Managing Word-of-Mouth: A Nonprofit Case Study

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Managing Word-of-Mouth: A NonprofitCase StudyMartin Williams a & Francis Buttle ba University of Technology , Sydney , Australiab Macquarie Graduate School of Management , MacquarieUniversity , North Ryde , AustraliaPublished online: 25 Aug 2013.

To cite this article: Martin Williams & Francis Buttle (2013) Managing Word-of-Mouth: ANonprofit Case Study, Journal of Nonprofit & Public Sector Marketing, 25:3, 284-308, DOI:10.1080/10495142.2013.816191

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Journal of Nonprofit & Public Sector Marketing, 25:284–308, 2013Copyright © 2013 Crown copyrightISSN: 1049-5142 print/1540-6997 onlineDOI: 10.1080/10495142.2013.816191

Managing Word-of-Mouth: A NonprofitCase Study

MARTIN WILLIAMSUniversity of Technology, Sydney, Australia

FRANCIS BUTTLEMacquarie Graduate School of Management, Macquarie University, North Ryde, Australia

Word-of-mouth (WOM) is an important influence on the opinionsof donors and their donation behaviors. Against a background ofmore professional donor relationship management, we investigateabout how, if at all, nonprofits (NP) manage WOM. We reportan in-depth case study of a single NP. We find that there iswidespread appreciation that WOM influences NP performanceindirectly through its impact on donor acquisition, donor loyalty,and organizational reputation. Whilst the organization employsnetworking and WOM practices, it stresses the reduction of neg-ative WOM (NWOM) rather than the promotion of positive WOM(PWOM). Crisis management dominates the NP’s WOM-relatedthinking. We find that PWOM emanates from many organizationalinfluences including donor satisfaction, the welfare service itself,networking practices, external suppliers, alliances, its officers andcommunication practices including both advertising and publicrelations. We apply a new model, the eight pillars of WOM, to ouranalysis of WOM management in the case organization.

KEYWORDS negative word of mouth, NWOM, donor dissatisfac-tion, crisis management, public relations, corporate reputation

INTRODUCTION

Nonprofits (NPs) have good reason to worry about word-of-mouth (WOM).In 2005, the chief executive of Singapore’s National Kidney Foundation

Address correspondence to Dr. Martin Williams, Faculty of Arts and Social Sciences,University of Technology, P. O. Box 123, Broadway, Sydney, NSW 2007, Australia. E-mail:[email protected]

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Managing Word-of-Mouth 285

resigned in disgrace after revelations about his salary and the charity’sspending led to a public outcry. The CEO also admitted exaggerating thenumber of kidney dialysis patients in a bid to hype the problem and lift theamounts donated.

The scandal not only shook public confidence but also affectedsubsequent donation behavior. According to research commissioned bySingapore’s National Volunteer and Philanthropy Centre, the proportion ofpeople donating money to charitable causes fell to 89% from 97% the pre-vious year, and total donations dropped over 20% from S$438 million toS$341 million (Straits Times, Singapore, July 14, 2006). Therefore bad newscan have significant effects on donor behavior and subsequently on theorganizations they support (Goldenberg, Libai, Moldovan, & Muller, 2007).

On the other hand, good news can have a beneficial impact on rep-utation and donation behavior. That is certainly the hope of people whocontribute to the Facebook page “My Favourite Charity,” where a largenumber of charities are nominated for their excellent work.

There is growing contemporary interest, both in the NP communityand in academia, in the influence of WOM on organizational outcomes.However, little is known about how, if at all, NP’s manage WOM. We there-fore undertook research into a major internationally known NP to shed lighton this question. Previous research, which we explore in more detail below,indicates that WOM can influence customer- (donor-) related and broaderorganizational outcomes, suggesting that in principle, there may be merit intaking a more systematic view of the management of WOM.

LITERATURE REVIEW

WOM has been widely researched across many decades (Bauer & Gleicher,1953; Dichter, 1966; Trusov, Bucklin, & Pauwels, 2009; Whyte, 1958) becom-ing more prominent since the 1970s. The growing number of recentpublications signal increasing interest in WOM (Dye, 2000; Gladwell, 2000;Godes & Mayzlin, 2009; Godin, 2001; Rosen, 2000; Silverman, 2001), withthe Internet sparking further attention (J. Brown, Broderick, & Lee, 2007;Dellarocas, 2003; Godes & Mayzlin, 2004; Litvin, Goldsmith, & Pan, 2008;Thomas, 2004; Vilponnen, Winter, & Sundqvist, 2006). Yet, despite the stronginterest, important knowledge gaps remain, particularly in the managementof WOM.

WOM can be defined as informal person-to-person communicationbetween a perceived noncommercial communicator and a receiver abouta brand, a product, a service or an organization (Anderson, 1998; Buttle,1996; Sen & Lerman, 2007). WOM gains persuasiveness through the higherperceived credibility and trustworthiness of the communicator (Buttle, 1998;Chatterjee, 2001; Godes & Mayzlin, 2004).

