Most nonprofits can’t survive without fundraising, or at least not for very long. Appealing to donors and increasing the chances they’ll take action involves customizing communication to maximize relevance. One of the major ways to boost the effectiveness of your outreach efforts is to engage in donor segmentation.
What Is Donor/Audience Segmentation?
Donor/audience segmentation happens when nonprofit organizations put their donors into groups based on similarities. As such, nonprofits end up with numerous subpopulations of their whole donor pool. Doing this makes it easier to target each group with the best messaging after determining the content that’s most likely to resonate with them.
Although people often talk about segmentation for marketing purposes, it happens in everyday life, too. Think about how the tone of your message and its content are different when addressing a close family member versus someone you’ve just met. You engage with them differently based on your relationship and what they already know about you or the topic you’re bringing up.
Donor segmentation is similar because it involves tailoring your message for different, identified audience groups. It ensures you’re optimizing your delivery style and content to strengthen the link between your organization and its contributors. Segmentation lets you meet your donors where they are and give them appropriate material that ups their interest in your group or its causes.
Most of the examples discussed here refer to donor segmentation. However, don’t forget how people can show support for your organization without donating. As you read through the following sections and use them in your fundraising tasks, view them through the lens of applying to all audiences — donors or not.
Why Should Organizations Use Segmentation?
Once an organization starts using segmentation, the representatives in it often remark they shouldn’t have waited so long to get started. This enthusiasm is due to noticeable results. Donor segmentation is an excellent idea for two main reasons:
- It’s a time-saver: While segmentation requires time to implement, it’s typically more effective over the long-run. It helps your organization address the people directly involved in supporting your organization, improving your interactions with them.
- It makes the audience more likely to respond favorably: If messaging comes across as too generic, people will be more likely to ignore it. Segmentation ensures the messaging is appropriate for the targeted group, meaning recipients will become more interested in the content.
How Can Organizations Use Segmentation?
We’ll go over some specific best practices in the upcoming sections that walk through how to apply different marketing segmentation techniques. Generally speaking, what are some ideal tactics that nonprofits should keep in mind for favorable outcomes?
- Be mindful of the audience’s financial resources: College students will almost certainly not have as much disposable income as well-established professionals. That means it’ll likely work better to ask college students to give a modest, monthly amount such as $5. Financially secure individuals may be more willing and able to give more often, such as a few times per year.
- Apply segmentation across all marketing channels: Nonprofits should ideally implement segmentation across all marketing channels instead of only focusing on one. For example, segmentation for email marketing can be just as effective as when applied to direct marketing. However, as we’ll see later, some people don’t necessarily want to be contacted through all possible methods, and organizations must respect that.
- Segment donors according to meaningful characteristics: Donor segments should have some broad characteristics that make them worthwhile. For example, a segment should be consistently stable, large enough to be cost-effective, easily measured and demonstrably different from other audience groups. They should also be accessible. Nonprofits have to reach the people in a segment to foster ongoing relationships, after all.
The Importance of Using Different Strategies for Retaining Certain Donors
You’ve probably had several instances over the years where you’ve received mail and thought, “How in the world did I get on this mailing list?” Maybe you were sent a catalog for pet owners, but you’ve never had a furry family member. In the best cases, people in those situations feel mildly annoyed and may even laugh. At worst, they could get so fed up they make sure they never receive any mailings from the provider again.
If people get content they perceive as junk mail, they’ll likely at least look at it for a few seconds before putting it aside or tossing it out. The results can be even worse if individuals receive emails their service providers view as spam. Companies like Gmail take numerous things into account when evaluating how to categorize messages.
One of them is the open rate of the messages received. If a person regularly gets content from a sender — a nonprofit or otherwise — that they never click on, algorithms within the email service will probably classify it as spam. If that happens, the content goes into a separate folder that the recipient may never look at.
