When we think of donor segmentation, we tend to think of sending out emails to different groups of donors. This one's for potential donors, this one's for monthly donors, and this one's for donors who wear berets. (We hope you have a few of those donors; they sound very fashionable and fun.) But donor segmentation is about so much more than that! It's a strategy, a way of life, the key to successful fundraising efforts and a happy donor base.
What is donor segmentation?
Donor segmentation is an approach that nonprofits use to group their donors by category based on various criteria, including preferences, demographics, and history with the organization. Segmenting donors allows nonprofits to tailor their fundraising strategies and communications to individual donors, fostering engagement and building stronger donor relationships.
Pretty straightforward! But, like most things in life, there's a bit more to it.
Why is donor segmentation important for nonprofits?
Picture it: You receive an invitation to an alumni event in Tokyo when you live in New Jersey. "All that money on tuition, and they can't remember where I live?" you fume. "Also, I wish I lived in Tokyo." Or perhaps you get a donation request asking first-time donors to give again, when you've been donating to that very cause every few months for the past two years. How dare they! Situations like these are why any org in the nonprofit sector needs a solid segmentation strategy. Specifically, segmentation helps you:
Up donor engagement
Segmentation makes it easy to send personalized communications to donors. And when people feel seen by your organization, rather than being one number in a vast donor database, they want to stay connected to and involved with your cause.
Improve donor retention
Understanding donor preferences leads to improved relationships with donors, and strong relationships means donors who stick around, in good times and in bad. Plus, segmentation helps you avoid donor fatigue by not asking too much of any one donor (that donor who gives $15 every year on his niece's bday? Don't send an ask for a $100 monthly donation).
Create content that works (and converts)
70% of consumers report receiving irrelevant ads, content, or information at least once a month (Redpoint Global). Nobody has time for that! With segmentation, you can send your donor population relevant content, tailoring your communications strategies to the various donor types.
Deliver tailored fundraising asks
When you segment donors, you can ask for donations based on past giving patterns (i.e., how much they've given, when, and how frequently), ensuring your asks make sense for each individual. Nothing turns off a donor more than asking for gifts that are above their income level!
Cultivate major donors
Once you have your segments, you can easily identify major donors and commit additional resources to cultivating those relationships.
Tailor fundraising campaigns
Different donor segments may respond better to specific fundraising campaigns, which enables nonprofits to create more targeted appeals and boosts campaign effectiveness.
Examples of donor segmentation lists
So, what do meaningful segments look like? When you segment out your donors, you want to consider what type of communication makes sense based on donation history, communication preferences, giving motivations, and demographics. Here are some examples of types of donor segments to consider with tips on how segmentation can lead to more effective fundraising.
With donors who have given single donations, the goal is continued engagement and, ideally, another donation. By segmenting this type of donor, you can give them a warm welcome, encourage engagement with your organization, and turn one-time donations into recurring gifts.
As much as we love diversified revenue streams, major donors usually make up the majority of nonprofit fundraising revenue, so you really want to go above and beyond when it comes to stewarding these relationships. By segmenting out major gift donors, you can make a personal connection and build a communication strategy to match.
Recurring or monthly donors give on a regular basis, making this common type of individual donor vital for stable revenue. When you segment out these key donors, acknowledge their commitment, maintain their loyalty, and potentially encourage them to increase their recurring contributions or engage with peer-to-peer fundraisers.
You know lapsed donors once loved you, but then ... something changed. Segmenting this type of donor allows you to re-engage them through targeted fundraising appeals, reminding them of the impact of their past support.
Volunteers may not give cash, but they're dedicated supporters who invest time and effort. By segmenting volunteers, you can recognize their contributions, involve them in volunteer opportunities, and transition them into donors (if appropriate).
Donors who have included your organization in their estate plans are a special segment. Acknowledge their planned gifts, invite them to special events, and maintain a strong personal relationship, ensuring future sustainability.
Social media followers
Social media followers are all potential donors. With effective donor segmentation, you can tailor online communications to convert their interest into active support, whether that's through financial donations, peer-to-peer fundraising, advocacy, or the occasional birthday fundraiser.
Corporate donors' motivations are quite different from individual donors, so you want to engage them accordingly. Typically, they're donating because they have a social responsibility to do so, so keep this segment apprised of marketing opportunities and special events that will polish their brand image.
Donor data points to inform your segmentation
All the nonprofit donor types we've discussed share a common giving history, but there are lots of other data points that should inform your segmentation efforts.
First of all, the amount of money a donor gives is a crucial data point. Look at a donor's average donation size and frequency, then segment them based on whether they're a major donor, a mid-level donor, or a small donor.
Examining a donor's giving history, including the frequency and consistency of their donations, can inform when and how you interact with them moving forward. For example, one donor can give a single large gift every December while another gives a medium gift every month. Both would be segmented as major donors, but your donor communications strategy would be different.
Geographical location can impact a donor's connection to your cause or nonprofit. By taking location into account, you can identify donor prospects who might be interested in your cause and tailor current donor messaging to regional interests and concerns, such as local fundraising events.
Preferred communication channel
Meeting your donors where they are starts with understanding how they prefer to receive information (e.g., email, direct mail, social media, phone, or one-on-one conversations). Note their preferences well.
Donor demographics are the segmentation basics! Demographic data, such as age, gender, income, and occupation, provides insights into donor preferences and motivations. For example, older donors might prefer direct mail or face-to-face conversations, while younger donors may engage more through digital channels.
Donor journey stage
You can segment donors based on where they are in their donor journey. Are they a prospective donor, new donor, current donor, or lapsed donor? This allows for tailored communication strategies that match their current engagement level.
Preferred payment method
Knowing whether donors prefer cash or credit (or, these days, Venmo or crypto) ensures a seamless donation experience, reducing barriers to giving. Use this segmentation information to bring prospective donors into the fold by building the most effective donation form out there!
Best practices for effective segmentation
Now, you're well-versed in all things segmentation, from segmenting donors to segmenting oranges. (The trick is to use a sharp knife and cut between the membranes!) But how do you implement donor management best practices to maximize segmentation effectiveness? Here are our go-to donor segmentation strategies.
How to begin donor segmentation
Successful segmentation starts with investing in great donor management software. It provides the tools you need to collect, organize, and analyze donor data efficiently, all in one place.
Why is clean data imperative?
Donor segments only work if you have accurate, up-to-date data. Clean data ensures that all of your segmentation efforts are based on reliable information, so set aside time to regularly clean up your donor database, deleting duplicate entries, checking for accuracy, and standardizing formatting.
Create donor segments meaningful to your nonprofit's goals
As you can see, there are so, so many ways to segment your donors, and you don't want to go overboard with 1,256 different donor lists. Instead, you want to create segments that align with your nonprofit's specific fundraising and engagement goals.
The role of intersectionality in segmentation
Remember that donor segments aren't one size fits all. Intersectionality recognizes that donors have complex identities, needs, and motivations that may overlap with various segments, so defer to your donors themselves on what matters most.
Integrate your software solutions for a complete, accurate picture
If you're using 10 different software solutions, clean, comprehensive data is going to be hard to come by. Instead, integrate your various technologies within your organization to create a comprehensive donor database with a more holistic view of donors. This, in turn, will lead to more effective segmentation--and stronger relationships.
Ways to keep your donor segmentation equitable
With great segmentation comes great responsibility, nonprofiteer. We all know that data can be, and often is, biased, and that means it's imperative that you ensure equity, inclusivity, and fairness when you segment your data. Here are some effective strategies for equitable segmentation.
Data privacy matters
Equity starts with transparency, and as the almighty keeper of donor data, your organization needs to prioritize data privacy and security to protect your donors' personal information. What's more, you need to be 100% transparent about data usage, informing your donor population about how you'll use their information.
When segmenting donors and making donor profiles, it's easy to unintentionally make assumptions. Not all major donors are older; not all college students are on social media. Repeat after us: segmenting should be based on data-driven insights rather than preconceived ideas.
Make your communications inclusive
Your communication with donors should be personalized, but that doesn't mean the overall messaging should exclude any donor segment. Craft messaging that resonates with a diverse target audience and offer content in different languages and formats so that it's as accessible as possible.
Offer all donors (and potential donors) the same opportunities to engage with your organization. And if you do have certain events for a certain category of donors, do your best to make it more inclusive. For example, if you're hosting a special event for everyone who gave a major donation and calling it your "leadership circle," also invite long-time volunteers who have given countless hours to your cause.
Again with the intersectionality
We said it before, and we'll say it again: people will belong to more than one segment simultaneously, so recognize that the college student from Iowa who's an annual donor and social media influencer has many facets. Analyze your donors' motivations and preferences mindfully.
Your donors are your source of truth for how you're doing. Regularly reach out to them, especially those in underrepresented or historically marginalized groups, and ask what they need.
When it's all about standing out and keeping up, donor segmentation is your key to success. By taking a data-driven approach to your communications and campaigns, you can better connect with donors and blow past your fundraising goals. So, head on over to Funraise, and start turning those numbers into insights.
Donor segmentation: Key takeaways
- Donor segmentation is a way for nonprofits to group their donor pool by category based on a range of criteria, including preferences, demographics, and giving history.
- Segmenting donors is important for nonprofits because it allows them to tailor their strategies and communications to different nonprofit donor types, increasing engagement, improving donor retention rates, and building stronger relationships.
- You can segment your donors based on a variety of factors, including types of donations, giving history, demographics, preferences, and motivations.
- Clean data is essential to effective donor segmentation, so regularly go through your database to delete duplicate entries and check formatting and accuracy.
- Don't forget to emphasize equity in your donor segmentation strategy that's inclusive, intersectional, and secure.