Donor Segmentation: What It Is, And Why It Matters

A few weeks ago I checked my mailbox, and I was surprised to discover a new hunting and fishing magazine addressed to my family. My husband and I laughed a little. Neither of us hunt or fish. We were a little confused, and threw the magazine into the recycling bin without even opening it.

You have most likely experienced a similar situation, and received mail or email that was obviously sent en masse, and was anything but personal to you. You probably ignored the marketing, moving on to those things that were more relevant to you.

As a nonprofit, you can avoid your audience reacting in this way to your email communications, and maximize your ROI by practicing donor segmentation.

What Is Donor Segmentation?

Donor segmentation is simply separating the whole of your donor base into smaller groups in which members share similar qualities (e.g. geographic area, age, type of donor, donor status, donation amounts, etc.).

Regardless of the size of your nonprofit, donor segmentation is an important strategic process because it enables your organization to communicate with your donors in ways that are meaningful to them as individuals.

“Regardless of the size of your nonprofit, donor segmentation is an important strategic process…” tweet this

As a nonprofit, you will experience greater success by focusing on building healthy donor relationships. By catering to your donor’s unique desires and needs, you build rapport, credibility, and trust. These in turn will reap significant dividends in your fundraising efforts.

By segmenting your donor list you will be able to:

•      Customize your tone and information to a smaller target audience
•      Encourage your donors to engage with your nonprofit wherever they are in the donor continuum
•      Personalize communication with your donors to build rapport, credibility, and trust
•      Ask for donations strategically based on empirical data
•      Reduce irrelevant noise to donors outside of target segments
•      Increase your ROI by providing meaningful content to strategic populations of donors

Donor segmentation primarily focuses on providing relevant content to a smaller pool of constituents. It prevents a broader base of your donors from feeling that your content and communications are irrelevant to them personally. Recent statistics show that personalizing your emails increases click-through rates by an average of 14%, and conversion rates by 10%.

Donor segmentation does not inherently make your content more relevant (personas can help you with that, as we will discuss below), but instead makes it easy to send your donors content they care about—and only content they care about.

When done effectively, donor segmentation builds trust and credibility with your audience. By curating content for a narrowed population you reduce irrelevance. This will in turn decrease the number of “unsubscribe” and “unfollows” you receive, as well as increase your ROI.

“When done effectively, donor segmentation builds trust and credibility with your audience…” tweet this

There are several basic ways to segment your donor list, and we have a great blog post to help you with the nuts and bolts of methodology.

In addition to the donor segmentation methods we cover in the aforementioned post, donor segmentation may also be based on sociological, psychological, or preferential factors. These methods will require good quantitative research skills, as the information needed is not usually readily available::

• Segment based on sociology

This method includes segmenting by qualities such as age, sex, family size, income levels, occupation, social class, etc.

• Segment based on psychology

This method includes segmenting by donor lifestyle, attitudes, personality traits, etc.

• Segment based on preferred method of communication

If you have subsets of donors that prefer email over postal mail, you need to cater to that preference. To do so, you need to know your donors’ desired means of communication so that you can create content within that medium.-

Sociological, psychological, and preferential segmentation require additional empirical data that you will need to obtain. Surveys can be an excellent marketing tool to gain information pertaining to your donor’s motivations and engagements with your organization. Survey Monkey has several donor feedback survey templates that can help you get started.

Why Donor Segmentation Matters

Social media platforms and strategic trends have evolved over recent years. But time and again we see that email is here to stay.

According to McKinsey and Company, email is still significantly more effective than social media for driving conversion rates. It is advantageous to develop email skills, including donor segmentation, because statistical data continues to show remarkable return on investment:

• 39% of marketers who segmented their email lists experienced higher open rates
• 28% experienced lower unsubscribe rates
• 24% experienced better deliverability and greater revenue
• 18% greater number of transactions
• 15% greater customer acquisition

These numbers provide evidentiary support that validates that time spent practicing donor segmentation is well worth your effort.

Donor Segmentation and Personas

Donor segmentation tailors your messages to “hit” the right population of people. However, in order to help you understand donor motivation—who they are, and what makes them tick—you will also want to create donor personas.

“Donor segmentation tailors your messages to “hit” the right population of people…” tweet this

Donor segmentation and donor personas are not synonymous, but they do complement each other. Donor segments are actual groups of your real donor pool, divided by actual similar characteristics.

Personas, on the other hand, are fictional representations of your ideal target audience that help you understand donor behavior, motivations, and desires. Developing donor personas enables you to create more relevant content for your target donor market to increase engagement, enthusiasm, and your ROI through donor action.

By strategically planning your content for specified donor segments, you will provide your constituents with curated content that they will be delighted to receive. Your donor relationships will become stronger as your supporters trust that you contact them with relevant, personalized information that they care about, which will greatly aid your donor retention rates, fundraising efforts, and more.