The holiday shopping season, coupled with the current wave of renewed interest in raising the minimum wage and the plight of workers at places like Walmart, got me thinking about — what else? — donor retention.

Seems to me there is significant similarity between the management mindset of some of the Big Box stores and burger chains and many nonprofits. Let me explain.

There are two types of big box consumer retailers. Type A views workers who serve the public as a ‘cost center’ and does everything possible to hold down wages and benefits. Type B views workers as a ‘profit center’ believing that a better-paid, better-trained worker will be more eager to help customers and also be more eager to help their store sell to them.

There are two types of nonprofits. Type A views donor service as a ‘cost center’ and does everything possible to hold down the costs and quality where donor services are concerned. Type B views donor services as an ‘income  or profit center’, believing that a donor whose inquiries or complaints are quickly and properly resolved will respond with higher donor loyalty and value.

In earlier posts here and here, I’ve pointed out that poor donor service accounts for a significant part (20%) of why donors drop out.

There’s simply no excuse for organizations losing nearly 20% of their defecting donors because of lousy service. Shame on us.

I do realize of course that while every Agitator reader knows and appreciates the retention value that springs from good donor service, many of you have to battle upstream against CEOs who are not donor-centered and bean counters who have no idea why taking good care of donors is so fundamentally important.

So, here are some insights from the business world that may help convince the doubters. In her book The Good Jobs Strategy, Professor Zeynep Ton of MIT’s Sloan School of Management persuasively argues that many of those big-box retailers have been making a strategic error: Even the most cold-hearted, money-hungry capitalists ought to realize that increasing their work force, and paying them and treating them better, will often yield happier customers, more engaged workers and — surprisingly — larger corporate profits.

To Professor Ton, consumer-facing workers are not merely a cost; rather, they can be a major source of profit. Costco, a company that believes workers are a ‘profit center’, pays its workers about $21 an hour. Walmart, with an opposing ‘cost center’ philosophy, pays its workers about $13 an hour. Costco’s profit and stock performance has beaten Walmart’s for more than 10 years.

How does your organization view donor service? Profit Center or Cost Center?

Roger

P.S. My thanks to Adam Davidson, co-founder of NPR’s “Planet Money”, whose piece in the NY Times, Thinking Outside the (Big) Box, got me thinking.