Why Donor Segmentation is Essential for Fundraising Success

Many nonprofit organizations treat their entire databases as one mass unit. This is often because 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 donor segmentation is the “right” way to communicate with your supporters and build lasting relationships. Donor segmentation is the process of grouping supporters based on shared characteristics to send tailored marketing messages to each group (rather than sending one generic message to everyone). 

Many organizations never implement an effective segmentation strategy because it can be challenging and complex. Navigating your CRM and understanding which segments are truly useful for your marketing and fundraising efforts requires time and effort. However, segmentation is worth the work. This guide explores the benefits of donor segmentation and simple yet effective strategies for creating donor segments. 

Benefits of donor segmentation

What makes donor segmentation such an effective nonprofit outreach strategy? Segmenting your donors comes with a range of advantages, allowing you to: 

• Create more accurate marketing personas and predictive fundraising models. When you organize donors into defined groups, clear archetypes begin to emerge. You can use this information to develop marketing personas and predict giving trends based on each group’s unique behaviors and preferences. 
• Design personalized marketing and storytelling materials that appeal to donors’ unique interests. Using your segments, you can design outreach campaigns that appeal to each group. For example, new donors might like to see introductory information, while long-term donors would be interested in personalized impact reports. 
• Develop individualized donor journeys for each segment. Defining donor segments allows you to chart clear pathways for each group to encourage retention. For example, you could create a new donor cultivation plan similar to this timeline from Bloomerang’s donor segmentation guide: 

Ultimately, you can use these strategies to:

• Boost donation conversions
• Increase donor retention
• Save time when crafting marketing campaigns

As you can see, segmentation allows you to interact with donors on a more personal level rather than treating them as a single mass. At the same time, you can still save time by creating marketing materials for specific groups rather than individuals. 

Useful donor segments to create

It’s important to approach segmentation strategically. You may be tempted to create dozens of segments for different audiences, but remember, that’s not the main point of this practice. Segmentation is meant to transform your donor database into several easily manageable categories of donors who share basic traits. 

With that in mind, we recommend creating the following segments using your nonprofit’s software solutions: 

First-time donors

Becoming a first-time donor is exciting. Someone has decided to commit some of their hard-earned money because your cause strikes an emotional chord. They’re excited about making a difference for your incredible organization, but they may not know how to start.

That’s why creating a segment for first-time donors is so important. It takes a lot to transform from a casual audience member or social media lurker into a true supporter, so your outreach materials should recognize that. 

Communications to these donors should focus on welcoming them to your organization and making them feel at home with messages like this:

“Welcome to our cause! You’ve just joined an incredible community of dedicated advocates fighting for [your mission]. We’re so happy to have you here. Introduce yourself in our exclusive donors Facebook group and check out these upcoming events to get involved with.” 

By making new donors feel like partners in your organization’s success, you can retain their support and encourage repeat donations. You can also help them find their niche at your organization, inspiring them to stay involved and even help recruit other supporters from their networks. 

Recurring donors

Recurring donors contribute to your nonprofit on an ongoing basis. These may be monthly donors or members. 

This segment is becoming increasingly important to all nonprofits because, according to the M+R Benchmarks 2023 report, monthly giving increased by 11% last year and accounted for 28% of all online giving. 

Create a segment for recurring donors using data from your CRM or membership database. When talking to these donors, emphasize your gratitude for their reliability and ongoing commitment to your mission. Create personalized donor impact reports that depict donors’ influence over time and outline ways you use recurring donations to support your mission. 

Major donors

Major donors contribute your nonprofit’s largest individual gifts. For most nonprofits, a relatively small group of major donors provide the vast majority of funding from individual donations, making major donors a key segment that requires thoughtful stewardship. 

You can further segment this group to separate planned and principal donors:

• Principal donors contribute transformative gifts, typically $1 million or more. These individuals require the greatest amount of personalized engagement, from personal tours of your nonprofit’s facilities to naming rights for buildings or programs. Your messages should focus on these donors’ pivotal role in helping your organization make major strides toward achieving your mission. 
• Planned donors plan to give large sums in the future via their estate planning or will. These donors also require a great deal of personalized stewardship, but your communications should focus on themes such as leaving a legacy or having an enduring positive impact on future generations. 

Creating major donor segments separate from your other recurring donors is imperative. Major donors require the most personalized outreach efforts, so making a specific segment allows you to easily identify and develop tailored journeys for each major donor or prospect. 

Lapsed donors 

Re-engaging donors who once gave to your organization but no longer contribute is not as complicated as it may seem. 

Because these folks once donated, you know they once cared about your cause. Plus, many lapsed donors 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. 

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 2022 helped so many people in need.”
2. Tell them you miss them and 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 makes our nonprofit go!”
3. Provide a case for giving that lays out 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 donating $X to address the ever-growing needs we address?”

Especially for donors who haven’t donated in over two years, ask for a smaller donation 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. 

Potential donors

This segment is challenging to engage with, but not impossible. Potential donors are contacts in your database who haven’t yet given. Perhaps they’ve received some outreach from your organization but haven’t been specifically prioritized in your fundraising strategy yet.

To effectively reach potential donors, we recommend keeping the following considerations in mind: 

1. Lower your expectations for anyone in your database who hasn’t donated after being asked three or more times. Don’t bother sending this group direct mail letters or anything that incurs an expense. Email is the only cost-efficient (and time-efficient) way of reaching them.
2. Try to learn how individuals entered your donor database or volunteer management system in the first place. Did they attend an event or volunteer opportunity? Did they sign up to receive your newsletter? Do they follow you on social media and interact with your posts? 
3. Make your outreach specific. The more specificity you can add to your messages, the better. If you segment all event attendees, for example, you can tailor your message by saying, “You have attended one of our events, which makes you a valued part of our family. Today, you can become a pillar of our community by making your first donation.”
4. 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?). Then, ask for a specific donation amount so potential donors don’t have to stress over how much to give. 

Our final suggestion is to wait until your next peer-to-peer fundraising campaign to connect with potential donors. Recruit fundraising ambassadors who have already hit their goals to engage with prospects and make a compelling case for support. 

Your ambassadors are natural sellers. They’ll be able to conjure excitement and build upon the momentum they’ve established by hitting their goal. For example: 

“Hey Steve, this is Raimy. I’m raising money for [organization name], this amazing community that does X, Y, and Z. 

I had a $5,000 fundraising goal, and with the generous support of my family and friends, I’ve surpassed that target. 

Now, I’m reaching out to people in the [organization name] database who have yet to donate to this special cause. 

Would you consider a donation of $10 to help even more people affected by [issue your nonprofit faces]?”

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

Conclusion

One of the many reasons we advise these donor segmentation strategies is because they work 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 treated like newbies and prospective donors aren’t treated like well-established, long-time supporters. 

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