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286 M. Williams and F. Buttle

The dominant focus of earlier authors is on the positive WOM (PWOM)produced by satisfied customers as they communicate with prospects(Blodgett, Granbois, & Walters, 1993; Bowman & Narayandas, 2001; East,Hammond, & Lomax, 2008; File et al., 1994; Richens, 1983; Sonderlund,1998; Westbrook, 1987). Thus, PWOM is usually seen as a potential sourceof new customers (Kelly, 1997; Rosen, 2000; Stokes & Lomax, 2002; Wilson,1994), particularly in services (Boulding, Staelin, Ehret, & Johnston, 2005;East, Hammond, Lomax, & Robinson, 2005; Engel, Kegerreis, & Blackwell,1969; Keaveney, 1995; Silk, 1966; Swan & Oliver, 1989), and as a stimu-lator of donations in the NP sector (Cermack et al. 1994; Prince & File,1994).

Nonprofits are generally service organizations whose outputs areintangible-dominant. While there is little research on NPs per se, in servicesmore broadly particular attention has been concentrated on the antecedentsof PWOM, especially the effects of product perceptions (Westbrook, 1987)and quality judgments (Bitner, 1997; File & Prince, 1992; Harrison-Walker,2001; Hartline & Jones, 1996; Godes & Mayzlin, 2004; Gustaffon & Johnson,2002; Zeithaml, Berry, & Parasuraman, 1996).

Several theorists have suggested that a donor orientation (Congram& Dumesic 1986) and relationships (Cermack et al., 1991) and relation-ship management activities are particularly well suited to the NP sector(Sargeant, 2001). Burnett (1992) coined the phrase “relationship fundrais-ing.” This recognizes the important role that relationship management playsin the creation, maintenance and development of relationships with donors.This author points to the differences between donors, their giving histo-ries, their motivations for giving, and their expectations of ‘customer care’from the charities they support. Sargeant (2001) emphasized the impor-tance of a “customer care” perspective by suggesting that perceptions ofservice quality are highly influential in whether or not to fund a particularcharity.

Donor-perceived service quality has been shown to positively influencedonor lifetime value and therefore, donor behavior (Sargeant & Jay, 2004).While, donor trust is an essential component in the relationship (MacMillan,Money, Money, & Downing, 2005; Sargeant & Lee, 2004; Sargeant, 2001),more recently, Shabbir, Palihawadana, and Thwaites (2007) have reinforcedthat relationship benefits, service quality, trust, commitment, and satis-faction are the key antecedents of donor-perceived relationship quality.Furthermore, they highlight that donor loyalty and PWOM communicationsare central consequences of donor-perceived quality.

In fact, it is well established that a baseline of appropriate service qualityis essential if the longevity of a customer is to be assured; however, higherfrequencies of WOM occur when satisfaction or dissatisfaction are at theirhighest levels, that is when consumers are extremely satisfied, or dissatis-fied (e.g., Anderson 1998; Herr, Kardes, & Kim, 1991). According to Sargeant

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(2001), lapsed donors have a significantly poorer view of the quality of ser-vice they receive than active donors; they tend to think that the NP hasgiven them inadequate feedback as to how their donations are being used,whereas 26% of lapsed donors exit the relationship because they believeother causes to be more deserving.

Overall, Sargeant (2001) found that donors generally express a feelingof neutrality or satisfaction towards the organizations they support, with veryfew being “very satisfied” with the quality of service rendered (where thosevery satisfied are likely to make a further donation). Very satisfied donorstend to remain active as opposed to those who are merely satisfied. Despitehigh degrees of credibility (Kimmel & Keefer, 1991) or commitment (Dick &Basu, 1994; v. Wangenheim & Bayon, 2004), relatively few donors expresstheir satisfaction by uttering PWOM.

However, it is understood that not all WOM is driven by service satis-faction or dissatisfaction (Anderson, 1998). Mangold, Miller, and Brockway(1999) identified 10 catalysts that set off WOM. Customers’ experiencesof complaints-handling processes, for example, may influence WOM (File,Cermak, & Prince, 1994). Prince and File (1994) discuss the influence ofWOM on donation behavior. In NPs, they write, “testimonials take the form ofWOM in which a person considering a donation will seek out others to obtaintheir opinions” (p. 145). This makes donors feel more confident and assuredabout their decisions. This finding reflects what is known about the role ofinfluentials on consumer decisions more generally. A number of researchershave explored the role of influentials (Feick & Price, 1987; Weimann, 1994;Goodey & East, 2008), including early adopters (Rogers, 1962), opinion lead-ers and “market mavens” (East, Hammond, & Wright, 2007; Feick & Price,1987; Wiedmann et al., 2001) on the diffusion of innovations (Mahajan,Muller, & Bass, 1990).

In the broader management literature, Granovetter (1973), Gremlerand Brown (1999) and J. J. Brown and Reingen (1987) have explored theinfluence of referral networks and network effects on consumer behavior.In the NP context, the significance of network effects on donor involvementhas been explored by Rosso (1991). Prince and File (1994) explored hownetwork influences impact the donation behaviors of wealthy individuals.

All these authors underline the importance of close relationships thatincrease participation, involvement and sustained giving. Grace (1997) wentfurther, advocating that NPs create special stewardship programs that ringfence important relationships.

The NP literature also suggests a number of motivations for firms tobecome donors. These include enhancing corporate image (Scott & Lane,2000; Polonsky & MacDonald, 2000), firm visibility, (Brammer & Millington2005), tax breaks (Foran & Theisen, 2000), CEO interests in the particu-lar cause (Werbel & Carter, 2002) and having control over charitable gifts(Ostrander, 2007).

