-qualified marketing employees presumably wanted to
'practise their craft', and had the technical and theoretical knowledge to do so.
The degrees to which public perception metrics were used were affected (as in
the case of accounting metrics) by top management demands for accountability,
competitor orientation, and the employment of well-qualified staff. Additionally the
use of perception metrics was influenced by donor orientation, as anticipated a-priori
because donor orientation involves the active consideration of donor preferences.
The link was modified upwards by the presence of resource slack. Hence a charity
with a donor orientation and the availability of resources was relatively more likely to
use metrics extensively than was a donor orientated charity without slack resources.
The same set of independent variables impacted on the degree of application of
donor satisfaction metrics except that top management demands for accountability
did not exert a significant influence, suggesting that such demands did not extend to
information on donor satisfaction. Nevertheless, the extent of the use of advertising
effectiveness metrics was affected by demands for accountability, and also by donor
orientation (modified by resource slack) and the employment of well-qualified
marketing staff.
A number of the variables shown in Figure 1 failed to attain significance. Anfi-
marketing bias within a charity's top management did not lead to greater demands
for accountability (cf. Catano et al. 2001; Ambler 2004). A close examination of
the data revealed that pro-marketing senior managements (measured in terms of
responses that fell in the bottom two categories of the relevant composite) were
just as liable to demand high levels of accountabihty as were anti-marketing boards.
Indeed, the (albeit statistically insignificant) relationship was positive, indicating
perhaps that pro-marketing senior managements were more rather than less likely to
want marketing activities to be explained and properly justified. Centralised control
was not significant, implying that decentralised management systems were as likely
to employ a wide range of metrics as others. Possibly, decentralisation is associated
with relatively sophisticated control systems and styles that rely on the application
of metrics to at least the same extent as centralised schemes. The failure of mission
rigidity to exert a significant impact might bave something to do with how charities
determine their missions. If a mission is conceived with beneficiaries rather than
donors in mind (e.g., helping victims of a certain medical condition) then a concern
for adhering rigidly to the mission might not be seen in terms of measuring donor
behaviour, perceptions and satisfaction. Although resource slack moderated upwards
the impact of donor orientation on the extent to which a charity used metrics, it did
not exert a direct influence on the latter variable. Relatively few of the respondents
(14%) reported the existence of substantial amounts of resource slack, so this result
might be explained perhaps by a lack of variation in the data.
Poor financial performance did not impact on the extent of metrics use. Charities
which had done well over the previous couple of years employed metrics to the same
degrees as organisations that were performing badly. Fundraising success might have
itself generated interest in the application of marketing metrics. Organisation size and
length of establishment failed to exert a significant influence on the level of metrics
use. It is relevant to note in this connection that the sampling frame comprised the
UK's 750 largest fundraising charities, most of which were very well-established.
Hence a meaningful investigation of the effects of size and age on the application
of metrics should really be based on a comparison of these large organisations with
980 Kjizt Journal of Marketing Management, Volume 23

much smaller charities (e.g., those with annual donor incomes below £2.5 million).
As regards the nonsignificance of competitive intensity and environmental volatility,
an inspection of the data divulged a lack of variation in the responses so that high/low
connections between these composites and the extent of metrics use could not be
discerned. Over 70% of the participants agreed or strongly agreed that the fundraising
environments in which they operated were both highly competitive and volatile.
The final insignificant variable was the interdepartmental communication element
of market orientation. It appeared that charities that did not use metrics extensively
transmitted marketing information across departments to the same extent as those
that did.
Figure 2 illustrates diagrammatically the generic model emerging from the study,
showing all the variables that attained significance with respect to at least one category
of metrics. The comparison of Figure 2 with Figure 1 indicates that only a minority
of the variables that prior studies undertaken in the commercial domain have found
to affect the extent of the employment of marketing metrics appear to be relevant
within the charity context, at least so far as the present sample of organisations was
concerned.

CONCLUSION

The findings of this study revealed a number of similarities with the results of
comparable investigations in the commercial sector, but also some differences.
Similarities included the importance of the roles of (i) financial pressure, (ii) the
intensity of an organisation's marketing planning systems and procedures, and (iii)
competitor and customer (donor) orientations as determinants of the propensity
to employ metrics. This suggests an increasing convergence of influences and
managerial orientations within the commercial and non-profit sectors. It appears that
approximately the same proportion of charitable organisations use all the possible
categories of marketing metrics as occurs among commercial enterprises (i.e., about
one in five). In both sectors the emphasis seems to focus on financial metrics. A
conspicuous difference between the findings of the present study and those of at
least one investigation completed in the business sector (namely that of Barwise and
Farley [2004]) is that metrics concerning market share and (donor) loyalty, retention
and satisfaction were rarely presented to top management. A reason for this may
be that the very senior managements of charities might be far more concerned to
discuss and evaluate opportunities for improving an organisation's services to its
beneficiaries than to examine the organisation's relationships with its donors.
Frequently, nevertheless, market share figures were conspicuously displayed to top
managements when budget increases were requested. In general, issues concerning
market share and its measurement are likely to attain ever increasing salience within
the charity sector as competition for donor income continues to intensify.
All the charities in the sample used some rudimentary marketing metrics. The
measures that the organisations employed most often were relatively unsophisticated
(number of new donors for instance), and focused on basic financial measures.
There was little evidence of attempts to measure brand equity, suggesting that
the importance of brand equity is not well-recognised in the charity sector. These
findings are of some concern as it is essential that charitable organisations be aware
of the latest thinking and behaviour regarding brand management. The effects of
marketing activities vis-d-vis the generation of favourable word-of-mouth were
 c

