Donor Segmentation

Key Topics

1. What is donor segmentation?
2. How to maintain donor retention
3. What is donor data?
4. How to store donor data

INTRODUCTION

Want to increase donor retention? Donor segmentation is the key!

In the first part of this article we will discuss donor segmentation and how it affects donor retention. Donor retention is key to a consistent incoming flow of donations. In the second part, we discuss collecting donor data and using a suitable CRM software to organize your donor database.

Donor segmentation is an organizational system that groups your donors into categories based on their information. This will help you create more meaningful experiences and authentic communication between you and your donors. This allows you to get to know your donors, and create streamlined interactions when it comes to informing them on ways to participate in your organization that are relevant to them.

Donor segmentation is important for personalizing your approach with donors. By keeping track of specific details of donors, you can build authentic communication systems that will increase the chances of them participating in your organization.

Donor segmentation increases donor retention, which is key to growing fundraising efforts. When you have the resources to maintain personal relationships with those affiliated with your organization, you will be able to continue to earn reliable revenue for your cause. Retention rates are on the lower side in the nonprofit sector. According to Bloomerang.co, on average, retention rates are at about 45% for nonprofits. For-profit businesses have average retention rates between 63% – 84% and can reach rates of 90% – 95% when they are actively making efforts to keep their retention rates high (Love, 2022).

Retention rates are already working against nonprofits. So it is vital to make all efforts possible to keep retention at a sustainable level. This is where donor segmentation comes into play, because it is making the most out of donor data, and ensuring you are getting donors to continue participating in your organization.

To get more information about donor retention, check out this article: Donor Retention: Structure Your Fundraising Operation for Success.

It is obvious to those that work in the nonprofit sector that donors respond to and continue to donate when they feel recognized and connected to your organization. Adding to your donor database is very important if you want to maintain those relationships and stay on top of personalizing your interactions with your patrons. The goal of a nonprofit development professional is to seek prospective donors and maintain relationships with existing donors. Sustaining a robust system of donor segmentation will help you do just that!

As your relationship with donors builds, you will start to collect more information that specifies your constituents motivations and interests with your organization. Using more details, you can develop a database that segments your donors.

What kind of donor data should you be keeping track of? There are various areas that you should collect information from to create segmentation:

Demographic:

1. Name
2. Age
3. Gender
4. Income
5. Education

Communication:

1. Contact Information
2. Preferred way of communication (direct mail, email, phone, social media, events)
3. Communication Efforts leading to donation

Donation Track Record:

1. Amount Donated
2. Date of Donation
3. Frequency of giving
4. Type of donation
5. How long have they been giving
6. Reason for giving

Interests:

1. Why are you a part of this organization?
2. Where would you like donation dollars to be spent?
3. What action would you like to see from our organization?
4. Events Attended
5. Interest in giving

The most important part of collecting your donors information is keeping the data organized. The way to do this is by investing in a CRM (constituent relationship manager). Storing information about your donors in a centralized system will allow multiple members of your outreach developing team to access donor data to develop a deeper understanding of your constituents, and build authentic relationships.

In an article from philanthropynewsdigest.org “The Importance of Donor Data and How to Use It Effectively”, Adam Weinger recommends a CRM that supports these 4 areas: list segmentation, measuring engagement, report and analyze data, and communication with donors (Weinger, 2019).

List Segmentation:

Categorizing your donors by their specific details such as: age, gender, wealth, location, etc

Measuring Engagement:

Having the ability to store and review the history of engagement of your donors. Seeing how often they engage, when they are more likely to donate, what encourages their action within your organization.

Report and Analyze Data:

Keep track of successful methods of engagement with your donors.

Communication with Donors:

Being able to communicate directly with your donors for discussions of fundraising efforts.

CONCLUSION

Wrapping up, we discussed the importance of donor segmentation and how it increases donor retention. Then we went into more detail on the specific information your nonprofit should collect from your donors to build a comprehensive donor database in a proficient CRM software.

BONUS TIP

This is only the beginning to building a thorough donor database! Check out this article that goes more in-depth about Donor Database for Nonprofits.

References

Love, J. (2022). Donor Segmentation | Comprehensive Guide + Tips For Success   [web log]. Retrieved 2022, from https://bloomerang.co/blog/donor-segmentation/.

Weinger, A. (2019, April 30). The importance of donor data and how to use it effectively. philanthropynewsdigest.org. Retrieved  2022, from https://philanthropynewsdigest.org/features/the-sustainable-nonprofit/the-importance-of-donor-data-and-how-to-use-it-effectively