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Despite the rhetoric about NPs embracing relationship managementpractices, and thereby benefiting from network-based WOM, Brennan et al.(1998) and Brennan and Brady (1999) have argued many NPs are adoptingthe trappings, rather than the substance, of relationship marketing. This isparticularly evident, they say, in the areas of direct mail and fundraising, inwhich use of the term relationship marketing simply refers to an increasednumber of outbound donation solicitations.

As this review shows, whilst there is a small but emerging amountof research into NP-specific WOM, and it is clear that some service-sectorresearch findings are also relevant to the NP context, there is no researchinto whether or how NPs consciously attempt to manage WOM.

RESEARCH STUDY

Research Questions

As the literature review makes clear, there has been considerable interest inWOM across many decades. However, there is a significant lack of insightinto how, if at all, organizations, including those in the NP sector manageWOM. We therefore opted to undertake exploratory research, guided bythe following core research question: How, if at all, does the NP manageword-of-mouth?

Subsumed in this question are others: how aware, if at all, is the NPof the role and importance of WOM? How, if at all, does the NP attempt togenerate PWOM? How, if at all, does the NP try to control or prevent NWOM?Is WOM a defined organizational responsibility?

These were the issues explored during data collection.

METHODOLOGY

Our research is an Australian case study guided by the methodological rec-ommendations of Yin (1994). Primary data sources and collection methodscomprised interviews, texts, observation, and transcripts—the four classifi-cations outlined by Scapens (1990). Interviews were the principal sourceof data. Interview transcripts were triangulated with internal documentationand other materials such as annual reports, newspaper stories, marketingplans and internal memos, and creative communications including radiotranscripts, television commercials, and web pages. Documents such asthe Annual Appeal Chairman’s Handbook, that outlined donor and vol-unteer recruitment processes were also reviewed (Daymon & Holloway,2002). Discrepancies were identified and clarifications sought in additionalinterviews.

The identity of the NP is not disclosed, at its request. We gathereddata from 16 in-depth and semistructured, face-to-face interviews. WOM was

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explored from the point of view of different actors in a range of departmen-tal roles, including members of the marketing department, the corporategift and bequest sales forces and line management. One senior volun-teer, the Chairman of the Media Advisory Committee, was also interviewed.We performed participant observation (Denzin, 1978) within the context ofvolunteer meetings and in contexts selected through purposive sampling(Teddlie & Yu, 2007). Adopting the approach of Ferreira and Merchant(1992), the study also ensured there was an attempt to explicitly link theobservations to the pre-existing body of knowledge.

An on-going process of data analysis was conducted throughout theresearch. During this process, we followed Miles and Huberman’s (1994)model of qualitative data analysis, using analytical techniques includingpattern matching (i.e., word tables; Yin, 2003).

N-Vivo software was used as a repository and analytical tool to managecoding of the data into themes. The themes we identify are embedded inWilliams and Buttle’s (2011) eight pillars of WOM model. This model claimsto capture the full range of organizational attributes or practices that mightinfluence WOM, whether positive or negative. Our deployment of the eightpillars of WOM model does indeed fully account for all of the data wecollected about WOM in this NP context. Whilst remaining true to the originalmodel structure, we have reconfigured it to fit the NP context by drawingattention to the important role of the donor in WOM management (see Pillar1 in Figure 1).

FIGURE 1 The eight pillars of word-of-mouth model for nonprofits (adapted from Williams& Buttle, 2011).

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Results

Before we present our detailed findings that are organized against the eightpillars of WOM model for NPs, we make some general observations aboutour results.

First, our case organization has a coherent policy and integrated prac-tices to promote networking. We found that within the arena of volunteering,coherent processes and structures to encourage networking and PWOM aresalient and critical to achieving annual fundraising performance goals.

Second, we found that WOM is considered important within theadvisory boards where networking and “who you are” are factors in vol-unteer identification. These factors are also crucial to the Annual Appeal,particularly in business-to-business fundraising and Residential Doorknockvolunteer committee recruitment and donor identification. Language suchas “influence” or “personal influence,” “committees of influence,” “personalrelationships,” “significant others,” “advocacy,” “goodwill,” “testimony,” and“volunteer referral” is used in these specific contexts. There is an apprecia-tion that influence, advocacy, and personal relationships, “one gets five,” and“the right asker” and the committee structures are all important WOM-relatedmarketing tools. A spokesperson explained:

Advisory committees are a very powerful means of talking to people. . . .

A person said, “I know the people at Channel 10. I’ll get onto them.” So,advisory committees delivering people’s sphere of knowledge to a groupsituation where individuals are allowed to actually use those contactsand that influence for the benefit of the charity or the cause. It is a verypowerful way of turning one person’s ideas into maybe ten or twelvepeople combining and committing to the cause and going out to do thework to help through influence and contact. (SS1 6)

Third, within individual departments, we found that managers act in inde-pendent and uncoordinated ways that they believe may promote PWOM,even though WOM specifically is not a measured objective.

Fourth, we found that the NP has no processes to combat NWOM fromdonors, and thus has no equivalent to the complaints management pro-cesses that are typically found in commercial organizations. Despite this,both NWOM and PWOM are concerns of almost all departments, which varyin their understanding and management of WOM.

We now present our findings, guided by the structure of the eight pillarsof WOM model.

