In the early days of starting a charity or nonprofit when you only have a few dozen supporters, it is easy to have more personalized communication with each one of them. But as your nonprofit grows over the months and years and your donors increase in numbers, personalized communication can become challenging.
And yet, personalized communication with your database is exactly what you need to increase your revenue and continue to have loyal supporters who care about your mission. Segmentation allows your charity to tailor your communications strategy to match the values of your donors and in turn, makes them connect with your charity at a deeper level.
In this article, you will learn about donor segmentation, its benefits, and how you can use it to achieve your fundraising goals.
What is donor segmentation?
Donor segmentation is the simple process of categorizing donors based on similar characteristics. These could include geographic location, demographics, interests, and more. It provides a more effective donor management strategy by identifying demographic subgroups and allows you to tailor your communications to speak directly to these groups.
Benefits of donor segmentation
Personalization plays a crucial role in gaining donor support. When you tailor your communications to suit specific groups within your donor community, you help foster connection and loyalty. Here are some important benefits of donor segmentation:
- Ability to build more meaningful fundraising campaigns;
- Improved engagement levels among the donor community;
- Increased donor retention; and
- Attract advocates to promote your cause.
Common types of donor segments
As you plan your donor segments, sit with your team and think about the donor subgroups that are most relevant to your cause. Here are some of the more common types that you can include.
1. New donors
As per The Nonprofit Recurring Giving Benchmark Study, the average retention rate for new donors is around 20%. But when it comes to repeat donors, the retention rates go as high as 60%. For monthly recurring donations, the retention rates are even higher at 90%. It means that the fastest way to increase your overall retention rate is to retain your first-time donors. You can do this by giving them special treatment—and it all begins with a communications strategy tailored to the new donor segment so you can lead them into their second donation.
2. Monthly donors
When your donors sign up for recurring monthly donations, they should be nurtured with care. These donors help your charity or nonprofit have a dependable revenue stream. You get at least 12 opportunities to interact with monthly donors via thank you emails. So, get creative and find new ways to thank them each month.
For example, show them how their funding is making a difference in someone’s life, or send them little trinkets as tokens of appreciation such as keychains or physical thank you notes, etc. Find new and engaging ways to get them interested in your nonprofit’s activities.
3. Lapsed donors
Maintaining a 100% donor retention rate is nearly impossible. Several factors come into play that may be out of your control. This includes donors who may move away, might not be able to afford giving more regularly, or may just want to donate once only.
This is also an important segment to create for your donor database. When you reach out to them, you may find that a lot of these donors still feel connected to your cause and may simply have become too busy. Hence, it is always a good idea to reach out to this group with targeted messaging and ask them to give.
Conducting fundraisers through online charitable gaming with 50/50 raffles and lotteries is also an excellent way to garner interest and up the engagement from this segment of donors.