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" Employment of
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Bennett The use of marketing metrics by British fund-raising charities
981
982 HMJSI Journal of Marketing Management. Volume 23

generally ignored. Again this might be considered worrying in view of the growing
recognition within marketing circles of the importance of positive word-of-mouth.
When seeking increases in marketing budgets the respondents tended to emphasise
factual information (predicted financial returns on specific activities, figures on donor
recruitment, market share, etc.) rather than relying on emotional appeals.

Managerial implications
The results have several implications for charity management. It is unfortunate
perhaps that so few marketing departments or senior charity managements paid
much attention to brand valuation or to measuring public recognition of charities
as brands. This is in stark contrast to events in the commercial sector. Majorities
of the top managements in the sample charities were not routinely shown data on
donor loyalty and commitment, on the recency and frequency of contributions, or
on donor lifetime value. Metrics of this nature indicate the current and likely future
cash flow situations of the organisation, and hence its ongoing capacity to continue
its philanthropic work. It follows that the aforementioned metrics should receive the
close attention of top management and need to be regularly and properly discussed at
executive and/or governing board meetings. Bodies concerned with promoting good
management practice in the charity sector (e.g. the Charities Aid Foundation and
the National Council for Voluntary Organisations) should incorporate information
on how to measure brand value, donor loyalty, lifetime donor value, etc., into the
materials they distribute to charity managements.
Table 3 indicates a positive and significant connection between poor financial
performance in recent periods and top management's demands for accountability of
the marketing function. Arguably this suggests a short-term and somewhat immature
approach to the accountability issue, in that senior management should not wait for
failures to occur before demanding full accountability from a marketing department.
Charity managements should be seeking to implement sound metrics systems ah initio
and not simply respond to adverse events. It is relevant to note in this connection the
significance of resource slack as a moderator of the link between donor orientation
and the extent of a charity's use of metrics. This implies that a number of charities
may well want to develop and apply a wider range of metrics, but simply do not
possess the necessary resources.

Limitations
A limitation of the study was its employment of a quite long mail questionnaire,
contributing thereby to less than a majority of the addressees participating in the
investigation. Also, it was not possible within the confines of the questionnaire to
explore in precise detail the ways in which the metrics gathered by an organisation
were combined, analysed and interpreted. For example, were certain weighted
averages used in conjunction with others; were donor satisfaction measures put
alongside perception and advertising effectiveness metrics, etc.? Equally, it was
not feasible within the bounds of an already cluttered questionnaire to explore the
extents to which marketing performance was assessed at different managerial levels
within a charity and by disparate departments. What were the relative inputs of
finance, secretariat and marketing departments. Managers' degrees of satisfaction
with various metrics were not examined in the course of the research because the
pre-test had quickly revealed that the notion of 'satisfaction' with a marketing metric
was so multi-faceted that a separate study would have been needed to investigate
 Bennett The use of marketing metrics by British fund-raising charities 983

the matter properly. Thus, for example, satisfaction could be defined in terms of
a metric's usefulness for strategic planning, for policy determination, for helping
achieve particular objectives, for impressing various stakeholders, for monitoring
current operations, for facilitating forecasting and control, for providing insights into
future possibilities, and so on. Nevertheless, satisfaction with a particular metric will
represent an important determinant of its use, so the issue is clearly of significance.

Future research in the area

Further research is required to discover the antecedents of charity managers' levels of
satisfaction with different marketing metrics, the analytical methods that managers
employ when interpreting metrics, and the possible links between metrics use and
various categories of organisational performance. Additional research would also be
useful into whether the inclusion in a charity's governing body of members who
possess significant marketing backgrounds and qualifications has an impact on the
organisation's use of marketing metrics. Although the study identified the actual
metrics that marketing executives cited to their top managements when seeking
budget increases, the ways in which they presented their appeals were not questioned
other in very general terms. It would be interesting to establish more precisely the
relative roles of (i) the presentation of detailed factual information, (ii) internal
organisational politics, and (iii) lurid depictions of what may happen if a budget is
not increased, in the bidding process. Another valuable line of research would be
the examination of similarities and differences between the employment of specific
genres of metrics among various kinds of charity: children's charities, animal welfare,
health, third world development, etc. Do charities dealing with disparate types of
issue concentrate on differing sets of metrics?