WOM Pillar 1: Donor WOM

The role of the donor within the eight pillars of WOM model is veryimportant. In the original eight pillars model, Williams and Buttle (2011)

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entitled this the customer pillar. We have modified the nomenclature for thisparticular study. The NP’s managers believe that stimulating PWOM fromsatisfied donors will have a significant effect on new donor acquisition. Thishas particular poignancy within new volunteer identification through theadvocacy processes using donors and previous volunteers to their generaland business appeals. PWOM through these organized face-to-face pro-cesses, they believe, enables them to economize on their already stretchedcommunications budgets. An interviewee explained:

We have guidelines and manuals to show how you perpetuate the pro-cess of creating advocates. We have written manuals on how our peopleuse influence and use WOM. (SS4 57–58)

Our informants also stressed how important it is to retain donors by deliv-ering donor satisfaction even when a relationship is conducted by mail.Of crucial importance in this donor satisfaction is speedy processing ofdonations with consequent receipt of “thank-you” notes and tax receipts,on which the donor can receive a tax deduction.

An appropriate thank you is also an essential part of the relationshipbuilding and WOM-promoting process with key influencers. Senior managersmake a point of thanking those who refer donors, such as the public trustee.Thus the bonds between the influencer and the organization can be rein-forced with a timely expression of thanks. In fact, the thank you in personcan be reciprocated with more goodwill. In this NP, thanking donors is alsobelieved to link strongly to increased giving (see also Rosso, 1991, p.149):

I went to Port Macquarie to visit the Public Trustee and to say “thankyou” and just learn a little bit about the family. . . . He said “here’s myhouse keys, there’s boards in the garage, go and have a surf.” (SS1 122)

An added benefit flowing from contact is increased donations to thecurrent financial appeals. (SS8 101)

While for-profit organizations are united in striving to provide “very goodservice” by “getting it right first time” with a view to stimulating PWOM, theNPs donor satisfaction mainly comes from keeping out of the media spotlightand maintaining a high degree of credibility and trust, thereby adding to theNPs reputation. A good reputation is reinforced through delivery of serviceswith minimum impact on the donation dollar—a high percentage reachingits welfare recipients:

In terms of WOM, people would be saying, [the NP] have a good reputa-tion . . . we have a high level of applying the dollar that’s donated to thework that we do. (SS6 35–37)

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However, despite being surrounded with PWOM, database analysis has ledthe NP to believe that other more “emotive” charities receive more WOM,particularly with women donors in the 45–55 years of age segment, theirkey target group for new donor acquisition. The NP believes while theydon’t have “image problems” their image is less salient and is less “WOMcompetitive” within this important donor segment:

I just have a sense that perhaps some of the medical type of charities are,perhaps more emotive and touch people personally and word (WOM)indiscriminately gets spread faster. I am not sure that for that generation[we] are as relevant or connected. (SS6 46–53)

A major objective of the NP’s relationship management programs is to cre-ate a happy, loyal donor. Customer relationship management (CRM) tacticsinclude customized messaging in the direct mail fundraising targeted at creditcards owners. However, no donor satisfaction or reputation measurementsoccur in the NP. Thus, in reality, they do not actually know how donorsfeel about them at any moment in time. Instead, they use the number ofdonations and their value as a proxy indicator. An interviewee said:

No we don’t really know much about our donors or how they came tous and we don’t measure donor satisfaction. (SS 5 122)

Donor marketing events are prominent methods of leveraging donor good-will, particularly their free Annual Appeal launch business luncheons, whichthe nonprofit mounts through its bank and media alliance partnerships (Pillar6) and to which prospects are also invited, thus also providing a base of newprospects through WOM networking.

WOM Pillar 2: Brand/Product or Service WOM

This pillar focuses on the influence of brand attributes on WOM, whichincludes the brand name and logo, the NP’s buildings, livery, and its uniqueuniform. The nonprofit is also distinguished by its distinctive “nick-name”branding that is strongly associated with the work it does in the community.Public perception of the NP is heavily influenced by WOM of past deeds.For instance, stories of the outstanding example that their officers set inbattle, even though pacifists, during WWI and WWII have been passed onby WOM from generation to generation. These stories have created trust andcredibility and have helped form the organization’s reputation (SS5 23).

We were there for them in the War years and has been lingering for somegenerations now, probably less influential now than it used to be. Whatwe did then lingers for us, the trust and credibility element. (SS2 49–50)

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When its officers are seen carrying out its mission, or when a branded vehicleis seen carrying out work on the streets, this creates WOM. Our informantsbelieve that the NP’s credibility is reinforced by its high visibility includingthe distinctive uniform that is seen as officers undertake their caring on thestreets. This is believed to have created trust, goodwill and WOM. Trust inthe brand is seen as essential to WOM utterance for the NP.

“If people can’t trust (us), who can we trust?” And that was a bit of a keyto it. He had total trust in the uniform, not me, in the uniform and whatI represent. (SS1 5)

Our informants also believe the NP has enjoyed PWOM advantages by hav-ing an easy-to-recall and pass-along tagline, which reflects the NP’s mission.

