Why Donor Segmentation Is Essential

When it comes to targeting supporters, donor segmentation is the best approach if you want to maximise your fundraising success...

Do you segment your donors?

Most organizations treat their entire databases as one mass unit. When it comes to communication, “everyone gets everything” requires the least amount of work. Cast the widest net, catch the most fish. 

But everyone knows that donor segmentation is the “right” way to communicate with your supporters. A lot of organizations never implement a good segmentation strategy because, well, it’s hard. There is the technical issue of navigating your CRM. And there is the strategic issue of understanding what segments are truly useful in terms of your next fundraising campaign. 

Today, we’re going to address the latter: an effective yet simple approach to segmenting your donor database.

Every single contact in your database should be grouped into one of three segments:

  • Current donors
  • Lapsed donors
  • Non donors

During your next fundraising campaign, treat each segment differently. Target each one with a specific message. Doing so will help you prioritize your efforts and raise more money more efficiently. 

Current Donors

Current donors should demand most of your attention during your campaign. The reason is that a) you must earn the support of your current donors over and over again and b) receiving an increased gift from a current donor is easier (and cheaper) than bringing a new donor on board.

After people donate to an organization, they sometimes feel as if fundraisers expect their repeat donations without working for it. Without making a compelling pitch. Without conveying an emotional problem that requires a solution. 

Think of receiving a phone call from an organization you support. The caller says: “You’ve been a valued supporter in the past. Can we count on you again this year?” 

Now imagine the same caller says “Last year, you gave $100 to this campaign. Your gift did so much good. But there are so many more people to help, so many more lives to transform. Would you consider increasing your donation to $150 this year to help meet the growing needs?”

The first caller can sound as s/he is entitled to the gift, as if it is a formality. The second caller makes a more genuine ask.

This is especially important for donors who have just given one gift. They haven’t yet established a pattern of behavior, and you haven’t established a consistent level of trust with them. You don’t know their motivations for giving so it’s crucial that you approach them with genuine kindness and gratitude. 

The business axiom is true in the fundraising industry: retention is more efficient than acquisition. 

If you’re worried about “new”  money, i.e., increased gifts from your current donors, there are a number of ways you can inspire larger donations. We’ve used this space to talk about monthly giving, for instance. You can pitch a project-specific donation or an elite giving circle. You can leverage the relationship you (or someone connected to your organization) has formed with a donor, and you can explain the importance of a larger-than-last-year gift.

Increased gifts from your current donors are within reach, and they should be your primary target. 

Lapsed Donors

I LOVE strategizing about how to re-engage donors that once gave to your organization but no longer contribute. 

Because these folks once donated, you know they once cared about your cause. They are known to you. You are known to them. 

For many of your lapsed donors, they may not know they missed a year. They aren’t thinking about the last time they gave to you or when your fiscal year ends. 

As a result, the main crux of your message should be that you miss them. Then, they’ll respond in kind. 

The strategy runs deeper than that. however.

In your email or phone call to lapsed donors, you should:

  1. Thank them for their past support by using real amounts and real years 
    • ex. “Your $100 donation in 2020 helped so many people in need.”
  2. Tell them you miss them and that you are ready for them if they choose to play a more active role in your nonprofit family 
    • ex. “We miss you! Donors like you are the engine that make our nonprofit go!”
  3. Provide a case for giving that lays the problem 
    • ex. “Please know there is so much more work to do. Your support has never been more important.“
  4. Make the ask with a specific amount 
    • ex. “Would you consider making a donation of $AMOUNT to address the ever-growing needs?”

Especially for donors who haven’t donated in 2+ years, ask for a donation that is SMALLER than what they had most recently given. 

Once you get your donors back on the books, you can ask them for an increased donation in subsequent years. Right now, your main goal is to re-activate them at any amount. 

Non-donors

I have a couple of suggestions regarding this demographic, but they are, without a doubt, the hardest nut to crack. 

The first suggestion is this: lower your expectations of anyone in your database who hasn’t donated after being asked three or more times. I wouldn’t send this group any direct mail letters or anything that incurs an expense. Email is really the only cost-efficient (and time-efficient) way of reaching them.

If you can segment this group even further, try to learn how individuals entered your database in the first place. Did they attend an event? Did they sign up to receive your newsletter?

The more specificity you can add to your messages the better. So if you are able to segment all event attendees, you can tailor your message by saying “You have attended an ORG event, which makes you a valued part of the ORG family. Today you can become a pillar of it by making your first donation.”

Make it very clear in the messaging that you are looking for their first donation to your organization. Tell them that you are running a campaign and that you know that they care about your cause. (After all, why else would they be on your mailing list?)

My final suggestion is to wait until your next peer-to-peer fundraising campaign. Give these folks to Fundraising Ambassadors that have already hit their goals. These Ambassadors are natural sellers. They’ll be able to conjure excitement and build upon the momentum they’ve established by hitting their goal.

“Hey Steve, this is Raimy. I’m raising money for ORG, this special community that does X, Y, and Z. 

I had a $5,000 fundraising goal, and, I’ll be honest with you, I’m smashing it. My friends and family have been so generous.

Now, I’m reaching out to people like you, people who are on the ORG database but haven’t yet donated to this special cause. 

Would you consider a donation of $10 to help even more people affected by A, B, and C?”

Straightforward and full of energy. That’s the only way to go. 

Conclusion

One of the many reasons why I advise this donor segmentation strategy is because it works for all organizations. Big or small, new or old. 

It also helps you get into the right mindset. Your donors are individuals and deserve to be treated as such. Accurately segmenting your donors empowers you to communicate with them based on their giving history so that veteran donors aren’t being treated like newbies, and prospective donors aren’t being treated like grizzled, long-time supporters. 

There are endless ways to personalize your communications and make donors feel as if you are communicating directly with them, but this donor segmentation strategy is an important first step that will impact your fundraising results right away. 

If you’d like to learn more about donor segmentation or are looking for more fundraising  tips, contact one of our fundraising experts who would be glad to help. 

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