When you started your nonprofit, you likely had a core group of supporters who provided donations and funding on a regular basis. This made it very easy to reach out to each supporter individually and personalize the communication. However, as you became more well-known in the community, the list of supporters who contribute to your cause continued to grow, making maintaining one-on-one personal communication increasingly challenging.
That’s why nonprofits need donor segmentation. Segmentation allows you to create personalized outreach for all of your supporters without having to craft each message individually. This makes segmentation a necessary tool for your nonprofit to develop relationships with a large number of supporters at once by showing that you care in an efficient and effective way.
In this guide, we’ll cover what donor segmentation is and strategies your organization can use to reach your target audience and engage them with your mission. We’ll use the following questions to walk you through the ins and outs of donor segmentation:
- What is donor segmentation?
- Why is donor segmentation important?
- What data is necessary for donor segmentation?
- What donor segments should you create?
- How should you leverage donor segments?
After we’ve covered these core questions, we’ll dive into six tips that your organization can use today to optimize your own segmentation strategy. Let’s start by ensuring everyone is on the same page about what donor segmentation is.
What is donor segmentation?
Donor segmentation is the process of separating your nonprofit supporters into groups based on common qualities and characteristics they share. This strategy is used to create personalized interactions and communications with supporters, which they appreciate and prefer over generic messages.
For example, if you send an in-person event invitation to a donor who lives three states away, they will likely ignore the message altogether. Instead, with segmentation that accounts for your supporters’ physical locations, you might send an email that says something like the following:
We’re excited to be hosting our annual education conference on September 16th. Even if you’re not able to attend in person, please attend the live stream of our speakers. Check out the lineup in the attachment below. We look forward to seeing you there!
In this message, the emphasis was placed on the live stream opportunity that out-of-town supporters would have an easier time attending than an invitation to an in-person event.
To send messages like this to the appropriate audience, you need to know which of your supporters live in specific geographic areas. Then, you could create a segment dedicated to your community supporters and another for those out of town to make this distinction.
Why is donor segmentation so important?
Remember the last time you merged onto a busy highway from an on-ramp? Did the whole traffic pattern change just to let you in? Of course not. You had to make adjustments to your speed and change lanes according to the preferences of everyone else on the interstate.
As fundraisers, we too frequently treat our donors as if they’re merging onto the highway at our organizations. Someone donates, and regardless of who they are, the amount they donated, and their reason for giving, they are thrown into the in-progress communications schedule already set at the nonprofit. The resulting lack of customized, personalized communication with donors doesn’t communicate that they’re special or appreciated by your organization.
That’s why segmentation is so important. When you segment your supporters, it’s essentially like creating a personalized lane for donors merging onto the highway. Instead of forcing donors to adjust their speed and lane, your organization is essentially able to create a personalized lane for that type of donor, making it easier and smoother to get on the highway.
Segmentation creates more personalized conversations and communications between your organization and your supporters, changing the “traffic patterns” to meet their needs and preferences.
This builds connections and loyalty to your organization, increasing the chances that they’ll continue engaging with your organization, contributing to your cause, and growing your nonprofit’s impact.
How segmentation impacts retention
Donor segmentation has been shown to help organizations increase their donor retention, which is a key metric for growing and sustainable fundraising. Personalized communications allow your organization to build relationships with your supporters, providing them with the activities and opportunities most suited to their interests.
Donor retention helps your nonprofit earn reliable revenue, making it easier to carry out its mission consistently. However, the majority of nonprofits have subpar retention rates. Average donor retention has stayed right around 45% for years, as shown in the graph below:
If you’re thinking to yourself that nearly 50% isn’t too shabby, think again. Many for-profit industry retention rates fall between 63% and 84%, much higher than nonprofits’ averages. Some for-profit companies actively work to keep their retention rates close to 90% or 95% to avoid missing out on even 10% of the potential profit they could be making.
Another statistic to keep in mind: The average new donor retention rate is only around 20%. That means that after you’ve put in all of the hard work to attract new supporters to your cause, you can expect about 80% of them to leave right after their first donation.
Why does this matter? It’s around 10 times more expensive to attract new supporters than it is to retain existing ones. Plus, when donors give to organizations over time, their contributions tend to grow.