Those phrases seem to become imbedded in the “speak” of our Chairmanand volunteers. . . . So WOM is there, how else do young people who Isee on the street have that feeling that they must give to the [NP]? Wheredoes that come from other than grandma or grandpa telling mum andtheir mum telling them? (SS4 1–15; SS 5 211)

WOM Pillar 3: Communications WOM

Significant PWOM is generated through outbound organizational communi-cations, created not only by corporate PR, but also departments in charge ofwelfare where there is opportunity to influence media coverage particularlysurrounding disasters. Direct mail forms the central platform of outboundcommunications to the donor base and to new prospects. However, the NPhas not attempted to identify donor characteristics that predict behaviors ben-eficial to the NP and to manage them accordingly. One spokesperson said:

How can we possibly create satisfied loyal donors and have them moveup the [loyalty] ladder when we’re all doing different things at differenttimes with our donors. (SS4 156)

Of advertising, business events, direct marketing, and corporate sponsor-ships, the NP strongly believes television is the most effective way of buildingawareness of and trust in the organization, which in turn sparks WOM. Onespokesperson commented:

Advertising [on television] plays a role [in support of WOM] that noneof us could even contemplate the power of . . . it was a combination ofcommunication, advertising, awareness and trust. (SS3 99)

Advertising content demonstrating the plight of victims that is high inconversational value or which connects with customers emotionally, also

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reinforces trust and together stimulate high WOM. A spokesperson endorsedthis, saying:

Trust is an amazingly important thing and advertising has a role ofreinforcing trust, and reinforcing awareness and the values in theorganization. (SS4 101)

The NP has also uses well-known celebrities including actors and sportsidentities in advertising and direct mail fundraising activities, which theyclaim has stimulated high levels of WOM. The PR department is the dominantsource of PWOM stimulation. In fact advertising effects, through increasingclutter in the media from competitors and advertisers in general are havingdetrimental impacts on “share of voice.” The volunteer chairman stated:

Publicity [PR] is possibly the most powerful aspect [of communications].I have just had a [organization] report through from New Zealand, andWOM and comment from people is growing as a means of knowingabout the organization and advertising is actually dropping a little bit.That is partly because of the clutter there is a lot of people advertisingtheir services and asking for money. (SS3 80–81)

In fact, WOM from PR media exposure through television, radio and thepress is crucial in gaining awareness and reinforcing messages about theNP’s relief work amongst donor-volunteers, their greatest advocates:

Getting [WOM] out there is effected through the media, through mediareleases, to getting that information amongst our network of volunteersor committee members. (SS6 125–128)

Media coverage of disasters in which the NP is or is thought to beinvolved and the NP’s efforts to influence coverage have been of significantimportance:

The way to stimulate awareness and talk, is to be seen and to make aneffort to be seen, so we have to spend energy making sure that happens. . . to have a disaster brings the [NP] up to the front again. (SS1 59)

However due to government policy, the NP’s role in these disasters isdiminishing. A senior manager said:

You get people talking about the [NP] as a result of disasters. And withoutdisasters it’s fair to say that probably they don’t talk [WOM] so much aboutthe [NP], that’s probably the area that people notice the most. (SS13 259)

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Broadly, media liaison by the NP’s PR department is intended to influencejournalists and opinion formers within the media positively. However, inthe NP the predominant role of the PR department has increasingly been tobuild relationships with media contacts that help to ameliorate or extinguishNWOM arising from adverse media comment. A participant said,

[An] increasingly important area of operation is media management, interms of general media enquiries, enquiries about the [NP’s] work, we’rebecoming less and less of a sacred cow. Once upon a time the [NP] wasalmost untouchable with the media. (SS5 8–10)

The NP is deeply concerned about NWOM generated by harmful media com-ment as this threatens its relationships with key stakeholders and importantinfluence groups such as the federal government (Pillar 4), as well as itscorporate donors and higher net-worth prospects.

The process meant I handled all logistics for Four Corners [ABC TVprogram] and put in place a very strict protocol in relation to enquirieswhen they came in. Everybody was informed, the divisions, [our careline] and we kept it very tight . . . not only through the media but wehad that information in place internally right through the organizationto ensure that everybody was singing from the same song sheet andnegativity isn’t. (SS5 85–98)

The NP’s general experience has been that full admission and elaborationof their true position can diffuse negative sentiment in the media, thusminimizing negative WOM and extinguishing further adverse publicity.

Trying to stop the spread of negative WOM depends on what it is. If it’spublicity or a PR media type thing the best way to stop it is to justacknowledge the true position and try not to cover up that position. (SS6122–124)

Thus the NP’s emphasis is on protecting the organization’s reputation and not“breaking the public’s trust.” However the NP is able to directly link negativemedia reporting not only to significant reductions in donations from directmarketing efforts but also from key advocates. A bequest manager said:

I called my solicitor mate who said “long time, no hear” we arrangeda meeting. It actually happened the day after the papers were splashedwith the news of the aged people’s homes. He said when I got to ourmeeting, “Colin, what [is the NP] thinking of?” So the conversational tonehad changed in a moment . . . trouble is that solicitors tend to have longmemories. (SS7 10)

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Another commentator said:

There have been a few calls from donors to tell us they’ve changed theirwills, it’s only a small a reflection of the many more who haven’t told usabout it yet. (SS8 10)

Thus, negative publicity, coming from outside the organization, is deemed“not controllable” but still damaging to the organization’s reputation and itsfundraising. In fact the NP is able to equate NWOM effects to significantfundraising reduction and reputational damage. An informant told us:

We don’t like media comment, it gets out of hand and we can’t control itwhen it damages our reputation. (SS4 234)

Further, even when other charitable organizations experience negative mediacomment and associated NWOM, the reputations (and thus the fortunes) ofthe sector as a whole suffer, the consequence being significant reductions infundraising for our case NP:

I’ve talked to a fair few. The damage to the Red Cross’s reputationaffected us across the whole industry. (SS4 154)

Also attached to Pillar 3 are the attributes of, and practices associated with,organizational websites. Visitor experience, including donor interactivity, isthought to provoke WOM, especially in time of disaster-related fundraising.Some pages are designed specifically to stimulate WOM, featuring a “Clickto tell a friend” button.

