Pursuant is now part of Allegiance Group - Read More
It’s no surprise that fundraising is more difficult during times of economic downturn. Recent industry benchmarks show that giving started to trend downward in 2022, along with declining average donor retention rates. While these patterns can be discouraging, consider them an opportunity to improve your nonprofit’s fundraising and communication strategies.
By creating categories with your existing donor data, your organization can craft communications that resonate with each and every donor to inspire more donations for your fundraisers, help retain more donors year-to-year, and enhance your marketing ROI. In this guide, we’ll explore the basics of donor segmentation and how to use it to your advantage, including:
Before diving into the specific segmentation strategies you can use to boost campaign results, you’ll need to understand what donor segmentation is and why it’s beneficial for nonprofits. Let’s get started!
Donor segmentation is a strategy that nonprofits use to separate a donor base into smaller subgroups based on shared traits and characteristics. Segmentation is an important part of analyzing nonprofit data, as it allows you to organize large files into smaller, more manageable pieces. The subgroups you create are referred to as donor segments, and they can be based on a variety of categories.
For example, let’s say you work at a nonprofit whose mission is to teach young students how to use technology to better their lives, and you need to identify donors who may be willing to donate to support an upcoming workshop. You might segment donors based on their level of engagement, average gift size, interest areas, and geographic location to identify the most promising candidates.
In addition to making your data more organized and manageable, segmenting donor data can have a variety of other benefits for your organization—particularly when it comes to creating personalized donor experiences.
Here are a few of the ways donor segmentation impacts your relationships with donors:
You can get creative with your donor segments, using them to achieve whatever your nonprofit’s primary goals are at the time. Let’s say your technology nonprofit needs to recruit more Gen Z supporters. You can segment donors by their generation, send existing Gen Z supporters a survey asking them how you might reach their peers, and develop a referral program to motivate them to share your cause with their friends.
The way your organization creates and utilizes donor segments will vary based on your needs, goals, and supporter base. If your nonprofit has a specific goal like boosting donor acquisition and retention, you might spend more time digging into your donors’ “why” than you would if your goal is simply to better categorize your donor file.
Additionally, the process will change depending on the technology you use to categorize donors. Here is what the process will look like when you choose an all-in-one fundraising analytics and data visualization tool like GivingDNA:
With GivingDNA’s software, you can quickly identify which donors have the traits you are looking for and build specific, practical segments that your organization can use to achieve its goals.
Here are the steps you’ll need to follow in order to create targeted donor segments on the platform:
Additionally, check out this video to see what the process looks like in action (and how you can create a hyper-targeted donor segment in just a few minutes):
Once your team of fundraisers understands how to segment donors, you’ll need to determine which categories to base those segments on. Here are some of the most common categories to sort your donors into in order to learn more about them and maximize revenue:
Demographic data refers to socioeconomic information about a donor. These traits can help you understand their background which, in turn, can reveal deeper insights about the donor’s behaviors and preferences.
For example, you’d likely make different assumptions about the communication preferences of a female Gen Z college student living in a large urban area than a married, middle-aged man who occupies rural farmland.
Here are some demographic traits your organization can segment by or dig deeper into:
While these traits may seem to be surface-level, they can reveal much more about your donors than you might think at first glance. Look for trends in behaviors and preferences that are associated with certain demographic traits to better personalize interactions with individual donors.
Psychographic traits are somewhat similar to demographic traits, but they focus instead on who donors are on the inside and how they live their lives.
Specifically, these traits can include donors’:
Clearly, these traits can inform the ways your nonprofit interacts with donors. Here is an example of how a nonprofit can use data in this way:
Let’s return to our nonprofit that makes technology more accessible to young people. When crafting their acquisition strategy, they might filter their existing donors by average gift size, frequency, and household income to identify their most valuable donors. From there, they’d analyze those donors’ psychographic data to create a donor persona of the ideal supporter they hope to attract.