Leveraging donor segmentation to build relationships with donors increases their sense of loyalty to your organization, encouraging them to come back again and again.
What data is necessary for donor segmentation?
As you can imagine, effective donor segmentation requires access to certain information about your supporters. It would be impossible to group them by commonalities if you know nothing about them.
As a part of your donor management strategy, collect information about your supporters in your donor database, then use that information to create segments and send personalized messages.
Having a modern, easy-to-use, and powerful donor database or nonprofit CRM will be key here. This tool allows you to effectively organize and save the information you collect about your supporters.
When you ask donors to give to your nonprofit, register for events, or fill out surveys, save the information you receive to your donor database in individual profiles. Doing so means you’ll collect information such as your donors’:
- Contact information
- Donation amount
- Donation date
- Communications leading up to the donation
- Events attended
Over time, you’ll collect more and more information about your supporters, including additional data about their interests and motivations. Compile this information with the list above as well as these additional details in individual donor profiles, then look for segmentation opportunities.
Don’t forget to periodically clean out the data in your donor database. Getting rid of duplicate profiles, typos, and other mistakes will ensure your segmentation information is up to date and as accurate as possible.
What donor segments should you create?
Every nonprofit has slightly different segments to fit their donor management strategy. It’s impossible to say exactly which donor segments you should choose for your organization. However, there are some common data points that we recommend your nonprofit uses to build your segments. These data points include the following:
- Recency: How long have donors been giving?
- Frequency: How often do donors give?
- Type: How are donors giving?
- Amount: How much are donors giving?
- Reason: Why do donors give?
- Interest: What topics are donors most interested in?
From these data points, you can gather information to help drive engagement with your supporters. For instance, below, we’ve outlined seven of our favorite segments that nonprofits may choose to leverage for their strategies.
As we mentioned earlier, the average retention rate for new supporters is only around 20%. Meanwhile, the retention rate for repeat donors is closer to 60%, as you can see in the image below:
So what does this mean? Increasing your first-time donor retention is the fastest way to increase your overall retention rate.
The key to retaining more first-time donors is to give them special treatment.
Create a new donor segment for your first-time donors and don’t force them to merge onto your supporter communications highway. Instead, create a special path for your new donors to travel at their own cadence according to their needs.
We have a new donor cultivation timeline as an example of how to create a special lane for new donors, guiding them slowly toward a second contribution:
First, start your engagement with a sincere thank you for the donation made by your new supporters. Then, provide information about your mission and ask your supporters for feedback. Follow up by inviting them out to coffee or to tour your facilities. Finally, after a few months of interaction, invite these new supporters to give a second contribution.
If your donors have signed up to give monthly contributions to your nonprofit, they’re incredibly special. On average, monthly donors have retention rates closer to 80% or 90%. They’ve already signed up to have a donation taken out of their bank account on a regular basis, so you don’t need to solicit donations from them as often.
Plus, you have additional opportunities to reach out to these supporters, further developing these relationships. In fact, by sending a thank you email each time they donate, you have twelve opportunities every year to show your appreciation for their support. Get creative and try sending appreciation notes that differ each month. For instance, you might:
- Tell supporters about their impact and show them the unique things you did with your funding each month.
- Send fun holiday cards like National Salad Month for May or Admit You’re Happy Month in August.
- Add little trinkets to thank you cards like keychains or stickers branded to your nonprofit.
However, don’t limit your interactions with monthly donors to just thank you messages. You should also reach out to find new and interesting ways to keep your supporters involved with your organization’s mission and activities. Expand your relationship with these supporters in other ways, such as inviting them to attend events or to volunteer their time.
You should also make sure to alert them when there is an increased risk of lapse among monthly supporters. Set up a report to see which credit cards are expiring in two months. Send a special note before the expiration date. Remind them of all the great things you’ve been able to accomplish together. Don’t treat the donor like an ATM by simply saying, “We need your new credit card number.”
Creating a new donor segment for these supporters will help you avoid treating them like ATMs and help you retain more of them over time.
Achieving a 100% donor retention rate is just about impossible. You’ll naturally lose some supporters over time due to factors out of your control such as donors who have trouble affording regular contributions, move away, or want to only give once.