The NP’s PR department observes and monitors blogs that they believehave incited NWOM. However, the NP has not used social networking sites,forums or chat rooms to promote PWOM or to identify and quell NWOMbefore it becomes significantly damaging. The NP has little understandingof how to manage negative online criticism or the effects of “bad buzz.”This is partly due to their online operations not having clear ownership.A spokesperson said:

Though it’s a secure website, we haven’t got a strategy; it’s been a bit of amuddle really, until our website has got some kind of someone’s owningit, it’s difficult. (SS13 95–97)

We also found that our participants were aware of the potential for WOMstimulation, whether positive or negative, through the network relationshipsupon which their annual fundraising appeal depends. So, we now turn to the

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impact of key-influencer networks, referral networks, supplier and alliancepartner networks, and employee networks on WOM.

WOM Pillar 4: Key-Influencer Network WOM

Key influencers of WOM include government agencies, environmentallobby groups, user evaluator groups, industry associations, corporate giftcommittees and unions, family and ethnic groups and competitors. Theirendorsement or rejection of an NP, its services, policies and practicescan have significant impact on WOM, and thus requires a relationshipmanagement process akin to lobbying. A spokesperson said:

Corporates have changed their policies to having a review committeewhich selects charitable causes in rotation, and they also make fundsavailable through “workplace giving,” which relies on the employee toselect from an approved list, not always in our best interests. (SS8 145)

Competitors’ activity has had a significant NWOM effect on our NP.Competitor-originated NWOM, often taking the form of “bad mouthing” ourNP, is thought to have a significant impact on donor acquisition and loyalty.The NP belongs to industry bodies where these competitive behaviors canbe discussed and, it hopes, extinguished.

WOM Pillar 5: Referral Network WOM

This pillar describes the WOM-influencing practices of a number of differenttypes of referrers, which we cluster into general, reciprocal, and incentive-based groups (a classification originally proposed by Payne in 1995 andsubsequently applied to NP’s by Brennan and Brady in 1999).

We talk up the [NP] particularly amongst the business community. We sayto the community by WOM, significant people who can actually make achange, make a difference in the community, by WOM, particularly usingour Advisory Boards, and via [our] Committees, we’re making impact . . .

from fund raising with WOM. (SS1 1–4)

Considerable effort is made to obtain testimonials from satisfied donors,and to deploy these in new donor meetings and presentations. This occursrepeatedly within the volunteer sales force where new donor acquisitionprocesses provide opportunity for exerting influence through targeted WOMnetworking and advocacy cultivation. An interviewee said:

The committee structure is advocacy. It’s our committee structure for our. . . “Doorknock” . . . we really look for is people of influence in business

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or society who can influence others to donate and by getting theminvolved with us and by asking them to support us financially. (SS3 47)

Key influencers can also be a significant influence on PWOM advocacy. Forexample, the NP generates PWOM advocacy through advisory boards, whosenetworking within the media industry can produce pro-bono advertisingplacement worth over AUD $3million. A spokesperson said:

Donated free of charge. Again, through influence and goodwill WOM . . .

when something like the head of Channel 7 rings up his operators, hisadvertising people and says “there is an ad coming in from (us), use it”and they do, when our ad arrives because of that influence . . . its on thetop of the pile. (SS4 151)

During the annual fundraising drive this well-described and managed net-working operation intensifies with the NP’s officers accompanying volunteersin their endeavors. A volunteer interviewee reflected on the door-knockrecruitment process:

It’s a pyramid system. Very simple, I am the chairman of the “Doorknock”and I have five people under my responsibility. So I get five people ofinfluence. And all those people go out and get five more, like a pyramidselling, as the pyramid gets bigger just as the influence and filtration goeson. (SS3 117)

Sometimes donor advocacy does not pay off. The NP has lost someextremely high value prospects in their business appeal when one vol-unteer approached a prospect who had already been approached byanother volunteer, and given handsomely to the organization. An intervieweeexplained:

We don’t have a sophisticated system capable of duplication avoidance,it’s a problem cited quite often by our chairmen. (SS4 318)

Furthermore, the NP’s processes to keep the relationship alive by appreciat-ing the donor or volunteer’s contribution and are not sophisticated:

My belief is that data is the lifeblood of any of this kind of process.We need to get the data centralized, we need to get our doorknockers onthe central system so that we can do things like send them a ChristmasGreeting, send them an Easter Greeting . . . we have got no real meansof contacting a lot of our volunteers, some of whom have given for yearsand years. (SS4 20)

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Incentive-based referrals are those where some reward or inducement isoffered to influence recommendations. While for-profits may pay substantialfees to celebrities and sports personalities to generate PWOM, the nonprofitnegotiates similar but pro-bono arrangements. The NP has also enjoyedsuccess using sports personalities. The NP strives to promote expertisereferrals by identifying and recruiting acknowledged experts within a tar-geted industry, for instance, within the finance or banking or pharmaceuticalindustries. Solicitors are enrolled in the “Honored Friend” referral programto encourage bequest referrals from colleagues in the legal sector and toinfluence their clients:

We attract solicitors who will write the Will for nothing with the ideathat if we introduce them to a new client they will enjoy other profitablebusiness in the long term, so it works both ways. (SS8 11)

High profile members of the community including the ex-governor of NewSouth Wales, Sir William Deene have also lent kudos and support to the NP.

