An Introduction to Donor Data Segmentation
Crafting a compelling message is near impossible if you don’t know to whom you’re talking. Effective storytelling begins with matching your message to your audience.
When we don’t segment our messaging, retaining donors can be very difficult and we set ourselves up for failure. If we were breaking up our donors into little groups and communicating to them in ways that resonate, those retention rates are going to improve. It’s true – data segmentation powers stewardship!
AFP recently had a chance to chat with Steven Shattuck, chief engagement officer at Bloomerang, about some of his favorite strategies for segmenting your donors and other constituents in your database – strategies that produce results!
Steven also covered these subjects in much more detail during his recent webinar, An Introduction to Donor Data Segmentation. If you missed the live webinar event on July 11, you can still sign up and listen to the archived event.
Q. What is the key takeaway from your webinar?
A. To make sure that you’re not sending the same piece of donor communications to everyone in your database. Avoid sending the same thank you letter, appeal, or anything to every single donor regardless of how much they give. It happens too often. Retention rates suffer because we don’t take the time to personalize our communications to individual donors. The goal is to improve the communications you’re sending out.
Q. How would you define donor data segmentation?
A. Dividing your database into small groups of donors that share similar characteristics (e.g., monthly donors, first-time donors, wealthier donors, donors who give more). It is different buckets within your database, and not just one big list of names that we are going to send the same correspondence to. Think of your donor database as this kind of living organism, and we take different actions depending on who it is we are trying to reach and the kind of what action we want them to take. We should create unique communications based on recency/frequency of giving, reason for giving, type of giving, and constituent type.
Q. What are a few of your favorite ways to segment?
A. The first thing fundraisers should do if they want to dip their toes into these waters is separate out first-time donors and everyone else, basically people who have given multiple times to the organization. If you do that, you’re going to be way ahead of the game right off the bat!
First-time donors need to be communicated to in very specific ways that may not apply to repeat donors. AFP data and other retention data shows that most first-time donors don’t give again. They don’t make a second gift. So, the ultimate goal should be to get the second gift from first-time donors because the cost per acquisition to acquire them may be greater than the gift that they give. So, we need that second gift a lot of time to break-even or to get some ROI (Return on Investment) for our fundraising efforts.
Specific Things to Do for First-time Donors
- Welcome them into the family – organizations could provide welcome kits.
- Get to know them – send them a survey to find out why they gave.
- Invite them in for a tour.
For all other donor, break them into people who give monthly vs. people who give annually, or by certain dollar amounts. Maybe you have a threshold where you consider your average gift size. Additionally, you might want to do something for people who give above average vs. people who give below average.
Knowing why people gave is always a really good way to segment your data. For example, if you have two donors who each gave $100 online – same channel, gift amount, frequency. Those could be very different types of donors because of why they gave.
For example, one person may have given that $100 because relatives suffered from the illness that you’re trying to eradicate, and they want to make sure that doesn’t happen to any other family member. Now consider someone who watched a peer-to-peer campaign from a friend who was raising money for that cause. He or she gave to support a friend, even though the individual may not have a connection to the organization.
Most important, finding out why they gave, what their connection to the cause is, and why they are passionate about it could be a really good way to segment. At first glance, donors who give the same dollar amount through the same channel can look similar, but often times they are not similar at all.
Q. What’s the biggest challenge in donor data segmentation?
A. Sometimes technology gets in the way. Sometimes our tools make it difficult. The other times it can be overwhelming. It sounds like a lot of work, and it is a lot of work. We are all overworked, we’re understaffed, and a lot of times we’re underpaid. Nevertheless, it can pay dividends beyond the things that make up our normal daily work. We don’t blink at putting on that gala that we have done for 20 years and takes up 6 months of our time, but maybe if we invested that time into something like segmentation, I think we would see greater dividends.
Q. Describe the current state of donor retention?
A. The Fundraising Effectiveness Project (FEP) was formed in 2006. Every year that they look at retention, results reveal retention rates in the mid-40 percentile, so it’s pretty flat-lined. The one metric that we have seen drop year after year is the re-capture rate—that is, the percentage of donors who have stopped giving but suddenly come back after a few years. If someone stops giving, FEP data shows there is only a 5 percent chance that they are ever going to come back!
People stop giving because they receive pieces of communication not personalized for themselves and not necessarily relevant to themselves. It’s like throwing a bunch of stuff at the wall and hoping it sticks with a couple of people who receive it.
Let’s make sure everything we send sticks to the person we send. That requires us to know something about the donor. For the organizations who do this, their retention rates are much higher than 45%, they don’t have as many lapsed donors, and they are getting upgrades and major gifts. It does sometimes take a culture shift within our organizations, but it really is worth the work!
Q. What are some reasons some donors might stay or decide to leave?
A. There was a great 2001 study by Adrian Sargeant where he surveyed lapsed donors of ten major U.S.-based nonprofits. Respondents were asked to check each reason for stopping their contributions. The top reasons for leaving were:
- I, as a donor, thought other organizations were more deserving;
- I wasn’t thanked; and
- The communications that were sent to me were not appropriate.
On the other side of the coin, we know some reasons by donors stay with an organization. DonorVoice’s 2011 Donor Commitment Study surveyed 1,200 recent, frequent donors from over 250 nonprofit organizations. Donors were given a list of 32 reasons why they might continue giving and were asked to rank them by order of importance. The top reasons for staying were:
- I was thanked quickly;
- The organization told me what they did with my donation; and
- They told me the impact stories.
Q. What Do You Enjoy Most About Donor Data Segmentation?
A. It’s fun to dig in and see where the differences lie. Fundraisers are so busy that sometimes we can’t always afford to be curious about the people who support us. Imagine sitting at home and someone sent you a birthday present, and you did not know who that person was. Wouldn’t you be a little curious? We should be the same way with our donors.
Q. If not a Chief Engagement Officer, I’d be …?
A. A database administrator at a big nonprofit. I’d enjoy working side by side with a major gifts officer or an annual giving officer, helping them to find prospects or to connect dots between people and identify opportunities.