However, lapsed donors are still a great segment to create in your donor database. For those supporters who have simply become too busy to give or who still care about your mission despite not contributing, you have the chance to reach them and convince them to give again.
Our data shows that donors who haven’t given in the last two years are about 98% likely to never give again. So that’s exactly where you should start! Try to bring that 98% down a few notches by isolating the donors who haven’t given in two years. From here, separate them into sub-categories and take action (or decide not to take action) by answering these questions:
- Were they memorial or tribute donors? These supporters may have only wanted or expected to contribute once to support their friend, the bereaved.
- Were they peer-to-peer donors? Supporters who contribute via peer-to-peer campaigns likely do so to support their friend, the fundraiser. In the future, consider asking the fundraiser to reach back out to their generous networks to provide additional information about the organization they’re supporting through the campaign.
- Did they give to you for many years consecutively and then suddenly stop? This could happen for a number of reasons, for instance if a donor passes away or runs into hard times financially. The data service Deceased Suppression Processing notifies you if a current supporter is deceased, so you can respond respectfully. If they have stopped giving for other reasons, reach out and invite supporters to get involved in ways that don’t require them to dig deeper into their wallets, like volunteering or liking your Facebook page.
- Did they only give to you once? Again, there are several reasons a supporter might only give once to your nonprofit. They may have only wanted to give a single donation or forgotten they contributed. Try to learn more about these supporters before taking action.
Consider sending a survey to the other lapsed donor sub-segments to find out why they stopped giving, and assess if you can bring them back into the fold. Doing so can give you more information about how to communicate with other donors. You may not get many responses, but there’s a chance to convert some of them into repeat donors.
While you should recapture as many supporters as possible, keep in mind that the average recapture rate for lapsed donors is only around 4%, so don’t stress too much about the ones who got away.
Volunteers who never gave
Volunteers are essentially low-hanging fruit for nonprofit fundraising. In fact, volunteers are around 11 times more likely to donate than the average person. If you have volunteers who have never given to your nonprofit, you should create a specific donor segment in your system for them.
That gives your organization the power to reach out to volunteers and guide them towards donating. You can also offer these supporters additional volunteer opportunities and encourage them to strengthen their relationship with your nonprofit through additional interaction opportunities.
Donors who shared feedback
When donors share feedback with your nonprofit, whether positive or negative, it’s a good indication that they’ll be retained for a long time. While this may seem counterintuitive, it makes sense when you stop to think about it. Donors who actively give feedback to organizations are likely invested in that cause and want it to succeed. If they didn’t care, they would simply stop interacting.
Send donor surveys to all of your donors, including first-time donors, every year. Ask them insightful questions about their interactions with your nonprofit and their motivations for contributing. For instance, you might ask questions such as:
- Why did you first give?
- What’s your connection to the cause?
- What are we doing right?
- What can we do better?
- What do you expect out of us?
When you send these surveys, try to make them as easy as possible for supporters to fill out. Use multiple choice or 1-10 rating questions to let supporters quickly provide their feedback. Then, include one or two short-answer questions at the end of the survey to wrap it up.
If supporters give positive feedback, you can assume that they care about your mission and are satisfied. If they give negative feedback, they may not be fully satisfied, but they want to see you do better and succeed. Receiving negative and constructive feedback can provide actionable ways to improve your organization.
Reach back out to supporters who give feedback and thank them for taking the time to complete your survey. Then, inform supporters who gave constructive feedback when you incorporate their suggestions to show that you’re listening.
Social media followers who interact with your nonprofit
Donors who follow you on social media have opened up a channel for personal, one-on-one interactions with your organization that you can’t get through other channels.
A donor database that listens for mentions on social media, records those interactions on a constituent’s profile, and stores their usernames and profile URLs on their profiles is indispensable in building this segment.
But it’s not enough to just wait for these interactions to come to you. Take initiative and highlight these supporters on social media yourself by thanking them or encouraging them to get involved directly on the platform. For instance, you might:
- Tag donors and volunteers to thank them for their past support. These tags will show up on donor profiles and are a great way to promote your organization.
- Target current supporters with your social media advertisements. For instance, you might ask your current donors to start a birthday fundraiser on your behalf.
- Invite supporters to post crowdfunding or peer-to-peer campaign pages directly on their social profiles.