WOM Pillar 6: Supplier/Alliance Partner Network WOM

Suppliers and alliance partners provide significant additional resources tothe NP’s operations. The NP believes that the deep association between twowell-respected brands, for example between a national bank and our NP,has propelled PWOM and provided access to new donors through inserts intheir monthly account mailings. A spokesperson said:

I describe it as a family relationship. It’s that close. There is no writtencontract there is no written agreement, it would be so difficult to writedown the depth of the relationship. It is a very deep relationship, as wellas widespread. (SS4 158–160)

This partner has also donated additional assistance, for example, by buyingand donating additional 30-second TV advertising spots. WOM is maximizedthrough other areas of cooperation, such as free inserts in customer state-ments. On Doorknock Saturday, the bank opens branches for receipts andstaff work free. Other partners include the media, where sponsorship hasincluded both Channel 10 and Channel 7. Though conflicts are increasing,the NP does its best to isolate potential problems.

WOM Pillar 7: Employee Network WOM

The participants in our research regard the internal WOM between employ-ees and volunteers as the glue that holds the organization and their AnnualAppeal together. Policy and strategy announcements from the Commissioner

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and senior management are disseminated both vertically and horizontally byWOM. They stress the importance of getting donor-facing employees to buyinto the mission of the NP:

When you answer the phone, when you talk to somebody, you are actu-ally the [NP]. And the way you present yourself on the phone and theway you deal with people makes an impact on how the [NP] is actuallyperceived in the community, like it or not . . . I have to get that across.(SS1 151)

Negativity towards the Doorknock exists amongst employees alreadystretched with welfare commitments, particularly when fundraising perfor-mance is equated with the resources the organization employs against thistask annually. The event has to be strongly defended. Both advisory boardsand marketing department stress the benefits to senior management interms of awareness, and image and reputation and its criticality to giving.Thus the support of the Commissioner is crucial to ensuring full employeecommitment, and in turn, their support of volunteers within the businessand residential appeals, where networking and WOM provide the basis ofdonation receipts.

WOM Pillar 8: Organizational WOM

Thus the referral chain of command originates with the most senior mem-bers of the NP and trickles down through the WOM networking of theNP’s directors and externally through their allocated volunteer contacts.A spokesperson said:

WOM processes come from the top down. (SS2 351)

So, WOM is generated by the behaviors of the NP’s leaders—what they doand say or fail to do and say. Both PWOM and NWOM are provoked bythe policies promoted by leadership. Individuals and work groups in the NPtake their lead from the top and are encouraged to use their networks tocreate PWOM for the organization. People we spoke with believe that theCommissioner, the NP’s CEO, drives referral both within the organizationand amongst their volunteering sector. This in turn affects the organization’sreputation and business performance.

However, when an organizational crisis is featured in the news media,management fears that the negatively loaded chatter that it provokes couldhave a calamitous impact on the organization’s reputation, revenues and bal-ance sheet. Negative WOM is universally recognized as being damaging toorganizational morale, performance and reputation. It is held in great anx-iety, because it is beyond management’s control. Some major crises have

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been well managed by the NP’s PR department, working in close associa-tion with senior management and the CEO. However this is not always thecase.

In a major crisis they normally just leave things to me totally but that wasone of the very few times that I actually met with the Commissioner andthe senior hierarchy to discuss how we’re going to deal with enquiries.(SS5 85–98)

Thus, the crisis management processes in the NP could be considered lessresponsive, as the line of communication to the media is not well definedand does not automatically involve the CEO.

DISCUSSION

We find that there is some appreciation of the significance and potentialof WOM in the NP. Although department managers act in independent anduncoordinated ways that they believe promote PWOM, WOM is not a specif-ically measured objective. However, the NP does have a coherent policyand integrated practices to promote networking-based WOM and WOM isconsidered important within the volunteers and Advisory Boards. The NPappears to fear NWOM more than it values PWOM. Although the NP’s PRdepartment is responsible for crisis management, the NP has no processes tocombat or respond to NWOM from donors.

Our findings can also be discussed against the framework of the eightpillars of WOM model (Williams & Buttle 2011). We find that WOM can bemotivated through donor satisfaction (Pillar 1), the NP’s welfare business,its identity including its buildings, livery/vehicles and its officers in uniform(Pillar 2), organizational communications such as advertising, events andPR (Pillar 3), and through key influencers separate from the organization(Pillar 4).

WOM also occurs within a framework of networking. WOM-networkinghappens when the organization makes an explicit effort to exploit some net-work relationships to stimulate positive WOM and to gain additional donorsas well as to reactivate past givers. For example, the personal and profes-sional networks of a diverse set of industry corporate business leaders ofinfluence are engaged for WOM purposes (Pillar 5).

Similarly, WOM is influenced by the networking efforts of the NP’svolunteer sales force as they acquire volunteer donors, and their closelyassociated businesses (Pillar 5). WOM is stimulated by actions within theNP’s corporate alliance partners and their employees and supplier networks(Pillar 6), for instance its printers, its advertising agencies, and its directmarketing suppliers.

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WOM is also influenced by NP management’s intervention in employees’personal networks, particularly the religious aspect of their welfare work(Pillar 7).

