New Strategies for Segmentation
Demographic and transactional data are givens, but they're not the be-all and end-all of donor-information gathering.October 2009 By Robin Fisk
For nonprofits involved in fundraising, segmentation is nothing new. But in the current economic climate, every activity requires review and analysis. Reviewing your segmentation strategy provides opportunity to not only increase ROI now, but to position your organization to prosper when the economy turns around.
Demographics and transactions
Data segmentation traditionally is divided between two broad categories: demographics and transactions. Demographics typically combine standard data elements such as age, gender, geographic location and job function with data elements specific to your organization. Together these elements create a donor profile that tells you who your donor is, and likely governs the tone and content of your messaging to that donor.
Transactional data typically encompasses the recency, frequency and amount of donations, and also might include related data such as event registrations or product sales. This information provides a profile of what your donor gives, and likely governs the frequency and type of your gift requests.
Most nonprofits segment their donor lists and build campaigns around the demographic and transactional profiles, but there are additional levels of data segmentation that can have a significant impact on ROI.
Nontransactional activity data
Consider mining nontransactional activity data, such as online community participation, e-mail forwards, downloads, or other Web-based metrics that provide insight into the interests and passions of your donors. Often, this type of data might overlap your transactional data, but in the case of online community activity, it can be distinctly different.
In addition to tracking this data to determine topics or areas of interest, this is also good information to combine with giving habits to identify power donors — a group that can be engaged in peer-to-peer fundraising, otherwise known as "friendraising." Friendraising opens new doors for data segmentation and is a great way to not only raise money, but also to acquire new donors.
Channel, or communication, preference often refers to how donors wish to be contacted. Many nonprofits ask their donors whether they prefer to be contacted by direct mail, e-mail or other channels. This information also can be determined by analyzing response rates to different channels.
The benefits to adding a channel-preference segmentation are cost savings and response improvement. It can be especially valuable when using high-value channels such as telemarketing but is still relevant to direct mail and even e-mail, considering the need to stretch every dollar in the current economic climate.