The Nonprofit Marketing Blog

Donor Segmentation 101

A long, long time ago (1997) in a galaxy far, far away (Cambridge, MA), I managed the direct mail program for the Harvard Law School annual fund. What I enjoyed about this opportunity was that it allowed me to combine my writing skills (that B.A. in English was good for something) with the challenge of growing an already successful fundraising program. My colleagues jokingly called me the “segmentation queen” because I analyzed giving trends of past alumni gifts and created  seven to 10 groups with tailored ask amounts to encourage increased giving. That year, we saw a 60% increase in direct mail revenue in large part because we looked at our alumni giving through a very different lens.

I share this story not just to walk down memory lane, but also to show that segmentation was, and is, the first step in strengthening your fundraising program.

As fundraisers, we think in segments all the time  Donors, nondonors, LYBUNTs, SYBUNTs, volunteer leaders, prospects, suspects, and so on.  How often are we “grouping” our audiences like this?  

Segmenting helps you meet your donors where they are so you can tailor your messaging, ask amounts, and communication strategies to increase their interest in and support of your organization.  

There are many ways to segment. Even if your bandwidth is limited, you still want to group your donor lists in some way to help you prioritize your attention. Regardless of your resources, the right level of segmentation isn’t overly complicated and maximizes your ROI.  

In a previous blog post, I talked about how it’s a helpful to start fiscal year planning knowing how your donors’ gifts break down.  Segmenting becomes the next step in maximizing your donor outreach. We know that donor retention levels remain flat and abysmal at an average of 43% (according to the Fundraising Effectiveness Project). So, your most basic segmentation should be financial:

  1. Donors and nondonors
  2. Giving levels

You want to ensure that you are maintaining and even growing your donor renewal rates. How do you do this? First, focus on not losing those who are already support you, whether they are first-time donors or long-standing supporters. Then, you want to encourage upgraded levels of giving from your current contributors. That’s where knowing who is giving at what level is useful. From there, you can design your outreach around the following themes:

Retaining Donors and Growing Revenue

Your solicitations should be based on your donors’ giving patterns and your ask should focus on  increasing their gift just a little more. The messaging and frequency of your outreach to current donors, LYBUNTs, and STBUNTs will also be different than to nondonors.  

When I managed Harvard’s direct mail program, we knew which giving levels we wanted to grow revenue and matched the ask amounts to encourage increased gifts. We saw that year’s annual revenue grow significantly.

We also sent nondonors a mailing that addressed all the reasons they may give for not making a gift. Guess what? It resonated with one donor who made a $25,000 first-time gift! We figured out how to frame our messaging so we’d be heard. Finally, you might use a non-financial segment criteria to test certain messages, comply with donors’ communication preference (printed or electronic) or frequency, or focus on updates about certain interest areas.

Strengthening Engagement

Donors giving within a certain range can receive more personal outreach through board or development committee calls or personal notes from your president or executive director to deepen their connection. You may also segment prospects or lapsed donors by  inviting them to special events so they can get to know your organization better. If you have an annual giving circle, donors within that group can  receive certain “benefits” for their support.  

These are wonderful ways to show donors gratitude and  show them how their gift is making a difference. Note that all of these suggestions are stewardship. We want to thank, thank, and thank again in a number of different ways to show impact and inspire continued giving.

Growing Your Major Gifts Pipeline

Segmenting also helps you identify donors who have the potential to grow to major donors. There are several ways to prospect for major gifts donors. Right now I’ll focus on the “middle donors,”(e.g.. those who give just under whatever you define as a “major gift.”)

Let’s say you consider $10,000 to be a major gift. Your middle donors might be giving between $5,000-$9,999.  Conduct some wealth capacity research to determine their fuller potential. Screen these names with your board or other volunteer leaders to narrow the list down to those donors who are worth further cultivating. If you have a major gifts officer (MGO) on your team, he or she can develop a personal strategy to determine their potential and likelihood for a major gift down the road. You might also uncover donors who are great planned giving prospects (I’ll be covering this in a future post).

Demographic Segmentation

Finally, you may think about being mindful of certain donor types based on age, gender (women philanthropists respond very differently), or ethnicity.

We know that fundraisers can’t take “one size fits all” approach anymore. Luckily, there’s more research to support the science of giving to help you modify your fundraising activities so that they reach and resonate with diverse audiences.  

However you decide to incorporate segmentation into your fundraising, remember to make it manageable. Don’t create complex groupings that will be difficult to manage throughout a fiscal year. Just know that using information to tailor your approach to different donor types can help you strengthen their connection to your organization.  


 

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About This Blog

Lisa Bonanno
Vice President of Digital Marketing

We’re here to help you win hearts and minds—and donations.

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