- Mobilize your supporters to share your content on social media, spreading information about your mission further and wider than you could do alone.
- Ask donors if they’re open to direct messaging on social platforms. Then, you can reach out to them directly and enjoy one-on-one conversations about fundraising and engagement opportunities.
Building this segment will enable you to leverage these dedicated supporters during digital campaigns such as #GivingTuesday or other online days of giving.
Your long-term donors have shown their dedication to your nonprofit time and time again. If you’re still treating them like average supporters, your strategy is long overdue for a change. For instance, if you’re still sending letters to your legacy supporters explaining what your long-standing programs are, you might be annoying them. They already have that information.
However, they may be interested in other aspects of your organization. For example, these donors would be interested in the story of a person or family whose life has been impacted for the better by your nonprofit with the help of your supporters’ contributions. You also can go into more details about new initiatives, seeking their valued input.
When you’re interacting with your long-term donors, always treat them like a partner who has truly invested in your mission. This is how you can continue engaging supporters for years and increase the lifetime value of your entire donor database.
How should you leverage donor segments?
Once you’ve established your donor segments, start using them to advance your donor cultivation strategy.
Stop sending the same generic gift acknowledgments or event invitations to every single person in your donor database. Start using your donor segments as a personalization strategy, making every message tailor-made to your recipients.
We’ll provide several messages that show how personalization makes a difference based on the donor segment. For example, an animal shelter might send the following message to a brand new donor in their system:
Welcome to the Save a Puppy Foundation family! Thank you for your generous contribution of $100 to the vaccination drive. Your gift will help the puppies in community shelters to receive their necessary vaccinations in order to get adopted.
If you have further questions or want to get more involved with this campaign, please visit our website at saveapuppyfoundation.com or follow us on Instagram to meet the puppies you’ve helped save today.
This message welcomes the new donor to the family and acknowledges that it was their first contribution. It also thanks them for their contribution and explains the impact of their gift. Finally, the message provides a next action to continue their engagement.
However, with donor segmentation, if that same animal shelter reached out to a monthly donor, they might take the following approach:
Thank you for your continued support of the Save a Puppy Foundation. Contributions this month will be helping vaccinate a new litter of puppies rescued from a puppy mill recently. Our first priority is their health and safety to make sure they can find their forever homes.
Please share information about this drive to your friends and family on Facebook, encouraging them to also support this cause until each and every puppy has the vaccinations they need.
As you can see, this message is phrased differently, accounting for the fact that these supporters are already familiar with the organization. It also provides a next step that doesn’t require them to make another contribution.
Finally, compare these messages to the following message that the shelter might send to a volunteer who has never given to their cause:
Thank you so much for taking time out of your day to help habilitate the puppies here at the Save a Puppy Foundation. Your time volunteering helps each puppy find their forever home.
Now, we need your help again! Last month, we rescued 50 puppies from a puppy mill and these new members of our family need their vaccinations. Would you consider donating to our vaccination drive campaign? Thank you in advance for your support. We appreciate everything you do to help these puppies in need.
This message is uniquely designed for a volunteer who the organization wants to contribute again to the cause. The organization acknowledged their past support and asked for help for a current campaign.
Consider the segments that you’ve made in your donor database and create rough templates that work for various types of audiences. These templates can then be adjusted and configured according to each supporter and campaign.
Never again will you have to worry about new donors accidentally receiving additional donation appeals just days after their first contribution because you already had a campaign message queued for everyone in your donor database. You can also stop worrying about accidentally asking for an insultingly-low gift amount from a potential major gift donor.
Donor segmentation will empower you to transition from a spray-and-pray communicator to a strategic, donor-centric champion!
6 tips for donor segmentation success
Donor segmentation requires concentration and work from your organization. However, once you put in the effort, you’ll be able to reach your supporters, engage them, and retain them more effectively and efficiently than before.
To help you succeed, we’ve compiled a list of six tips that you can use to optimize your donor segmentation strategy even further.
1. Choose segments that will help you reach your goals.
As mentioned, each nonprofit will use different segments to achieve their goals and objectives. Carefully consider which ones will be most effective for your specific organization. While you can crowdsource ideas and research examples, don’t forget to take your organization’s unique situation into consideration.
