2018-05-09 12:00:34Nonprofit FundingEnglishSegment your nonprofit's donor base into smaller groups to provide a more personalized giving experience. After using donor data to make...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/04/Nonprofit-Founders-Discussing-Donor-Segmentation.jpghttps://quickbooks.intuit.com/ca/resources/nonprofit-funding/donor-segmentation-explanation/Understanding Donor Segmentation

Understanding Donor Segmentation

4 min read

Just because your nonprofit’s donors all give to your cause doesn’t mean they need the same kind of nurturing. In almost all donor bases, groups of donors with similar preferences and characteristics stick out. Donor segmentation helps you engage these donor groups in a personalized way.

What is Donor Segmentation?

Although no two donors are identical, similarities between groups of donors abound. When you segment your donors into groups, you can better tailor their experience with your nonprofit. The process of segmenting donors is only possible with data. Many nonprofits use a spreadsheet or donor management system to store data from one campaign to the next. Over time, you can pull the data, a process known as "data mining," to create segmented donor lists.

In addition to including each donor’s gift amount and contact information in your donor list, write down your donor’s affinities and giving preferences. The more data you have, the easier it is to fine-tune your segments. For example, note each donor’s giving methods and how often they connect on social media to pinpoint their preferred communication style.

In short, donor segmentation helps you identify who to engage, when to engage them, and how.

Major Benefits of Segmenting for Nonprofits and Donors

The main reason nonprofits segment donors is that it boosts retention. Across the board, retaining a donor is cheaper than getting a new one. Once you have a donor, you should nurture the relationship through segment-specific engagement strategies, such as email offers and volunteer opportunities. With the right types of engagement, you can boost your retention rates.

Segmentation also helps you understand your target donor. By looking at your donor data, you can see if most of your donors are millennials or retirees, small gift-givers or major donors, female or male, and so on.

Your donors also benefit from segmentation. Donors who receive a personalized experience are more satisfied with their investment, and they’re likely to get involved on a deeper level, such as by becoming a volunteer, advocate, or personal fundraiser.

What are Some Important Segments to Consider?

How you plan to engage your donors determines how you segment them. Start by segmenting your donors based on attributes that don’t change frequently, such as age, gender, geographic location, and method of giving. Segments such as these help your day-to-day marketing and engagement plans. For instance, before you ask your social media audience to share your latest campaign, check your list of donors to see who gave in response to a previous campaign.

Some segments that nonprofits use include:

Gift amount: Know how much your donor gives per transaction so you can ask for the right amount during the next campaign. Average gift amounts are also helpful if you plan to create donation tiers or a major gifts program.

Gift frequency: Gift frequency is the number of times a donor gives annually. If your donor gives multiple times a year, offer them the option to donate monthly.

First-time donors: Converting a first-time donor into a returning one takes extra nurturing, but the effort is worth it, since you’re saving money on donor recruitment. Knowing who is and isn’t a first-time donor is vital.

Preferred methods of communication: Phone lovers may not respond to your fundraising emails and vice versa. Always meet donors where they are, and speak to them how they’re most comfortable. If you don’t know their favored communication methods, ask.

Preferred methods of giving: Some donors like to give online, while others prefer a physical pledge. Understanding how they donate before you kick off your next campaign gives you time to accommodate all donors.

Their role in your cause: Is your donor just a donor, or have they also shown interest in serving on your board? Understanding each donor’s role with your organization helps you provide relevant engagement offers.

Interests and affinities: After you get a donation, learn what makes your donor tick. Send a survey or follow-up email to learn about why they chose your organization.

Using Donor Segmentation to Engage

After you segment your donors, create personalized engagement opportunities for them. Pay attention to your segments as you craft your annual fundraising calendar and marketing materials. If most of your donors prefer to give online, for example, try adding more crowdfunding and peer-to-peer fundraising campaigns.

Here are some ways to engage your donor segments:

  • Invite major donors to serve on your board of directors
  • Increase your social media presence to appeal to millennials
  • Plan a peer-to-peer fundraiser for donors who can’t give large gifts but have time to spare
  • Mobilize your online givers with a social sharing crowdfunding campaign
  • Ask your long-time donors to share a donor testimonial for your newsletter
  • Create family-friendly volunteer opportunities for donors with children

As you engage your donor segments with appealing opportunities that meet their giving needs, the likelihood of retention increases.

Donor segmentation is all about using the data you have to find the right fit for your donor base. Tracking donor data and using it to provide each donor a personalized giving experience benefits you and your donor both.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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