Fundraisers spend a lot of time developing the offer – writing (and rewriting, and rewriting, and rewriting) an appeal letter nine times, holding four meetings to decide on whether programs are accurately described, debating whether that cuddly polar bear premium is more compelling than a furry dolphin.

Sadly, only a fraction of that time is generally spent assessing who among the organization’s donors should receive the offer and why.

And so I was interested to see the results of a survey on ‘Communications Segmenting’ conducted by Bloomerang, the CRM company and Kivi Leroux Miller’s Nonprofit Marketing Guide.

The Survey, conducted in March and April, is based on 425 responses from smaller organizations, most with budgets of less than $5 million.

At a glance here are the key findings. They may or may not surprise you.

• When it comes to segmenting files for donor communications, it’s either feast or famine. Most nonprofits either follow robust segmentation practices or don’t bother to segment at all.

• Donation amounts and ‘take action’ histories are the most common uses for segmentation.

• What prevents those who don’t engage in segmentation? A “lack of knowledge” and inadequate “data and technological ability” are the principal reasons.

You can download the complete Infographic from the Survey here (or click image to enlarge).

Two findings in particular struck me.

• Although 86% of those surveyed recognize the importance of segmentation, only 64% actually segment their files.

• Of those who actually employ segmentation, only 25% — and often far less — focus on segmenting beyond transactional history.

In short, not nearly enough attention is being paid to donor retention when it comes to segmenting files for appeals and communication to donors.

One of the reasons for this, as the survey indicates, is a combination of ignorance and poor technology.

With inexpensive, easy-to-use data base tools like Bloomerang, technical barriers are no excuse. What the sector needs — particularly smaller organizations — is far more practical education on this essential function.

Here’s a simple rule of thumb for segmentation that easily enables an organization to tailor its communications/appeals by segments that reinforce retention.

This simple rule of thumb — which includes just four segments — is suggested by loyalty guru Adrian Sargeant who advises Bloomerang.

• Segment #1 – New Donors
• Segment #2 – Returning Donors
• Segment #3 – Donors with Above Average Gift Level
• Segment #4 – Donors at or Below Average Gift Level

Of course a great first step toward retention is the ‘Thank You’ process. You can see how this simple segmentation system works in the case of gift acknowledgements by clicking here.

Tom and I will have a lot more to say about the pros and cons of different types of segmentation — simple and sophisticated — in future posts, but for now we’d appreciate hearing from Agitator Readers on what you think are the biggest barriers to effective segmentation.

Roger

P.S. In reviewing some of the past Agitator posts on segmentation I came across this this additional piece of segmentation advice for smaller organizations from Australian fundraiser Sean Triner:

“Many charities I meet here in Australia, and smaller charities in USA and Canada haven’t even begun to segment their database by RFM. Those that have often don’t have the volume to justify much more than crude targeting, for which RFM, along with source and transaction type, is usually fine.

“No matter how complex your RFM, source and transaction type should always form part of your targeting. For example, two monthly donors giving $50 a month for the last nine months should be communicated and targeted differently depending on what triggered their initial gift. A face to face (direct dialogue) recruited monthly donor behaves very different to a mail recruited monthly donor even though their transactions look identical.

“Whatever targeting is implemented, for all charities the Pareto principle should be applied and a more sophisticated targeting approach for their top donors implemented. Even a charity with just 5,000 donors would benefit from a more personalised approach to its top 100 or so donors.

“At the top end, even the type of credit card should influence targeting. An AMEX donor who gave $1000 thirteen months ago is probably a better prospect than a VISA donor or cheque donor from eleven months ago.

“But unless you have hundreds of thousands of donors at the bottom end, it really doesn’t matter. If you had to choose between a $50 AMEX donor from 13 months or a $50 Visa donor from 11 months ago — mail them both, or neither, because it won’t really make much difference.

“Apply the Pareto principle early on in targeting.”