10 Ways to Segment Your Donors to Improve Fundraising Effectiveness

by Jeffrey Haguewood

Date

January 17, 2014 at 4:00 PM

checkbookThere is plenty of recent evidence showing that donors are looking for differentiated, personalized, and unique communications.

For instance, the 2013 Blackbaud Online Marketing Benchmark Study for Nonprofits found that "response and clickthrough rates in nonprofit email campaigns declined by 16% and 18.7%, respectively, from 2012." The report went on to conclude that "declining response rates illustrate a saturated channel with non-differentiated messaging and campaigns."

While this doesn’t prove all fundraising efforts suffer from a lack of specificity and personalization, it does offer some insight into how we might improve the effectiveness of our appeals, engagements, and communications with donors.

Personalization a Big Key in Gaining Donor Support

Statistics and research aside, personal experience and anecdotes offer similar conclusions.

Raise your hand if you're 'moved' by a direct mail solicitation that impersonally conveys a message so general that it’s obvious it was sent to thousands of recipients. Nobody? Now raise your hand if you like being 'blasted' with email. Still no one?

That's what I thought.

I'm not saying you need to hand-write and personalize every communication piece that arrives in a donor's inbox (physical or electronic). What I'm suggesting, though, is that we can do better than the 'one-size-fits-all' strategy. We can be unique, differentiated, and intentional with our fundraising efforts. We can meet donors at their level and provide them the experience, inspiration, and connection they are looking for from our organizations. 

Meeting donors where they're at is a combination of providing the right message in the right place at the right time. However, it's extremely difficult to do so when sending impersonal mass communications. That is why segmenting donors is an important fundraising tactic and best practice.

Instead of collecting Rolodex-style, contact card information, start building personas of your donors. Create personas that describe a donor’s likes, dislikes, preferences, expectations, passions, motivations, characteristics, demographics, and history.

If we're able to align our fundraising efforts with their expectations, needs, and motivations, we reduce the probability our communications and solicitations will be tossed aside and increase the probability they'll be accepted.

10 Ways to Improve Fundraising Through Donor Segmentation

The first thing you've got to take into consideration when building donor personas? Identifying ways to segment donors.

Donor segmentations will vary from organization to organization, but they're generally informed by your strategic fundraising plan, the goals you set, the strategies you will use to achieve those goals, and the tactics you will use to implement your strategies.

Here are 10 straightforward ways to segment your donors and implement targeted fundraising at your organization.

1) Communication Frequency

How often does the donor want to receive communications from our organization?

Some donors want frequent communications from your organization, while others want an infrequent volume. Regardless of the frequency, all donors are valuable.

Segmenting donors in this manner allows you to plan communications based on donor expectations and increases the probability that the donor will accept the communication when it's received.

This segment -- which can be done weekly, monthly, quarterly, etc. -- will also allow you to focus on the appropriate timing for your donor engagements.

2) Communication Method 

Through which channels does the donor want us to communicate with them?  

Donors have preferences when it comes to the way you communicate and engage with them. Some don’t want you to 'blow up' their email inboxes, while others don’t want mail sent to their homes. Some donors want updates sent via email because it's easy to digest and store, while others enjoy a respectful solicitation via direct mail because it is tangible and tactile.

You can also save time and money by segmenting donors based on their preferred communication method. For instance, you can reduce postage costs by eliminating donors who don’t want direct mail and improve donor service by removing donors from email lists when they don’t want them.

All in all, this segment will allow you to focus on the 'right place' for your interactions with donors.

3) Types of Communication 

What types of communication does the donor like to receive from our organization?  

Some donors may have a preference on the types of information they'd like to receive from your organization. For example, they may be interested in opportunities to give, registrations for special events, information on mission impact, general updates and news, ways they can volunteer, or combinations and permutations of those topics.

Even if someone isn’t interested in opportunities to give, that doesn’t mean they won’t be a donor in the future. As a result, don’t be anxious if your list has donors who are uninterested in solicitations at the present time.

A prospective or existing donor doesn’t need to be pummeled with solicitations in order to donate to your organization. Engagement is most important. The touches you have with a donor that align with their expectations are positive, even if they aren’t focused on how much the donor can contribute financially.

Cultivating that donor with that specific type of communication can eventually lead to a tangible fundraising outcome, like a donation. However, it's equally important to build a relationship so the long-term potential can be realized.

4) Program Interests

Which programs, efforts, and causes of our mission is the donor most interested in?  

Your organization may have a handful of wonderful programs that aim to solve a particular challenge or need (or even multiple challenges or needs). While these programs have great reach and diversity, that doesn’t mean donors are interested in everything you do.

Each donor may have separate interests -- even emotional connections with particular programs, causes, or efforts at your organization. Channeling a donor’s passion toward a particular interest area can keep the donor focused and engaged.