The fictional persona should list out specific traits the donor has and how those impact how your nonprofit interacts with this type of supporter or prospect:
Clara Thompson is a 35-year-old woman living in New York City. Her income is considered to be upper-middle class in the city, and she earned a master’s degree in business from a prestigious university. She is married and has two young children.
Clara is passionate about how technology can transform the world, frequently attending tech conferences around the country to keep up with new innovations. She prioritizes her own children’s education, is passionate about bringing tech-focused learning opportunities into her community, and frequently volunteers and donates to educational causes.
Because Clara leads a busy lifestyle, she values convenience and efficiency in her day-to-day interactions. While she appreciates learning more through regular updates, she rarely has the time or bandwidth for lengthy blog posts or phone calls from fundraisers. However, she checks her email frequently and is active on social media.
Using this persona, the nonprofit’s team can put themselves in the shoes of their top donors, both current and potential, when communicating. In this case, they can skip explaining how technology and education are related as Clara is familiar with the subject. Additionally, they know that while she wants to be privy to updates about the work the nonprofit does, she’d prefer it in bite-sized pieces she can browse on her own time.
Giving behavior refers to how, when, where, and why donors give to your cause. Creating segments based on giving behavior can help you identify the donors who give the most often or at the highest amounts. Additionally, you can create segments of donors who, based on their giving behavior, may be willing to increase their donation size.
Giving behaviors that can be useful as donor segments include:
You can also track larger giving patterns among your donors, such as times of the year when donations spike or which projects and initiatives tend to earn the most support. Tracking these trends among specific segments like mid-level and major donors can help you pinpoint opportunities to upgrade their donation amount, encourage them to join your sustainer program, or suggest other ways to get involved.
Your donors likely have a handful of communication platforms they actually interact with on a daily basis. But keep in mind that they may not want to interact with your nonprofit through all of them—for example, perhaps they are fine with emails from outside organizations but prefer to keep text messages limited to friends and family.
These preferences can come in the form of:
Understanding and adhering to these preferences is crucial. Sending messages through the platforms that donors use increases the chance that they will see, open, and engage with the message. Additionally, it shows that you care about their preferences and are willing to make their experience with your nonprofit a personalized one.
Segmenting by engagement level is a more holistic way to track donors’ involvement with your nonprofit. By focusing solely on a supporter’s financial contributions, factors like volunteer hours can be overlooked. But, these factors can be strong indicators of a supporter's affinity to your cause.
For a more comprehensive understanding of your supporters’ engagement with your nonprofit, remember to create segments based on traits such as:
Being aware of which donors volunteer the most or attend every event you host helps you identify your most dedicated supporters, whether they show that dedication by contributing their money or their time. These loyal supporters are the ones your nonprofit can turn to when it needs last-minute help at an event, emergency funding to support an urgent need, or assistance spreading the word about a new program to beneficiaries.
Because each nonprofit's needs are so different, there are no hard and fast “rules” when it comes to donor segmentation. You can filter, segment, and analyze groups of donors based on whatever traits will help you better understand them and achieve your objectives. However, there are some basic best practices you can use to make the process run more smoothly.
For efficient and effective donor segmentation and analysis, consider following these best practices:
By following these best practices, your nonprofit can analyze its fundraising and donor data in a streamlined, organized way and rest assured that its findings are as accurate and current as possible.
Donor segmentation is a simple, effective, and often underutilized tool in each nonprofit’s fundraising toolkit. GivingDNA’s fundraising analytics software takes traditional, flat data and brings it to life. In just a few clicks, your nonprofit can segment donors quickly and easily to uncover actionable, updated insights—all without help from additional apps or data analysts.
Take full advantage of your donor data to deepen connections with supporters, fundraise more effectively, and gain a better understanding of why people choose to engage with your cause. To learn more about the power of donor data and its role in your fundraising strategy, explore these additional resources: