We often ignore random emails that arrive in our personal inbox, or the promotional magazines and newspapers that are distributed to homes. In fact, nonprofits can avoid this way of handling messages directed at the public and increase return on investment through 'donor segmentation.'

Generally, the concept of 'donor segmentation' involves dividing an organization’s donor database into small groups based on coalition points that unite various donors; such as geographic distribution, age of the institution and its type, donor status, donation sizes, and more. Regardless of the size of the nonprofit organization, donor segmentation is a strategy that makes it easier to communicate with donors individually.

Focusing on strengthening the relationship with donors contributes to greater success for organizations in the nonprofit sector. Moreover, paying attention to the desires and needs of donors builds a certain type of connection, credibility, and trust between the organization and donors, which in turn will generate a higher rate of donations.

Through donor segmentation, the organization will be able to:

  • Tailor messages and information to a smaller percentage of the target audience.
  • Encourage donors to engage with the nonprofit organization, wherever they are.
  • Personalize communication with donors to strengthen the relationship based on principles of credibility and trust.
  • Request donations using a strategy based on empirical data.
  • Minimize disruption to other donors outside the targeted segments.
  • Increase return on investment by providing useful content regarding the donation strategy to donors.

Primarily, 'donor segmentation' relies on small groups of donors. This way each donor feels that the content or message is directed personally to them. According to recent statistics, sending a personalized email to a donor increases the open rate by 14% and boosts the conversion rate by 10%. Additionally, donor segmentation enables sending content that is of interest to donors.

In this regard, donor segmentation helps build a bridge of trust and credibility between the organization and the audience, thanks to targeting specific content to a defined group. As a result, the percentage of donors unsubscribing or unfollowing the messages directed by the organization will decrease, as well as an increase in return on investment.

Indeed, there are many ways to 'segment donors'; for example, donors can be segmented according to social, psychological, or preferential factors. However, it is worth noting that these methods require extensive research skills because it is challenging to obtain the required information.

– Segmentation based on social perspective:

This type of segmentation relies on a set of attributes; such as age, gender, family size, income level, occupation, and social class.

– Segmentation based on psychological perspective:

This is primarily based on the donor’s lifestyle, behavior, and personal characteristics.

– Segmentation based on preferred communication methods:

This method is based on a subset of donors who prefer that emails reach them via mail services, hence this request must be met. In this case, the organization must know how the donor prefers to communicate.

Based on the three methods mentioned above, 'donor segmentation' requires gathering more data based on real-life experiences to ensure achieving the desired results. In this regard, surveys are the best marketing tools for gathering the necessary information about donors such as their motivations and commitments. For further assistance, nonprofits can utilize the services of 'SurveyMonkey' which provides many survey templates directed at donors.

Why Is Donor Segmentation Important?

With the development of social media and strategic trends over recent years, we note that communication through email still retains its position. According to McKinsey, email remains the most effective medium compared to other platforms.

Statistics have proven the power of developing email communication skills:

  • 39% of marketers who segmented their email lists saw increased follow-up rates of their messages.
  • 28% experienced a decline in unsubscribe rates.
  • 24% gained a greater ability to deliver content and increased profit revenues.
  • An 18% increase in transaction numbers.
  • A 15% increase in client acquisition.

Donor Segmentation and Creating a Profile for Them

By segmenting donors, organizations can link a certain number of messages together to reach a specific group of people. However, to understand the motivations of donors, the organization will need a profile for each donor.

It is worth noting that donor segmentation complements the process of individualizing donors; unlike donor segmentation, the process of individualization involves a fictional characterization of the ideal target audience as perceived by the organization, which helps in understanding donor behavior, motivations, and desires. Thus, the nonprofit organization can develop a donor profile that leads to creating content more suitable for donors, which in turn will increase return on investment and make donors more committed.

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Website: CauseVox

Author: Hilary Boudin