5) Generation Demographic

What generation demographic does this donor fall into?  

There is a wealth of information online about generational giving trends. Most of this information provides strategies and tactics for targeting your fundraising efforts toward these generational donors. If you know the generational demos of your donors, you can use this information to your advantage.

I recommend the Blackbaud Next Generation of American Giving Report, which outlines the characteristics and qualities of the four main generations: Matures, Baby Boomers, Generation X, and Generation Y (or Millennials). You could also use The Millennial Impact Research from Achieve as a helpful resource.

6) Affiliation 

How is this donor affiliated with our organization?  

Sometimes, the relationship a donor has with your organization goes beyond their status as a donor. Some donors are volunteers, board members, staff members, committee chairs, coordinators, or affiliated based on your mission, organizational structure, and community involvement. Thus, this differentiation in how they're connected to your organization offers a prime segmentation method.

Similarly, you can segment donors based on the status of their affiliation with your organization. For example, the donor may be a prospective committee chair, a current staff member, or a former board member. These people should receive content and communications tailored specifically just for them.

7) Entity Type 

What type of entity is this donor?  

This segmentation is critical for strategic planning, forecasting, and managing fundraising performance. Each donor you have can be categorized as a particular entity type. This may include: corporation, individual, family, organization, foundation, and government, among other entity distinctions.

With this type of segmentation, you can better determine the effectiveness of your fundraising activities for each type of donor. Are you better raising funds from corporations over individuals? Do you have skills applying for government grants over foundation grants?

If you segment donors based on their entity type, you're better equipped to make strategic decisions for allocating fundraising resources and taking advantage of opportunities where you can be most effective.

8) Annual Giving Level

How much does this donor donate to our organization on an annual basis?  

The level of giving can influence your ask amount and the message and presentation of your ask. A goal of good fundraising is to be ethical, respectful, and courteous to the donor. As a result, it's important not to insult or disrespect the donor’s ability, potential, or capacity to give.

Segmenting donors based on their level of giving can give you a better understanding of a donor’s position. Moreover, while it's imperative not to ask for too much, it's equally vital not to ask for too little.

Overall, this segmentation can make sure you don’t leave potential contributions on the table or exceed your donor’s capacity, which could lead to total rejection of your ask.

9) Year-Over-Year Giving Status 

What is the year-over-year giving status of this donor?  

In your donor pool, which ones have lapsed, which ones are new, and which retained donors have upgraded, downgraded, or remained the same in their giving year-over-year?

The giving status of your donors can influence how you engage, cultivate, steward, and funnel donors through your fundraising appeals, solicitations, and donor experience.

Donors with different giving statuses have different characteristics and, thus, require different messages and different asks. Donors in different segments need to be treated in unique ways:

  • New donors need to be cultivated toward a second gift
  • Lapsed donors need to be reengaged
  • Retained donors who upgraded need to be thanked and stewarded
  • Retained donors who downgraded need to be cultivated toward larger gifts
  • Retained donors who gave the same need to be supported and promoted toward more engagement and larger gifts in the future.

If you have a mix of these donor types, you'll find it helpful to ensure your communications with each segment are handled delicately.

10) Preferred Giving Channel 

Through which channel does the donor prefer to give to our organization?  

This segmentation is straightforward, but I cannot emphasize enough how important it is.

Online giving is growing at an incredible rate. The great thing about online giving is that it simplifies operational processes, can be automated, and you can see near instantaneous results from your efforts. However, don’t force everyone to online giving and don’t assume that everyone wants to give online either.

While a shiny new online giving form or new giving channel may help you in your daily work or seem great on paper, you may stand to lose more than you gain if donors reject the platform because it isn’t their preferred giving channel.

For instance, don’t send your grandma a link to your online donation form or your Facebook donation page when she wants to send a check via mail. Additionally, don’t send your Millennial donors a pledge card in the mail when they want to pull out their credit card and give on their mobile device.

The channel you offer donors, as a means to give to your organization, should match their expectations and preferences.

After segmenting with these groupings, the next step is to develop strategies that match your donor segments (in whatever form your segments take) and then test, measure, analyze, and improve your strategies. After that, just rinse and repeat.

You'll most likely see gains from segmentation immediately over a mass communication strategy, but never remain satisfied. Donor segmentation gives you the opportunity to be more creative, innovative, and intentional in the way you engage donors. Use these opportunities to improve the effectiveness of your fundraising efforts.

In what ways do you think you should be segmenting your donor base? Give us some insight into your organization's communications strategy.

Written by Jeffrey Haguewood

Jeff Haguewood is a Co-Founder of Sidekick Solutions, a company that believes nonprofits are real-life heroes and helps nonprofit heroes succeed with nonprofit software.

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