Donor segmentation strategy: Improve your fundraising
Read time: 8 minutes
Mackenzie Walters
CEO and Strategist
As a journalist, I always loved telling the story of a nonprofit's impact. The difference nonprofits make is real, and the people they help or empower are inspiring.
The truth is, stories sell. When I shared a nonprofit’s story in the newspaper, donations increased.
Many nonprofits know they should share their own story, but starting can feel overwhelming. They don’t know what to say or how to get started.
One solution is segmentation, which I’ll discuss in this article. Because a nonprofit’s audience is complex — it includes donors, volunteers, community partners, and more — it’s difficult to draft one story that resonates with everyone.
Segmentation allows you to draft many small stories or identify key messaging points that are targeted to different groups, or segments, in your audience.
More:
Essentially, segmentation is the process of identifying commonalities between groups, and tailoring messaging and communication to each group's motivations, experiences, and preferences.
Segmentation strategy should be used as part of a fundraising strategy or donor management practices. It’s also effective in marketing campaigns.
By identifying the types of stories and messages that resonate, you're more likely to send the right message on the right channel to the right person. And that can lead to better results.
In my view, nonprofits should share their stories of impact more. If they don’t, who will?
There are fewer journalists working today than ever before. The responsibility of storytelling falls squarely on the nonprofit.
Executive directors are starting to take note. Recently, I saw a job description for a "community journalist."
"[Our nonprofit] has 1,001 success stories about Iowans becoming more inclusive and accepting of diversity, while striving toward equity. We seek a community journalist to accurately portray [our] expertise as a resource for cultural education and DEI (diversity, equity, inclusion). Your coverage of [our nonprofit's] programs and services will allow readers to see their own potential for growth and opportunity."
Donor Segmentation Process
Segmentation strategy requires a bit of legwork, especially if you don't have a donor or marketing database.
Our highest-performing clients have a reliable database and are constantly adding to it. They use the data for marketing automation, donor journeys, or drip campaigns.
However, while software and databases are important, they do not move the fundraising needle alone. Instead, it's the deep understanding of your donors alongside thoughtful communication.
Ultimately, it’s about building and cultivating relationships.
Segmentation allows you to communicate to smaller groups, making the messages feel more personal and relatable. Ultimately, you want your stories to connect on an emotional level.
>> Deep Knowledge: A Marketers Guide to Customer Segmentation <<
We recommend the following process:
1) Identify your audience
What do they have in common? Asking this question allows you to group them together. Create segments based on similar behavior, such as:
Why donors or volunteers give (for example, for a community health nonprofit, are they giving because they care about health outcomes or are they giving because of the school-aged program and they care about kids?)
What triggers them to give (for example, are they giving to help with disaster relief, because they want to see systemic change, or because they personally experienced something that's tied to the nonprofit's cause.)
Their communication preferences (for example, are they active on Facebook, do they want detailed financial reports, are they visually oriented and want to watch videos?)
And key data metrics to track, such as when they gave, how much, how frequently, and other data points.
2) Research their motivations and preferences
Don't make assumptions! As a former journalist, the biggest mistake I see nonprofits (and businesses) make is to guess. If you find yourself brainstorming why your donors give, stop!
We have yet to share donor research results that didn't surprise executive directors or their leadership team. That's because motivations are rarely discussed outside of a financial request.
By taking the time to interview key donors and follow up with a survey to confirm insight, you'll identify critical information that will make the segmentation process (and all the marketing and communications to follow) more effective. Research options include:
Donor interviews
Donor surveys
Donor focus groups
Donor roundtable discussions
3) Identify priority segments
Organize your fundraising, marketing, and communications plans around your top segments. That includes what message to share on what channel.
The trick here is to create groupings that are large enough to be effective but small enough to feel personal.
Think through what outcome (call to action, or CTA) you want for each group. For example, you may decide to divide your volunteers into these three categories, and send different messages to each with different outcomes:
First-time volunteers — Outcome goal: Second volunteer activity
Group volunteers — Outcome goal: Follow you on Facebook
Regular volunteers (for example, they've committed to a weekly volunteer activity) — Outcome goal: Participate and share campaign for an online giving day
However, if your nonprofit is young or you don't have a robust volunteer list yet, you may decide to simply segment by volunteer and financial donor.
The best segmentation strategies are unique and custom to your nonprofit.
>> Deep Knowledge: A Marketers Guide to Customer Personas <<
Create donor segments
While teaching segmentation at a conference for nonprofit professionals recently, we walked through an exercise where I asked the audience about three possible segments:
Major donor
First time (small) donor
Volunteer
Working in groups, attendees reflected on their knowledge of these donors and volunteers, and put themselves in their shoes.
Below is what they shared, based on their unique nonprofit experience. As you can see, it quickly showed how different types of donors or volunteers want different things from the nonprofits they are giving to.
Disclosure: We do not endorse guessing. There are too many "good ideas" floating around that are not grounded in the reality of the people your nonprofit engages with. Remember, just because you like to engage in a certain way doesn’t mean that’s how your audience wants to engage. Your best outcomes for segmentation is based on research about your unique donors and stakeholders.
Major gift donor
Why they give:
Community recognition, such as a name on a building, public relations, or another benefit. This has become a natural way in our society to share their story of giving.
Legacy
To feel good
Tax breaks
What they are looking for:
Wants you, as the nonprofit, to understand why they give
Financial transparency about where their money is going and how it will be spent.
Clarity of story — what the nonprofit will do with their money, specifically
Track record of financial due diligence, such as how the nonprofit has managed money in the past
Specific outcomes from programming or services
Stories of the impact of their donation
Influence over the nonprofit’s programs, which may be related to outcomes. (Grants are often looking for fund specific outcome, such as increasing literacy scores.)
Long-term program or nonprofit stability
An ongoing relationship with the nonprofit, including regular updates and communication.
Data point examples:
Gift size
When gifts were made — based on recency so you can spot lapsed donors
Frequency of gifts (maintaining a relationship with long-time givers)
Why they gave (specific connections to cause)
First-time (small) donors:
Why they give:
To be part of something bigger
To have a positive impact
To feel good
Tax breaks
Connection to the cause or organization
Personal connection to the nonprofit, such as a friend, family member, or coworker who is already connected
What they are looking for:
Impact of their giving
Story of their impact, which they may naturally want to share with others
To be part of something bigger
Clarity or proof of how their donation will be used*
*According to research we've done, the larger the donation, the more donors want to see financial transparency in money management
Data point examples:
Gift size
Frequency of gifts
Why they give
Social media preferences
Volunteers (time donors)
Why they donate their time:
To be part of something bigger
To have an experience
To feel good about doing good in the community
To connect with a community (maybe seeking friends, involvement, etc.)
Connection to the cause or organization
Satisfaction of doing the tangible work and seeing the outcome
Personal connection to the nonprofit, such as a friend, family member, or coworker who is already volunteering
What they are looking for:
The story of their experience, which they may want to share with others
Recognition of their time and sweat equity
Group or individual photos, which create recognition and allows them share their story
Communication and clarity around what to expect when they are volunteering
Routine, especially for regular volunteers. They want to know what to expect and not have it change every time. The routine creates confidence.
Skill development
Data point examples:
Volunteer type
Frequency of volunteer
Why they volunteer
Social media preferences
Want to know more? Fill out the form (below) to view the presentation slides.
The presentation slides include:
Example of audience persona
Example of a donor journey (email drip campaign) for first-time donors
Example of an email to send to first-time donors
Examples of how to tell your nonprofit story, taken from an annual report that incorporates best practices of donor segmentation