When messages are deemed irrelevant, they may not get looked at, so you waste resources distributing them. Moreover, if donors do see content that doesn’t match their needs, you’re more likely to make them feel you don’t value them. Then, it’ll be much harder to convince them to donate or even stay interested in your organization. Plus, without segmenting, donors may feel that you’re asking for money too frequently, resulting in them feeling overwhelmed.
These examples illustrate why it’s necessary to take care when crafting segmented messages for particular donor groups. All your outreach methods could backfire if you don’t apply that technique. Then, you waste both time and money, and your organization may have severe issues with finding willing donors. Now, let’s look at some specific segmentation strategies.
1. Segmentation by Gift Amount
One of the most popular ways that nonprofits engage in segmentation for marketing is to put donors into segments according to gift amounts.
You can have different messaging for people who’ve given more than $100 compared to those that have never contributed any amount more than $25. When you create these segments, be careful not to have too many categories.
For example, segmenting in $10 increments is not a good idea because there’s not enough difference between those groups. However, you could structure the segments as follows:
- $25 or under
- $25 – $100
- $100 – $249
- $250 – $500
After you finish segmenting, the most important thing is to be sure the messaging supports the amount the person gave. If your records show that the most someone ever gave at once is $75, an ask of $200 will almost certainly turn them off.
Then, besides asking for the appropriate amounts, you could remind the person of what your organization could do with the money. The charity Heifer International mentions that giving $275 sends a girl to school while contributing $1,000 provides stoves for a village.
If you get specific by telling people how their donations are used and what differences they could make, individuals could feel more excited about giving. Bear in mind, too, that you should shape further engagement activities around trying to get donors to gradually increase their gift amounts. Tracking your success through a donor metrics interface could help you see whether what you’re doing works well or if there’s room for improvement.
2. Segment Your Donors by Recency and Frequency
This segmentation strategy relates to the one concerning gift amount, but it has a couple of additional elements. Rather than only segmenting by the amount of a donor’s gift, you go further and segment people according to how often they give. This technique is sometimes called the RFM model, for recency, frequency and monetary.
First, we’ll look at recency. This kind of segmentation for marketing works best if you focus on the current year and the four previous years.
Make five categories for each group and give each donor a corresponding numerical score:
Recency (of donation):
- Last contributed 12 months ago or less (Numerical score = 5)
- Last contributed 13 to 24 months ago (Numerical score = 4)
- Previously contributed 25 to 36 months ago (Numerical score = 3)
- Last contributed 37 to 48 months ago (Numerical score = 2)
- Last contributed 49 months ago or more (Numerical score = 1)
Frequency (number of donations per last 25 solicitations from the organization):
- Donated 21 to 25 times (Numerical score = 5)
- Donated 16 to 20 times (Numerical score = 4)
- Donations 11 to 15 times (Numerical score = 3)
- Donated six to 10 times (Numerical score = 2)
- Donated one to five times (Numerical score = 1)
Monetary Value (of total donations across the chosen period):
- Donated $1,000 or more (Numerical score = 5)
- Donated $500 to $999 (Numerical score = 4)
- Donations of $250 to $499 (Numerical score = 3)
- Donated $101 to $249 (Numerical score = 2)
- Donated $100 or less (Numerical score = 1)
Keep in mind the categories used for the monetary value metric will vary depending on the giving patterns donors usually show.
Once you have these three groups of statistics, focus on the highest-scoring donors. Remember that a person may not necessarily have high scores in every category. Maybe they only give once a year but contribute $1,000 each time. Then, messaging too often could spark donor fatigue.
3. Segment Your Donors by Age
Being successful with the fundamentals of marketing for nonprofit organizations means understanding how your messaging may differ depending on a person’s age. Segmenting by age is especially useful for helping you determine which marketing channels work best for reaching current or prospective donors. Break segments down by generations to get started.
