Can Purchase Behavior Predict Relationship Perceptions and Willingness to Donate?

Abstract

As arts organizations frequently seek purchases and donations from the same consumers, one of their challenges is identifying which consumers are likely to become donors in the future. With all of the data currently available, many organizations are looking to their databases to predict future consumer behavior. In the customer relationship management literature, models have been developed that allow organizations to use consumer purchase data to predict future purchase behavior. This goal of this research is to extend this literature to determine whether it is possible to predict consumer willingness to donate using purchase behavior data. It is not expected that purchase behavior data will be nearly as accurate a predictor of future donation behavior as past donation behavior would be. Rather, the goal is simply to determine whether organizations would be able to use purchase behavior data as a proxy for relationship perceptions to improve their ability to identify prospective donors among their consumers. Three commonly used methods of prediction based on past behavior are tested using a combination of purchase behavior data and consumer surveys: a segmentation approach, a recency/frequency/monetary value model, and a Pareto/NBD customer relationship management model. Across all three methods, purchase behavior is found to be a poor predictor of both customer relationship perceptions and willingness to donate to the organization.

Segmentation of individual donors to charitable organizations

“…However, Durango-Cohen et al ( 2013 ) notes that reliance on RFM statistics alone introduces an aggregation bias that masks the underlying motivational factors that trigger behavior. Similarly, Johnson et al ( 2014 ) conclude that donor behavior patterns, particularly regarding the intensity of the relationship between the donor and the charitable organization, were found to be ineffective predictors of the individual’s willingness to donate. In this regard, Dolnicar and Randle ( 2007 ) suggest that motivation-based data must accompany mere RFM statistics in order to better understand the nature of the homogeneity within donor segments as well as the differences between them, thereby allowing nonprofit organizations to more effectively target each donor group with customized messaging.…”

“…However, contrasting findings regarding the impact of age and gender have also been revealed by other research. For example, Johnson et al ( 2014 ) in a study conducted in a southeastern U.S. city, found no difference in gender or age regarding respondents’ willingness to donate to a performing arts organization. Similarly, Heiser ( 2006 ) reported mixed support for a significant relationship between gender differences and charitable-giving behavior.…”

“…A branch of segmentation research has focused on using purchase (i.e., contribution) results to find patterns in this data regarding relationship perceptions and to predict future charitable donations (e.g., Durango-Cohen & Balasubramanian, 2015 ; Johnson et al, 2014 ). For example, Johnson et al ( 2014 ) and Taylor and Miller-Sevens (2019) found that donors’ perceptions of a strong relationship with a causal organization lead to a greater willingness to contribute.…”

“…A branch of segmentation research has focused on using purchase (i.e., contribution) results to find patterns in this data regarding relationship perceptions and to predict future charitable donations (e.g., Durango-Cohen & Balasubramanian, 2015 ; Johnson et al, 2014 ). For example, Johnson et al ( 2014 ) and Taylor and Miller-Sevens (2019) found that donors’ perceptions of a strong relationship with a causal organization lead to a greater willingness to contribute. Durango-Cohen et al ( 2013 ) also acknowledge the considerable extent to which research on donor segmentation has focused on behavioral data, specifically the recency, frequency and monetary value of contributions (or RFM statistics) in which individuals sharing similar RFM characteristics are grouped into segments for better predicting future donation behavior.…”

Beneficiaries or Charity: The Influence of the Source of Acknowledgments

“…Consequently, charities have focused on the retention of donors ( Johnson et al, 2014 ; Merchant et al, 2010 ). Previous studies have shown that communications and interactions can influence donors’ subsequent donation desires ( Gundlach et al, 1995 ; Mathur, 1996 ; Bennett, 2009 ).…”