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Segmentation – It Really Is All About Who You Know

Segmentation – It Really Is All About Who You Know

Good journalists apply a formula to ensure that every story has all pertinent facts by always including “the five Ws and the H” – Who, What, Where, When, Why, and How. Notice that Who is first on the list. That’s a very important fact – Who is at the crux of the story?

Unfortunately, many fundraisers forget about “who” is at the crux of their fundraising efforts when it’s time to send out a big mailing. So much time is spent developing the offer, writing and rewriting the appeal letter; deciding on whether programs are accurately and adequately described; debating about which cuddly photos are the most compelling to use, that one vital element is forgotten…the recipient.

Does your organization segment your mailing list into categorized groups and tailor communications based on the needs and interests of those groups? If not, you’re not alone, but you’re still missing a big opportunity.
A recent survey on communications segmenting conducted in March and April by the CRM Company and Kivi Leroux Miller’s Nonprofit Marketing Guide revealed some interesting statistics. The survey is based on 425 responses from small
er organizations. Most have budgets of less than $5 million.Bloomerang-IG5B1-200

Here’s a snapshot of the survey results:

  • All or nothing at all. Most nonprofits either have very robu
    st segmentation practices or don’t bother to segment at all.
  • Actions and amounts speak louder. The most common categories used to segment donors were donation amounts and ‘take action’ histories.

‘I don’t know; it sounds too complicated.’ The greatest stumbling block that prevents those who don’t engage in segmentation was a “lack of knowledge” and inadequate “data and technological ability.”

Other interesting results:

  • While 86% of those surveyed recognize that segmentation is important, only 64% segment their files.
  • Of those who do segment files, only about 25% — and often far less — focus on segmenting beyond transactional history.

Segmentation = Donor Retention
In short, not nearly enough attention is being paid to donor retention when it comes to segmenting files for appeals and communication to donors.
One of the reasons for this, according to the survey, is a combination of ignorance and poor technology.

But with an inexpensive, simple data base tool, technical barriers are no excuse. What smaller organizations really need is more practical education on what segmentation is really all about.

A simple rule of thumb separates donors into just four segments:

  • Segment #1 – New Donors
  • Segment #2 – Returning Donors
  • Segment #3 – Donors with Above Average Gift Level
  • Segment #4 – Donors at or Below Average Gift Level

This simple rule of thumb is suggested by donor loyalty guru Adrian Sargeant who advises Bloomerang.

Do these categories or segments look familiar? If you read last month’s newsletter article, “The 4 Thank You Letters You Must Have,” we talked about categorizing donors into these same categories.

It’s important to customize your communication to these groups, whether it’s an acknowledgment letter or an appeal.

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