EDITOR’S NOTE:  Right before the Christmas break Kevin posted on segmentation arguing that what most fundraisers call ‘segmentation” is little more than an impersonation of the real thing.  Nick Ellinger, our  former Comrade-in-Agitator took issue with Kevin.

Their disagreement, as reflected in their comments, is worthy of further exploration. And since the original post was cut short by Christmas we’re running it again.  Yes, again.  Why? Because understanding basic segmentation is not only fundamental for any fundraiser, but awareness of the techniques involved –their pros and cons — is essential to avoid costly mistakes and unrealistic expectations.

That’s why we’re re-posting Kevin’s initial piece, along with Nick’s comments and why on Wednesday I’ll weigh in with a post outlining how the issue of segmentation has evolved substantially over the last 30  years and why so many fundraisers need to get un-stuck from the past and update their thinking and approach to segmentation.

Roger

Are You Doing “segmentation” or Segmentation?

For purposes of this post all versions of “segmentation” that include air quotes” ” and a lower case ‘s’ are not segmentation at all.

Sadly, most versions of claimed Segmentation are really little more than the impersonating cousin named “segmentation”.

None of the following is real Segmentation;

• Mailing the same thing to different audiences.  An example is the agency that rents Humanitarian lists and Social service lists and sends both lists the same thing.
• Mailing different packages to the same people.  An example is dividing your house file or your final, merged acquisition list into two random nth groups then sending different mailings to the two groups.  Hint: if you create random nths you’re assuming everyone is the same.   Sending a “we help seniors” mailing to one of your random nth’s and a “we help kids” mailing to another of your random nths is equivalent to sending the same thing to everyone.  Finding out that the seniors  message beats kids message is finding the best, weak average.  Do you think it was preferred by everyone?  Of course not, which is why this is “segmentation”.
• Breaking out results after the fact using different attributes.  If you utilized either of the two approaches above and then prepared reports showing different outcomes by RFM bucket, other internal labels, or using 3rd party data then you are still stuck with ‘segmentation’.  No number of groups –even if broken out eight ways to Sunday– will fix your starting point problem.

Here’s a definition of and process for Real Segmentation.

Creating different groups of people based on differing needs and messaging them differently because you believe the juice will be worth the squeeze.

If your segmentation mostly lives in PowerPoint (e.g. clusters, personas) or a spreadsheet then there is a 99.9% chance it’s a “segmentation”.  If it lives in a process that impacts every step of your fundraising it’s at least on it’s way to a Segmentation.

To avoid any wiggle room, here’s a simple, concise set of steps.  All steps must be followed to do real Segmentation.

• Step One.  Define two groups, let’s call them A and B, and write out detailed guidance on how fundraising imagery and copy should differ between the two.  You’ll want a strong reason to believe group A is different from B and that those differences explain their giving.  This last part is the juice-being-worth-the-squeeze requirement.  If I say Group A gives ‘online’ and Group B gives “offline” then I’ve missed the mark.  That describes the way they give, not the reason for it.  Same goes for all our internal labels – sustainer, one-time, etc.   And lets return to our senior vs. kid mailings.  Do you think some people prefer to help Seniors and other, different people prefer to help kids?  Maybe but why?  What makes those people different in that way?

• Step Two:  Tag individual records in your CRM or acquisition mail merge list as belonging to either group A or B.  Hint: these groups are mutually exclusive and if you have to make arbitrary choices on whether to put them in A or B then go back to Step One.  If you don’t have any idea how to create groups A and B that will be reliable, go back to Step One.   You may still have some portion of your list tagged as ‘unknown’, which is fine.

• Step Three:  Create two offers, A and B.

• Step Four: Offer A only goes to Audience A and Offer B to Audience B.  If you feel the need to send Offer A to Group B then you probably didn’t do a good enough job on Step One.  However, if you want to do this to affirm your targeting and message then do it in digital first, this can be done for hundreds of dollars in a week, not tens of thousands over months.

Your aim with all this is two controls, one for Audience A, another for B.  The path to growth from this starting point is the traditional, incremental testing with each group to beat the control , but more importantly, it’s repeating steps 1-4 within Audience A and separately,  within Audience B.   You don’t have one audience and you almost certainly have more than two.

Do you think all people who prefer the kid (senior) mailing are the same?  Don’t we think there is a way to frame the kid issue differently that might really match how some people in Group A think but not all of them?

The real growth path is segmenting based on who your audience is independent of you in the picture.

This is about the old ‘start from where they are’ trope.  Your donors do not intrinsically care about your charity nor your beneficiaries.  Where they are is pre-baked and often, hard-wired.  If you match your pitch to their hard-wiring as opposed to your organization’s brand or issue A, B or C then you’ve created a true connection and the donor’s intrinsic self will be more likely to care.

You’ve probably heard of needs-based segmentation, it typically lives in a PowerPoint making it a “segmentation”.  Needs are real but they are deeper than a need to help kids or seniors or your charity.

I am a parent who skews Conscientious and prefers a loyalty frame and using attentiveness as the emotion.  I’ll help kids if the message is framed to match who I am.  My neighbor has kids the exact same age.  He skews Agreeable and prefers a caring frame using Compassion as the emotion.  We’re the same age, gender and race and have both given to the same type of charities before.

In a “segmentation” we get the same mail tailored to neither one of us but maybe, just maybe, one of us has a spare minute and gives it to you to put in the necessary mental energy required to find himself in your letter and give.

It’s two different mailings in a real Segmentation.  If our mail gets switched neither of us responds.  If it doesn’t, we both do.

Kevin