UK Charities Marketing survey Analysis summary Survey conducted between June 2006 and September 2006 RSM Robson Rhodes | 1 Foreword The charity sector spends a considerable amount of its income on marketing and fund-raising activities. There is an increasing amount of competition to attract funds from donors, resulting in a growing emphasis on the strategic marketing of charities to their various audiences. Recent reviews of a number of charities indicated a need to review the effectiveness of marketing expenditure with the aim of improving the return on marketing investment. The survey was conducted to gain a deeper understanding of how marketing is used to support the objectives of UK charities. Sandra Malone, Director, RSM Robson Rhodes Contents Foreword 2 Summary of results analysis 4 Planning in a vacuum? 6 Teams and dreams 8 A charitable brand as an asset 10 To segment or not to segment… that is the question! 11 Conclusions Appendix I 12 Original Survey Questionnaire Research objectives Highlights To assess how companies create and infl uence value by investigating: z 76% of all charities that responded admit that z to gain a deeper understanding of marketing in charities; they fail to monitor the results of the marketing z to understand the primary role of the marketing function spend. in charities; z 58% of the charities surveyed revealed that they z to understand the primary role of marketing expenditure; and did not set any performance indicators, such as z to understand the return on investment for marketing spend. reach and impact, for marketing activities before undertaking them. Survey participants and methodology z 63% of respondents operated from within a The survey was launched in June 1006. It initially targeted centralised marketing team. Many of these marketing and fi nance directors in UK charities. The survey mentioned that their organisational structures was conducted primarily by post and online, following in-depth changed frequently, as did the person to whom the interviews and discussions designed to test its validity. For marketing function reported. reference, the original survey questionnaire is included on pages 12-16. z 40% of all charities that responded said they used external support (agencies and consultants) to Acknowledgements supplement their marketing teams. We would like to offer our thanks to David Membrey, Deputy Chief Executive of the Charity Finance Directors Group, for having the z 31% of respondents felt it had been necessary to vision to collaborate with us on this project. It will hopefully inform re-brand in the past two years. fi nance directors going forward and encourage them to form closer working relationships with their marketing colleagues. We would also like to thank Rosie Chapman, Executive Director of Policy and Effectiveness of the Charity Commission for her support and Professor Ian Bruce and Sandra Ramiro Meyer of the Cass Business School who worked with RSM Robson Rhodes and managed the survey analysis. Centre for Charity Effectiveness RSM Robson Rhodes | 1 Summary of results analysis By late spring 2006, RSM Robson Rhodes Marketing share of total income The graphs below paint an interesting had completed several major marketing picture: Our respondents say that they consultancy assignments for UK national The rule of thumb has always been that cannot specify where 81% of the marketing charities and detected a worrying trend. marketing spend should equal approximately spend is applied, and they also report that It appeared that marketing spend was 10% of turnover. This is rarely the case, but 91% of the activities for the unspecifi ed increasing and that more funds — millions gives some guidelines as to what to aspire to. budget are deemed as ‘other’. of pounds each year — were being diverted This fi gure, or an approximate thereof, should to ‘marketing’, without any monitoring or give a comfortable budget for delivering This lack of specifi city should worry both measurement of how successfully these both marketing necessities (web, external marketers and their charitable organisations. funds were being applied. communications, fundraising tools etc) and Customers/donors have a choice where funds for marketing trials. they would like to see their funds used So we discussed our fi ndings with the Charity – organisations that can confi dently state Finance Director’s Group and agreed to Customers/clients/donors differ signifi cantly how funds are spent and the return on that gather more data in an effort to discover if and it stands to reason that the way in which investment are bound to receive more, rather this tendency was the norm or an exception. they are compelled to engage with any than less. charity will also have different origins. It is We produced an online survey for the important to be able to get both the message Trends in the marketing budget Charity Finance Director’s Group, which it and the ‘channel’ to the target market ‘right’ distributed at events. Just under 10% of its and this often means that a controlled trial Marketing budgets are funny things. Those membership responded, most of who were and error process and budget is required. that hold them generally want ‘more’. Those working in charities with an income that disperse them generally expect better of between £1m and £50m. parameters, such as return on investment fi gures and key performance indicators. Figure 1 Marketing costs Figure 2 Percentage of income spent (activities) Figure 3 Trends in the marketing budget 1% 1% 1.1% 0.4% 3% 5.3% Increase 14% Stay the same 81% Decrease 93.3% Public relations General advertising (media) Fundraising activities National marketing activities 0 1020304050607080 Direct sales promotion People costs Other Regional marketing activities Projected in future years Actual last year Other 2 | RSM Robson Rhodes According to our survey, there was every to charitable causes are being inundated One charity admitted that it had a indication that marketing budgets are every day with requests for time, attention ‘small’ central budget for marketing. projected to increase. and money, the more prudent are beginning In fact, with closer inspection we to demand close accountability of the funds Primary role of marketing found marketing spend in every that they donate, before making a decision as function and in every department. to where their funds should be placed. 76% of all charities that responded admit We worked out that, by planning that they fail to monitor the results of their This inability to relate costs to benefi ts is a the production of its leafl ets and marketing spend. serious issue. brochures centrally for the year ahead – buying and storing the paper then Extent to which marketing There has been much talk in the past about results are monitored printing and producing in bulk – the keeping administrative costs down in an charity would not only be entitled to effort to ensure that most funds raised go According to our survey, the effectiveness of signifi cant discounts but would save directly to the worthy cause. But the survey marketing spend was only monitored to some showed that, in the main, ‘marketing and money by ensuring that the printing extent. This implies that a substantial amount marketing-related’ costs were ‘hidden’ within press was better utilised. Estimated of charitable income is not closely monitored, larger budgets and were rarely laid out savings were in the region of £2.3m. when being spent. Since those that contribute directly on the P&L sheet. Figure 4 Primary role of marketing Figure 5 Extent to which marketing results are monitored 27% 10% 22% 29% 18% 8% 70% 16% Raising public awareness of issues Raising media profi le To some extent To a great extent Not sure Advertising/promotion of charity Selling products and services Fundraising campaigns RSM Robson Rhodes | 3 Planning in a vacuum? 58% of the charities surveyed revealed that and external dynamics that infl uence their Value for money of marketing activities they did not set any performance indicators, customers and markets, and it is from such as reach and impact, for marketing this position that they would provide the Value and the ‘perception’ of value are activities before undertaking them. evidence-based information from which their important. Is a charity able to defi ne how colleagues would make strategic decisions. ‘valuable’ a particular marketing is likely to This raises issues at the strategic planning The fact that this model does not appear be? Can the marketing team ‘prove’ that stage as well as pointing to a lack of to be in place in many of the charities we the investment in marketing activities has communication between the fi nance director, interviewed, suggest that ‘marketing’ is resulted in a good return? the senior management team and the restricted to ‘marketing communications’ and Our survey indicates that those that marketing team. therefore is confi ned to the promotion of the responded believe that they offer ‘good or charity rather than the development of the Degree to which marketing is involved in excellent’ value for money. marketing strategy. developing strategy Effectiveness of marketing activities The results of the survey indicated that The Head of Marketing at Charity the marketing team was rarely involved in With the competition for charitable funds X told us that, when looking at the development of the overall strategy. intensifying and cash fl ow tightening, it last year’s marketing activities, he This is curious, as it is normally marketing’s seems only sensible that, before monies discovered that they had attended role to understand the environment and are spent, performance criteria are set to 167 events around the UK. We were provide the market intelligence from which help monitor the success of the spend. In a impressed.