Categorizing donors by age is a great technique to try if you heavily rely on social media for marketing. For example, more than 90% of Instagram users are under 35, meaning they belong to Generations Y — also known as millennials — and Z. The results of your age segmentation could confirm which marketing strategies are likely the most applicable. You might use the following segmentations:
- 25 or under: A person under 25 years old may not have a lot of financial resources, but they might feel passionate about a cause. In that case, organizations could ask them to volunteer or give a small amount, such as $10 a month. The messaging might point out how donations like these cost less than their morning cup of coffee from a neighborhood cafe.
- 26 to 35: People in the 26- to 35-year-old group may have opportunities to become fixtures in their communities as they get involved in clubs or groups and make friends with colleagues or peers. It could be ideal to encourage them to launch personal fundraisers to get people they know involved with the cause.
- 36 to 46: Many people in this group may have families with kids or grandchildren. In that case, it could be useful to talk about making support for your organization a family tradition that sets a good example for younger people in the household.
- 46 to 60: Once individuals reach this age group, they may be interested in supporting your organization through events like charity galas or auctions. By that time in life, many people have established connections with influential individuals or become notable in their own right by doing things such as running successful businesses. They could be well-positioned to either donate significant amounts of money to sponsor an event or give things like gift certificates or other goodies to use for a raffle.
- 60 or older: The people in the 60+ group may be perfect volunteer candidates — especially if retired. Make sure your messaging reflects that. Also, think about how people in this segment may be pondering what to put in their wills. You could mention that a person might state in their will that they want to give a particular amount to your organization, either as a lump sum or an ongoing gesture of support after they pass away.
As you consider how to reach out to people in certain age groups, don’t fall into stereotypes that may not accurately reflect a generation’s attitude toward giving. For example, society often pegs Millennials as entitled and lazy. However, research about their generosity shows that Millennials are more likely to give their time and money than other generations.
Speaking of giving time, the messages you send to people in your organization’s contact list may not solely be requests for money. You could ask that recipients consider volunteering their time, too. Technology makes it even easier for people to do so from home, especially if they have access to organization-specific tools and interfaces.
Segmenting by age means you’ll need information about a person’s year or date of birth. Some people don’t immediately feel comfortable providing such details. However, one way you could make it worth their while is to send a birthday card to wish them well. Then, suggest that people ask their friends and loved ones to donate to a charity instead of buying presents for those celebrating birthdays.
4. Segmentation by Donor Type
Most nonprofit contact lists feature people with varying associations with the organization. Some of them might only show up at your annual fundraising gala and give generously, but not at all during the rest of the year. You’ll probably have another segment of people who can’t financially contribute but are frequent volunteers.
Others might be formal members of your organization, which means they have specific rights to participate in internal affairs. Remember that most members will be donors, but not all donors will be members. That means it’s not always appropriate to create messaging for your donors that assume they want to or will be members. Perhaps they don’t have the desire or time to get involved at that level, but still, want to give.
Moreover, there are broader types of donors:
- Annual givers: These givers are most likely to contribute only once a year. Many do so in conjunction with the holiday season or anniversaries.
- Cause or crisis contributors: These contributors typically give in response to well-defined needs. For example, they’ll willingly pitch in to finance hurricane relief efforts. Maybe they’ll donate once your animal shelter mentions a critical food shortage on social media. However, they are harder to engage when things are going well for an organization or the people or cause it supports.
- People who want to get something in return: These people are most likely to give if they get a material perk in return. These incentives might range from 10 entries in a raffle to a calendar that features your organization’s logo and contact information at the bottom of every page.
- Individuals who give things or time instead of money: This segment prefers to provide their time or item-specific gestures more than money. Rather than asking this group for funds, think about what goods your organization could use or the specific ways people could volunteer.
When you use this kind of segmentation, define the groups as accurately as possible, then adjust your messaging accordingly. Take timing into account when applicable. For example, it probably isn’t a wise use of resources to ask your annual fundraising gala donors for money during the rest of the year. However, you should ramp up your appeals a couple of months before the event.
5. Segment Donors by Relationship Length
Knowing the right tone to take with donors can be tricky. The aim is to strike a delicate balance that allows building rapport without seeming invasive. That’s why relationship length is another vital kind of segmentation for marketing within your nonprofit. Keep in mind that your relationship with any donor is a journey, and the content you provide them will change over time.
