How Segmentation Can Bolster Your Fundraising Efforts and Foster Donor Relationships
Nonprofit fundraising teams often leverage a variety of strategies, from hosting peer-to-peer events and galas to sending direct mail appeals. What’s at the heart of it all is your relationship with your donors and supporters.
Because of this, it’s crucial to connect with your donor base in truly meaningful ways. That’s where segmenting your donor data can help.
“Our job as fundraisers and nonprofit professionals is to not only raise money, but it is to build relationships with people so that they have a long-term relationship with our nonprofit,” Tracy Vanderneck, president of Phil-Com, said. “By segmenting data, it allows us to do that — to get to know them better and more personally.”
Getting to know your donors better is the cornerstone of donor-centered fundraising, Morgan Falor, head of finance at King Philanthropies, said.
“Moving toward this philosophy of donor-centered philanthropy — understanding what motivates the donor to give, what spurs empathy for them specifically — you need to have different messages for different donors to have maximum success,” Falor said. “Just like those unfortunate clothing labels that's one-size-fits-all — it's really not, it's one-size-fits-most. That's kind of how your appeals can go out, and you could be missing crucial donations and engagement opportunities if you don't have the right messaging at the right time for the right donor.”
Related story: 5 Tactics to Establish a Sustainer Donor Journey and Reliable Revenue for Your Nonprofit
Managing Donor Segments
Most of the specifics of creating and managing donor segments are dependent on your nonprofit and your goals, but there are some things that are fairly consistent across organizations. For instance, while there’s no magic number of segments you should create, your data should be the basis of determining what segments your nonprofit targets.
“There's millions of different ways you can slice and dice donor attributes, but I think you need to be very clear on what is going to give you the maximum ROI, and what … sentiments you've heard from donors or donor surveys where it would make sense strategically [to] segment for your donor,” Falor said. “Don't just segment on age because it seems like a good idea, but if you're looking at the pipeline and understand that your legacy gifts commitments have gone down, segment by age and run a campaign by age to start to get some of those [commitments]. So, the question is before answering ‘how should I segment?’ I think honestly [is] what is your data telling you and what are your goals, or what are you trying to change with your recent development efforts?”
Regardless of which segments you choose to create, it is a good rule of thumb for all nonprofits to segment by gift level.
“Using segments to identify who your grassroots donors are, who your mid-level are, and who your major gift donors are — that's an important one because it tells you a lot about their relationship with the organization,” Vanderneck said, “and it helps you identify what type of relationship you might want to try to build with them or what you might want the next ask to be.”
Other ways to segment your donors include, but are not limited to:
- Age.
- Consecutive years of giving.
- New donors.
- Lapsed donors.
- Channel of acquisition (e.g., community meeting, special event, etc.).
- Programs they’ve supported.
- Preferred communication channels.
- Engagement.
Segmentation Review
To make sure your segments are up to date, Falor highlighted the importance of annually reviewing your donor database as a whole, as well as your individual donor segments when you run a campaign.
“If you have a fall campaign, spring campaign, annual appeal — whatever it is, your team needs to be looking and say, ‘OK, do these segments make sense to what happened last time we tried to do something similar, or based on donor sentiments and other trends we're seeing in the data?’” she said.
Vanderneck also pointed out that there’s no requirement to continue using a particular segment if it isn’t helping your organization reach its goals.
“It's about having the appropriate ones for what your need is at the time,” she said. “So if you're needing to communicate about a specific program or to test out a specific message, you can segment and use it only once or twice, and then leave it if it's not something you need going forward.”
Deduplication
Depending on what segments you decide to create, most if not all of your donors will fall into more than one segment — and that’s OK. However, Falor cautioned that you need to be mindful of which segments your donors are falling into. As an example, if you’re running a planned giving campaign, it can be easy to want to target donors above a certain age.
“But if they're over 70 and you're going after them from planned giving and they're about to lapse, you need to run deduping within those donor lists and say, ‘We're worried about them lapsing in general. We probably shouldn't be asking them for a legacy gift,’” Falor explained. “You really need to review any communication and outbounding efforts to make sure that if you are running multiple segments for multiple different functionalities that you have donors getting communication that is relevant and wouldn't offend.”
Donor Segmentation in Practice
Once you have some segments built, what exactly can you use them for? First and foremost, segments are primarily used for communicating with donors — for example, sending first-time donors an email about the impact they could have with a second gift to your organization.
But segmentation is not just for the actual sending of a message; it can actually help across the entire communication process.
“The more you understand what's in your donor management system, the more you understand who's giving and how, the better you can be at planning your communications and aligning your messaging specifically for them, which in turn improves your fundraising outcomes,” Vanderneck said.
Additionally, she noted that by segmenting your lists by gift frequency, you can identify and potentially upgrade donors who give frequently but on a one-time basis to monthly contributors.
And while segmenting your lists can be daunting, using software to segment — namely a CRM and a data visualization tool like Power BI — can help you get a full picture of your donor database without having to manually evaluate each donor. For example, Vanderneck said you might want to create a segment with people who have donated for five or more years consecutively. A CRM can help automatically filter donors into that list.
Segmenting your lists puts you on the right track for communicating the right messages to the right donors; however, you want to make sure you don’t get too in the weeds.
“What we really want to focus on is: What are our goals for our fundraising, what are our goals for creating this segmentation and what specific segmenting or filters do we need to achieve that goal?” Vanderneck said. “So, don't go down a rabbit hole if you don't need to.”
Falor emphasized the importance of staying focused on your goals.
“If you're really worried about donor retention and you're only focusing on the major gifts, your segments and your efforts don't align with what you're trying to solve for,” she said. “So, I think it's just making sure that you outline segments that are going to help you evoke meaningful change in your development operation.”
Kalie VanDewater is associate content and online editor at NAPCO Media.