Nonprofit Financial Management: Segmentation for Smarter Marketing

Nonprofit financial management includes ideas that can help you increase income from donations, events, and charitable giving. Segmentation, a concept borrowed from the world of for-profit marketing, can help you market smarter, achieve better results, and reduce marketing costs.

What Is Segmentation?

Segmentation refers to evaluating the characteristics of an email or mailing list and grouping people together according to similar characteristics. Marketing outreach can then be directed at smaller groups according to their unique interests or characteristics.

Why Segment?

Think about your current mailing list. It’s probably a mixture of long-time “friends” of the organization, new donors, and everyone in between.

But these groups need different information from you. Longtime friends of your organization or donors may welcome updates on programs while newcomers may need to learn more about your basic services. Others may be interested in specific programs or initiatives.

If you send the same information to all groups, you run the risk of people growing bored with the information you send because it doesn’t feel relevant to their needs. The more you can speak to your individual constituents through segmented and targeted communications, the better you will engage them. The more engaged someone is in your organization’s mission and activities, the more likely they are to donate to it in the future.

How to Start a Segmentation Program

First, you’ll need software that can be updated to include segmentation models. That’s usually accomplished by adding a simple field to each address record that can be keyed to reports so all people in each segmentation group can show up in the same cluster.

Begin with the data you do have on your constituents. You currently have addresses, so you know their location. You may be able to segment communications around location-based activities such as volunteer days, charity events, or other locally-based activities. This enables you to send mailings or invitations only to those who live near the event, and perhaps garner a better response rate by targeting those most likely to attend.

Another concept is to link the amounts donated to an actual situation to show donors how their money impacts the cause they care about. Since your records may indicate how much people have donated, you can segment by donations like this:

“The $50 you donated last week will pay for veterinary care for one cat or dog at our shelter. Thank you for your compassion towards shelter animals.”

“It costs $500 to train a service dog for our veterans. Your generous donation of $100 put us a big step closer to helping a deserving veteran get the help he needs. Thank you.”

“Each family who comes to us has a simple need: food. Your $25 donation puts a bag of groceries into a family’s hands. We can’t do it without you.”

In each case, the segmentation was around tiers of giving. Donors were grouped into $25, $50, $100 and up tiers and messages could then be tailored to each. By showing people how their gift impacts the cause they care about, you make it more personal and give donors a good feeling about their support.

A/B Split Testing

Another technique you can use after implementing a simple segmentation strategy is called message testing or A/B split testing.

In this marketing methodology, you create one message (A) and test the response against an alternative message (B). You then measure the response to decide whether A or B produces the best results.

Over time, you can test variables such as the message, the timing, or the design of the marketing materials to see which, if any, of these elements, impact the results. For example, by testing a known email design (A) against a new design (B) and measuring the results against the results you know you get for A, you can see if the revised design of B improves the response rates.

Nonprofit Financial Management Strategies from Beck & Company

Since 1987, Beck & Company has helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

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