For example, animal shelters may create separate segments of dog owners and cat owners, while a nonprofit that serves homeless populations would find little use for that information.
2. Develop message themes for each segment.
Once you’ve developed segments for your audience, your organization will also address some of the common communication messages you use across your segments of supporters. Some of the communication themes you might need to create for each segment include your thank yous, appeals, newsletters, emails, stewardship pieces, and more.
Then, consider how each of these message themes will differ for each audience segment. For example, donor thank you letters for your brand new donors will look different than those for your monthly contributors. Be sure to create templates of each message theme for each donor segment to be sure you address the common needs and communication interactions across different audiences of supporters.
3. Develop communication tracks.
Communication tracks are a series of messages that lead your supporters—especially new supporters—to complete a specific action. These messages create a personalized experience for each of your supporters based on their current relationship with your organization.
Map out the types of messages and communications you’ll send out at specific points within an established timeframe. For instance, you might send your first-time donors a follow-up message a certain number of days later after their initial donation. Remember the first-time donor timeline we explained earlier? Use that as a model for multiple segments of your supporters to lead them towards the next step in the giving process.
4. Mix up the communication medium.
When was the last time you saw a commercial on television or heard about a product on a podcast, then a letter arrived at your home branded to that same product? Chances are, you had a flash of recognition during the second interaction you had with the product.
By mixing up communication platforms, you can establish a sense of recognition. Be sure to appeal to donors in whatever format they’re most likely to respond to.
For example, here are some communication mediums you might decide to use after a donor contributes to your organization:
- An immediate thank you response after the donation
- A phone call to explain the impact of the donation directly to the supporter
- A handwritten thank you note
- A monthly newsletter
- An invitation to take a tour within six weeks
These different outreach strategies create a multimedia communications approach that supporters tend to respond more positively to.
5. Get your board on board.
Which would you prefer: a letter from a staff member at a company or a letter from the CEO? The additional authority held by the CEO adds more credibility to the marketing materials you receive. At a nonprofit, your board is the governing body, meaning they can provide this additional authority when you reach out to your various donor segments.
Ask your board members to hold letter-writing sessions where they draft handwritten notes to send to supporters, adding a personal touch to the message. You may also ask them to call new supporters on the phone to show appreciation for their generosity.
6. Track data from each segment.
Even nonprofits that meticulously determine the best possible segments for their organization sometimes need to refine their strategies over time. Refining your donor management approach requires understanding how each donor segment functions at your organization. Is your nonprofit reaching these supporters? Has your retention rate increased? Are these supporters still giving?
Track data according to donor segments such as the lifetime value of supporters, their average donation sizes, the retention rate, and more. Over time, this data will help you determine what strategies work best for each segment and how you can further optimize your segmentation for more impactful relationships.
Donor segmentation is the key to nonprofit supporter retention. This is the most effective and efficient way to develop donor relationships and encourage additional donations. Make the most of your nonprofit segmentation strategy and optimize it for your organization’s unique needs.
The tips throughout this guide will help your nonprofit make the most of donor segmentation, whether you’re starting from scratch or refining an existing strategy. You’ll also need a nonprofit CRM that supports your segmentation strategies and allows you to collect and organize your supporters’ information. The Bloomerang donor database is designed specifically to help nonprofits develop relationships with their supporters. See how it can help you craft and refine your segmentation strategy.
If you’re interested in learning more about developing donor relationships, check out these additional resources:
- Donor Appreciation: Creating a Strategy (And 22+ Ideas). Donor appreciation is a key part of developing relationships with your supporters. Learn more about how you can show you care in this guide. Plus, steal one of our 22+ ideas!
- Online Fundraising | Ultimate Success Guide + Tips and Ideas. See how you can put your new donor segments into action by applying them to your online fundraising efforts. This guide provides more tips and ideas to use for online fundraising success.
- [Free Download!] Nonprofit Development Plan | 3 Helpful Tips. All of these strategies and donor segmentation tips are designed to amplify your fundraising efforts. Use this downloadable nonprofit development plan to see how these strategies can help your fundraising.
- Nonprofit CRM: The Buyer’s Guide + Top Solutions (Updated). Looking for a robust nonprofit CRM to support your donor segmentation strategies? Our buyer’s guide will help you find the perfect software for your nonprofit’s unique needs.