Ever felt like you're shouting into a void, trying to connect with your nonprofit's supporters? Understanding your donor base is the foundation for building strong relationships that inspire continued support and engagement. But how do you dig deeper into understanding individual donors and their preferences? And what if you don’t have the time to craft a personalized message to each donor? That's where donor segmentation comes in!
Donor segmentation may sound like a buzzword, but it's far from that!
It's a powerful strategy nonprofits use to tailor communication and engage donors more effectively. This approach lets you break down your broad audience into smaller groups based on shared characteristics. It's about making sure every conversation counts by speaking directly to what matters most for each individual donor.
Table of Contents:
- What is donor segmentation?
- Why does segmentation matter?
- Creating effective donor segments
- Tools to support your donor segmentation
What is donor segmentation?
Donor segmentation is grouping your supporters into distinct categories based on shared characteristics. These categories can range from the amount donated, frequency of donations, interests, or even age groups.
The importance of donor segmentation
Why bother with segmenting donors? It might feel like a waste of time to sort through your donor data when you have so many other things to tackle in your day. But if you’re hoping to improve donor engagement and retention, then donor segmentation should be a top priority!
Think about how you interact with people in your life. You wouldn't speak to your boss the same way you'd chat with a friend at a BBQ, right?
The same thing applies to donors - by understanding these segments you're able to craft personalized connection points with your donors, without having to write individual messages for each donor. Personalized interactions lead to stronger donor relationships. And donors who feel connected to your nonprofit’s mission are more likely to continue giving over the long haul.
How donor segmentation impacts retention rates
An effective segmentation strategy does more than just group donors based on shared characteristics; it empowers organizations with actionable insights that can improve donor retention rates significantly.
You might ask why retention rates matter so much. To put it simply: acquiring new donors costs up to five times more than retaining existing ones!
Acquiring new donors costs up to 5x more than retaining existing ones.
On average, about 40-45% of donors continue giving to a nonprofit. So if 100 people donate to your cause, only around 40 of them would come back to give again.
Understanding your donor data plays an essential role in improving those rates. Things like donation history, volunteer hours logged, or event attendance help shape our understanding of different donor segments.
If you’re sending out a message to first-time donors, that should look different than how you would reach out to committed recurring donors or major donors. Likewise, seeking a donation from a lapsed donor versus a volunteer who gives their time but has yet to donate should also look different.
Understanding your donors allows you to craft specific messages targeted towards each segment, improving both engagement and ultimately average donor retention rates.
Creating effective donor segments
So now you know the importance of donor segmentation, but how do you separate your donors into meaningful categories? To truly engage supporters, a single approach won't do the trick anymore. Your donors want to feel seen and understood on an individual level - even when they're part of a larger demographic group like 'first-time donors' or 'long time supporters'.
Diving into questions about what groups your donors together allows your nonprofit to send personalized communications tailored to each segment’s needs and expectations. Then you can send personalized communications that truly resonate.
Effective donor segmentation requires you to spend a lot of time looking at and analyzing your donor data, so your data must be usable.
The importance of data hygiene
The first step to having usable data? Clean up your data! Your donor database should be a goldmine of information - age, donation history, engagement level - everything you need to create donor segments. But if it's cluttered with outdated or inaccurate profiles, it can lead to misguided strategies and missed opportunities.
Take the time to clear out donor data that is no longer relevant and get rid of duplicate donor profiles. Depending on the software you’re using, cleaning up your donor data can either be a simple, straightforward process or it can be incredibly time-consuming. Many nonprofit constituent relationship managers (CRMs) help you find and merge duplicate contacts, which simplifies the process.
You'll also want to use this clean data to create personalized messages based on individual preferences and behaviors—this shows donors that they matter as individuals rather than being one among many contributors. Personalization has been shown to increase donor retention rates by up to 10%.
Segmentation by donor giving
To connect better with your supporters, look at patterns in giving frequency. This helps you figure out if someone is a regular donor or a first-time supporter, or if they used to contribute but haven't lately. Tailor your communication based on these distinctions, as each type of donor prefers a unique approach.
When a donor gives for the first time, it’s important to prioritize cultivating that relationship. But where should you start? First, create a donor journey map for first-time donors, so that you have an idea of what you hope your donors’ experience with your nonprofit looks like.
Here’s an example of a donor journey for a first-time donor:
The most important step is to send a thank you, so your donors know how much you appreciate them. Find the right nonprofit CRMs that let you set up automatic thank-you emails when a donati on is received. Then follow up by giving your new donor a thank you call or sending a text within the first 48 hours.
A week later, send out an email that gives the donor more information about your nonprofit. Share your mission and vision with them, and then let them know how their gift is being used to impact your community.
One month later after the donation, follow up with a nurture email newsletter that updates donors on what’s happening at your nonprofit. You’ll send out another newsletter the following month that shares the impact that donor’s gift had on your nonprofit. Finally, three months after the initial donation, ask for a second gift.
Recurring monthly donor
With monthly donors, it’s important to take a moment to connect with them regularly throughout the year. Thankfully, you have 12 connection points naturally built in - your monthly receipt email! Automated thank you notes are a great way to make sure you’re connecting with your recurring donors each month.
Aside from your thank you emails or notes, take a moment to connect with supporters with monthly or quarterly newsletters. While the stories you tell in a newsletter might remain the same across all donor segments, craft the newsletter’s intro and conclusion with a specific segment in mind. Let your monthly donors know the impact that their recurring gifts are having on your nonprofit and how you’ve been stewarding the donations they’ve already given.
Additionally, be aware of the potential for a donor to lapse. Run a report that lets you know if a donor’s credit card is about to expire, so you can connect with them and remind them to update their info.
Even with you regularly connecting with and engaging your donors, it’s impossible to retain every single donor. There are so many factors outside of your control that contribute to a donor deciding to give. By creating a segment for lapsed donors, you are able to better engage this group of individuals who see value in your nonprofit but are currently unable to give.
First, divide lapsed donors into their own segments:
- One-time donor who has lapsed - Ask yourself a couple questions before reaching out to this donor segment: Were they giving to a memorial fund or in honor of someone else? Was their gift given through a peer-to-peer campaign? The answer to these questions will shape whether you reach out to them again and how you reach out to them.
- Recurring donor who has lapsed - If a donor has been consistently giving and suddenly stopped, this is a great time to reach out to them and see how they are doing. Whether through text, phone call, or email, take the time to engage with them about how they are doing and to thank them for all of their past support. Let them know how much you have valued their contributions in the past. This is not the time to ask them to give again. It’s an opportunity to build the relationship.
Segmentation by involvement
In addition to using gift size as a criterion when segmenting donors, consider factors such as event attendance or volunteer participation—these offer additional insights into a person’s involvement with your organization outside of their monetary contributions alone.
Whether your volunteers regularly donate or haven’t donated yet, it’s important to create a segment for them. Volunteers engage with your nonprofit in ways that are unique from other constituents. Reaching out to this group with volunteer opportunities and unique interactions strengthens their relationship with your nonprofit. Send out a text message or email that lets them know you are thinking about them on Volunteer Recognition Day (April 20th). Or send a funny volunteer-related meme to let them know you see them and appreciate them.
This helps to build rapport with your volunteers. They feel more connected to your organization and are more likely to continue giving their time and their donations.
Segmenting by event attendance is a great way to continue to engage your donors. Send updates about upcoming events or follow up after an event has ended. Take the time to thank these donors and continue to foster these relationships. Many people might attend an event put on by your nonprofit, but they aren’t giving regular or recurring gifts. You might remind them of their event attendance and let them know the good work that’s been accomplished since that event, while following up with a donation ask.
Not every outreach should be centered on events or asks. Foster deeper connections and encourage engagement with these constituents.
Tailoring your outreach by age group
The magic of age segmentation lies in its ability to help you craft targeted, relevant messages for different generations. From Baby Boomers to Gen Z, each group has unique preferences and communication styles.
Think about it: Would your grandma respond the same way as your teenage nephew if they both received the exact same email asking for donations? Probably not.
In all likelihood, your teenage nephew probably wouldn’t even see the email. He’s far more likely to see a text message or a post on TikTok. And while Grandma might read a text message, she’s probably not actively on TikTok.
It’s important to choose the right channels of communication for your specific donor segments.
Boost your donor segmentation with a Nonprofit CRM
Implementing donor segmentation may seem like a mountainous task. But with the right approach, you can turn it into manageable steps.
A good nonprofit CRM, like DonorDock, simplifies the process of donor segmentation by automatically updating profiles, giving you actionable to-dos, and letting you easily create custom reports.
A key tool for ongoing success is maintaining accurate donor records so you can identify trends over time. With DonorDock, you can accept gifts, manage your donors, and craft personalized outreach messages through text, email, or snail mail, all in one app.
Donor segmentation isn't just a fancy term, it's a game-changer for your nonprofit. By now, you should understand its importance in boosting retention rates and enhancing communication with supporters.
Remember to dig deeper into donor preferences and behaviors. Personalized outreach matters because each supporter is unique, each has their own story.
Leverage this knowledge to craft messages that resonate on an individual level. Use criteria like donation frequency, the nature of involvement, and age to create segments.
Persistence pays off! Implementing effective donor segmentation takes time and effort but can lead to significant improvements in engagement levels and continued support from dedicated donors.