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APPENDIX

Questionnaire items

A. Anti-marketing bias
Members of the govertiing body of this charity tetid to believe that:

[i] If most charity marketing were eliminated the beneficiaries of charities would
be better off.
(ii) Most charity advertisements provide the public with very Little essential
information.
(iiil Charity marketing often makes false claims.
(ivl Much charity advertising is intended to deceive rather than to inform the
public,
[vl Charity advertising should be more closely regulated.
 Bennett The use of marketing metrics by British fund-raising charities 987

B. Top management's demands for accountability

The top management of this charity:

[i] Dennands extensive justifications for the charity's expenditures on marketing,

(ii) Ensures that marketing managers are fuUy accountable for their performance,
(iii) Requires detailed feedback on the outcomes to marketing programmes.
C. Mission rigidity

(il If a manager were to initiate activities not in line with the charity's mission, his
or her status v^^ithin the company would be jeopardised,
(ii) This charity's mission is narrowly and precisely defined.
(iii) This charity believes in concentrating on the activities it knows it is good at,
rather than diversifying into unknown fields.
(iv) This charity discourages its employees from challenging existing activities,
strategies and marketing methods.
(v) The charity's mission defines clearly and precisely what exactly it needs to do.
D. Competitor orientation

(i) If a competing charity were to launch an intensive fundraising campaign

targeted at our donors we would implement a response immediately.
(ii] Top management regularly discusses competing charities' strengths and
weaknesses.
(iii) We devote substantial resources to making sure that our fundraising
techniques match those of other charities and relevant organisations in our
sector.

E. Donor orientation

[i] Our fundraising strategy is based on our understanding of donors' needs,

preferences and characteristics.
(ii) We constantly seek to improve our level of commitment and orientation to
serving donors' needs.
(iii] Our fundraising activities are driven primarily by donor satisfaction.

F. Interdepartmental dissemination of marketing information

(i] Information on donor behaviour and satisfaction is disseminated across all

sections and at all levels of the charity on a regular basis.
(ii] The people responsible for fundraising freely and routinely interact with other
sections to discuss fundraising issues.
(iii) This charity devotes substantial time and resources to ensuring that
information on donor trends, behaviour and satisfaction is circulated
throughout the organisation.
988 HSizI Journalof Marketing Management, Volume 23

G. Resource slack *

(i) If any of our departments concerned with marketing wanted to expand its
activities a substantial amount of resources would be available.
(ii] Not all of the firm's resources available for marketing have been fully
committed.
[iii) We have people readily available to implement new systems for improving the
charity's marketing performance.

H. Employment of qualified staff

(i] The marketing staff employed by this charity are well qualified academically.
(ii) Staff in this charity concerned with marketing tend to possess a formal
marketing and/or advertising qualification.
(Iii) People in this charity concerned with advertising and marketing have attended
many short courses and training programmes devoted to marketing.

/. Nature and extent of a charity's forward planning systems

The charity's forward planning systems are (i) extensive, (ii) highly structured,
(iii) comprehensive, (iv) methodical, and (v) follow pre-set criteria.

J. Centralisation of control

(i) Decisions made by the marketing department are subject to extensive review
by senior management prior to final approval,
(ii) Members of the marketing department rarely have the authority to exercise
their own judgement in relation to the charity's marketing activities.
(iii) Decision making In this charity is very centralised.

K. Environmental turbulence
(a) Competitive intensity

(i) This charity faces intense competition in all its donor markets,
(ii) Fresh forms of competition for donations are arising all the time.
(iii) Other charities in our sector quickly react to any marketing initiatives we
introduce.

(b) Volatility

The fundraising environment in which this charity operates is:

(i) highly uncertain, (ii) extremely turbulent, (iii) subject to radical and
unexpected change.
 Bennett The use of marketing metrics by British fund-raising charities 989

L. Priar investments in marketing

(i) Large amounts of time, nnoney and other resources have been invested in the
development of cur current marketing activities and programmes.
Iii) It has taken our marketing employees a long time to gain a thorough
knowledge of this charity's donor markets and the marketing methods we
currently employ.
(iii) The firm's top management were personally involved in the creation and
development of the firm's present marketing communications programmes.

ABOUT THE AUTHOR AND CORRESPONDENCE

Dr Roger Bennett is a professor of marketing and the director of the centre for
research in marketing in the department of business and service sector management
at London Metropolitan University. His main research interests Ue in the area of
non-profit marketing, especially in relation to the fundraising activities of charitable
organisations. Roger's career has included periods in the mining and metallurgical
industries, in management consultancy, and with a leading UK commercial bank. He
is the author of a large number of books and numerous journal articles on various
aspects of marketing and business management.
Dr. Roger Bennett, Centre for Research in Marketing, Department of Business
and Service Sector Management, London Metropolitan University, 84 Moorgate,
London EC2M 6SQ.
T +44(0)20 7320 1577
F -1-44 (0) 20 7320 1465 I
E r.hennett@Iondonmet.ac.uk