We found that negative WOM arises from four main sources but haseffects across the whole organization: external media comment (Pillar 3),competitor activity (Pillar 4) and competitive benchmarking within corporateorganizations, particularly in their rotation of short-listed officially sanctionedcharities (Pillar 4) as well as NWOM from disaffected donors and volunteers(Pillar 1).

However, while NWOM occurs through donor dissatisfaction the NP nei-ther measures nor monitors NWOM, so complaints, if any, are either fieldedat a local level or not at all. However, the NP has experienced jolts fromexternal media comment suggesting that they had departed from acceptednorms; this has noticeable effects on fund-raising performance. NWOM alsoemanates from NP-sector competitors denigrating the organization, whichalso generates adverse media exposure. This, in turn, influences employeeattitude negatively and disaffects frontline staff morale.

WOM, both positive and negative, may be influenced not only by indi-vidual Pillars but also by the interaction between them. For example, wefound that new donor acquisition and Annual Appeal advertising campaigns(Pillar 2) are also communicated internally to employees so that they becomeexcited and engage in positive WOM within their personal networks (Pillar7) and congregations. Similarly NWOM arising from media comment (Pillar3) and its affects in disaffecting stakeholders (Pillars 5 and 6) can have dra-matic effect on employee identity (Pillar 7) and on organizational leadership(Pillar 8), and in turn on the NP’s image and reputation.

CONCLUSION

The NP’s ability to influence WOM, whether positive or negative, is asso-ciated with a number of attributes or practices that are disconnected, andusually unmanaged. These attributes and practices are embedded in the eightpillars of WOM model. The managers we interviewed initially tended to asso-ciate WOM with their personal recollections of WOM networking through thevolunteer force and the processes employed therein. However, on diggingdeeper, they revealed that they understood WOM could be influenced by arange of attributes and practices including donor satisfaction, a high degreeof visibility within their welfare mission, advertising and PR, and the actionsof a number of network relationships.

Whilst networking WOM is high on the NP’s agenda, and systems are inplace to manage it, the processes adopted are not sophisticated and largelyleft to the volunteer force to execute. The NP has no integrated strategy forthe promotion of PWOM. Each departmental unit interprets WOM differently.

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Therefore there is no clear, shared, understanding of how WOM fits intodonor fundraising, bequests, major gifts, PR, marketing or communicationsprograms, or of the value that WOM contributes to the organization as awhole.

For example, direct marketing managers believe that PWOM is a resultof donor satisfaction with the company’s CRM processes, whereas theadvertising and public relations departments attribute PWOM to image stim-ulation effects. Annual fundraising volunteer management and their bequestsales force contends that PWOM emanates from networking efforts. Thus,there is no holistic understanding of PWOM and its causal agents in the NP.

While networking is a defined management responsibility in the NP,due to lack of resources, in large part the volunteer force controls theseWOM processes. In fact, WOM is not a focal management consideration, andoutside of the corporate and major gift and bequest sales forces is largely aby-product of PR. Though the NP engages in a significant number of WOM-influencing practices, many WOM effects go relatively unrecognized as aconsequence of this lack of understanding.

PR fails to collect data on WOM effects. Direct marketing does not iden-tify WOM effects and no effort is made to leverage, within the mailing list,a donor’s personal network. Amongst the volunteer force, no central datacollection occurs and the NP thus has no record of past success or failurewithin its WOM networking recruitment process either in its business orgeneral Annual Appeals. Thus, our NP organization is unable to determinethe impact of WOM on key performance indicators such as donor acquisi-tion or retention, or within the Annual Appeal volunteer framework. Withouta holistic organizational view of WOM, and with no real value attribution,WOM as a management tool may continue to be undervalued and thereforemarginalized.

LIMITATIONS AND FUTURE RESEARCH

The main limitation of this study is that it is a single case study. There istherefore no attempt to generalize. We don’t even claim that this case istypical—we simply have no way of knowing whether that would be true.Whilst we have been able to talk to many people in many roles and atmany levels of seniority across our case NP, we did not talk to everyone,and might therefore have failed to gather some other insights into how theNP understands and manages WOM. Although our case NP is a multina-tional organization, we explored WOM-related management practices in oneregion only. We do not know whether our findings would be replicated inother geographies. Paradoxically, the single-case limitation is also a researchstrength. This single case study provides deep insight into how this one NPorganization understands and manages WOM.

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Other researchers, also recognizing WOM’s potential for both damageand advantage, may wish to explore other NP’s either using the eight pillarsof WOM model or some other framework. We are confident in asserting thatthe eight pillars of WOM model fully accounted for all of the variance in thedata we acquired. There is certainly scope to explore how one or more NP’smanages either PWOM or NWOM in greater depth. Our research attempts tocover both polarities. Our research offers some tantalizing insights into theimpact of WOM on donor behaviors, including retention or exit. Participantsin our research expressed confident opinions but we did not see or readmuch hard evidence. There is certainly a need to investigate further whetheradverse publicity or negative chatter influences donors to stop giving, switchto an alternative NP or exit charitable giving entirely. Correlating data on giv-ing with media sentiment would be a good place to start. Our interest nowshifts to a case investigation of how a single NP set about creating and imple-menting a coherent organizational vision for managing both NWOM andPWOM. We wish to explore how the practices and attributes embedded inthe eight pillars of WOM model change as the NP shifts from uncoordinatedmanagement to a coherent, integrated, strategy.

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Managing Word-of-Mouth: A Nonprofit Case Study

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