Concerning relationship length, the segments you create might be:
- Fewer than one year
- One to three years
- Three to five years
- Five to 10 years
- 10 years or more
After defining your segments, spend time thinking about the best ways to make your donors receptive to your messaging. One option is to mark the anniversary of when they got involved with your organization. In any case, don’t go overboard by coming on too strong too quickly.
Be particularly careful with the language and tone you use when creating messaging for each segment. It must be appropriate for the length of time the donor has been associated with you and should come across as authentic.
If a donor only registered with your organization six months ago, they’ll likely feel swamped and disillusioned by messages that come every week and mention how much their support means. You can thank them for getting connected and showing enthusiasm, but the person will likely feel wary if you act like a close friend at the start of the relationship. They may even conclude that it was a mistake to provide their information to you.
Once a person is involved with your organization for several years, the best practice is to call out that commitment and make it clear that you value it. After all, many people have dozens of nonprofits they could support in their city or state alone. Prioritizing some of them through a long-term relationship speaks volumes, and it could indicate they’ll be faithful givers.
6. Segmentation by Preferred Communication Type
One of the great things about technology advancements for the nonprofit sector is that they collectively give you more opportunities to reach out to donors. Decades ago, it was common for charities to host star-studded telethons where the people on screen urged viewers to give. TV cameras panned over to show rows of volunteers diligently working to address the incoming calls.
Now, charities more often utilize methods like text messages and even chatbots to talk to their audiences.
One of the easiest ways to nurture a relationship with your donors is to ask them how they prefer to hear from you. Then, follow those requests to make communication type segments such as:
- Donors who prefer contact by email
- If they prefer contact by phone call
- Favoured contact by postal mail
- Preferred contact by text
- No preference
When designing a mailing list sign-up form, consider this structure based on the bulleted list above:
Providing your donors with that element of communication is crucial because it helps build trust. However, you should always have safeguards built into your system so you don’t get in touch with a donor in a way they didn’t permit. Using segmentation for email marketing is valid, but you should avoid connecting with people through email unless they said it’s OK.
When you move forward with this segmentation strategy, take into account that some people may change their preferences over time. Maybe they initially gave the go-ahead for email correspondence but decided several months later that they don’t want to anymore. Perhaps they’re trying to clear out their inboxes and reach an inbox-zero goal.
Always let donors know what they should do to change their communication preferences. It’s ideal if your database takes account of such alterations and automatically updates itself so people are removed from preferred communication type segments as appropriate. Otherwise, rely on as many staff members as necessary to keep the segments updated. Alternatively, be proactive and ask donors for annual communication preferences to maintain current segments.
7. Segmentation by Volunteering Activity
Most of the segmentation suggestions covered so far assume organizations will use them to ask for money. However, nonprofits can also create segments associated with their volunteers’ activities.
There are several possible segments, including:
- Number of hours a volunteer can contribute per week/month on average
- The kind of volunteering the person prefers — door-knocking, phone calls, cause awareness, special event assistance, etc.
- The length of time the person has served as a volunteer
Organizations can also use a modified version of the RFM model but substitute the money contributed element with time offered. That strategy could help nonprofits narrow down which volunteers they target by figuring out which ones are most likely to pitch in. This is a particularly useful thing to do when recruiting for short-term or urgent needs.
If an organization requires help with an event happening next week, they likely won’t have much success by targeting people who can only volunteer seasonally or sporadically.
Segmenting Can Help You Achieve Better Outcomes
When organizations are new to segmentation for marketing to donors, they may initially believe it’s too time-consuming. That’s because the principle behind this technique is that smaller groups of people are reached.
When nonprofits experiment with segmentation ideas and give them enough time to show results, it should be evident that splitting donor lists help form meaningful relationships. Then, donors will feel more willing to demonstrate long-term support toward your organization — both by giving time and money.