3 Tips for Donor Segmentation

3 Tips for Better Donor Segmentation for Your Next Fundraising Campaign

Your donors are not a faceless mass, so they should not be treated as such. Each one of your donors has a unique background that informs not only why he contributes, but also how he contributes.

Individualizing communications for every donor and prospect is an unrealistic goal. Luckily, there’s a process that allows your organization to personalize communications without sacrificing efficiency. What’s the process?

It’s donor segmentation.

Donor segmentation is the process of grouping your donors. Each group shares a particular trait (donor level, age, geographic location, etc.) that helps define how your nonprofit will communicate with it.

Categorizing your donors can be a time consuming process, but it will be time well spent. Your organization will benefit in ways you wouldn’t expect. Think about how much easier it will be to acquire auction items for a gala if there’s a “previous auction donor” segment at your staff’s disposal.

The trick to successful donor segmentation is preparing your database. Follow the three tips below and your nonprofit will be prepped and ready to execute your next donor segmented fundraising campaign.

#1 ORGANIZE AND STANDARDIZE YOUR DONOR DATABASE

Your donor database should be your organization’s best friend. A well-run CRM will help catapult your fundraising to the next level. Without an organized database, donor segmentation is nearly impossible.

Having thousands of donors input into a system is sort of useless if the donor information is intermittent or unclear. You want to know as much as possible about a donor when communicating with him. A first step in closing that knowledge gap is keeping detailed records of donors and your past interactions with them.

Keeping track of all pertinent donor information can make a major difference in how much money a person gives. For example, by always asking for the names of the companies that your donors work for you can then check to see if said companies match gifts. If the companies do, you have doubled those donated funds.

Donor records are vital, but ultimately unusable if your employees cannot understand them. Make your database accessible by standardizing the methodology behind data input.

Think of your method of cataloging donors as a language. You want all of your employees to be able to speak and use that same language. If one person speaks Russian, another speaks Mandarin, and a third speaks English, most of their time together will be spent translating.

By creating a uniform system of collecting and recording information, your staff will be better equipped to interact with and impress donors and prospects.

Clearly defined procedures make life easier for all involved. For example, your organization could implement annual prospect screening of your database to ensure your nonprofit is interacting with all potential donor prospects.

#2 KEEP CURRENT AND ACCURATE DONOR DATA

Proper donor segmentation is impossible if the data you are using is inaccurate. Donation data breaks down into three components:

• Recency When did the donor last give?
• Frequency Does the donor give monthly?
• Money Donated How much has this person given to your nonprofit since his first donation?

Organizations will often score their donors for recency, frequency, and money donated (“RFM”), and then combine those scores into a master score that accounts for all three. This is called the “RFM” score.

With a current and correct three-part breakdown of all your prospects and donors, you can then set about segmenting according to their “RFM” scores.

Your solicitation approach will vary drastically between a major donor who gave $5,000 and an annual fund donor. The same theory applies to a donor who gave last year versus four years ago and so on.

All of this specific information is really an aide to help you customize, customize, and then customize some more. Donors appreciate the personal touch and tend to reciprocate with their giving.

#3 CATER TO YOUR DONORS

If you are going to take the time to segment donors, you should reap as many of the rewards from the process as possible. Always remember that you are segmenting so that you can best cater to your donors and your groupings will prove most effective

The possibilities for segmentation are expansive and varied.

You could group donors according to how they like to be contacted to ensure that you’re never calling someone who hates to use the phone. If your organization’s location isn’t fixed, you might want to have your donors categorized geographically so that you have an easily accessible list to send out invites for an event.

Donor bases are diverse and sometimes segmenting a certain population of supporters is necessary to run a successful campaign.

Using segmentation to cater to your donors is one of the best ways to keep them happy. Happy donors are retained donors. Donor retention is a tough challenge and any steps your organization can take to maintain donors are definitely worthwhile.

Donor segmentation is about more than categorizing. It is about using what you know to create the best platform to garner donor support.

Gretchen Barry, Director of Marketing — Gretchen has been a leader in corporate communications and marketing for 20+ years. Gretchen has published numerous articles related to charitable giving and is a passionate advocate for public schools.  Gretchen has donated her time to numerous causes including Relay for Life, Girls on the Run, Rebuilding Together, and just recently became involved with the local land trust.  Gretchen graduated from the University of Nevada with a degree in English literature.