segmentation

More than just money.


Many organizations use traditional RFM (recency, frequency and monetary amount) criteria to segment their file and select mailable names.

While this tool can also be applied to nonprofits, it must be modified to fit the relationship the organization has with its constituents. Too often, an organization limits its focus to transactional interactions which may create a misleading perspective of the supporter base.

The experience of one of our faith-based clients illustrates this well.

This organization has a paid subscription product (inspirational), offers free inspirational reading materials and accepts prayer requests.

As would be expected, more involved constituents are more likely to become donors. People with all three types of interactions are more than twice as likely to donate. (And, as donors they’re also more likely to repeat and more likely to give more.)

If you were considering transactions only, a long-term subscriber would look far more “valuable” than a recent request for free reading materials.

But not so for donor potential!

The long-term subscriber is actually far less likely to give; if traditional RFM were driving your selects, you’d miss that entirely.

Another example. Long-term lapsed donors (no giving in the prior four years) who have a recent (within past 12 months) non-transactional interaction are more than three times as likely to give as other constituents with non-transactional interactions (although they look the same, based on current monetary activity).

In both of these cases, tracking non-transactional activity helps us mail smarter … by enabling us to mail to names we might not otherwise select and/or reduce mailings to contacts less likely to respond.

Are your constituents telling you something similar through their non-transactional behavior?

More to the point, are you paying close enough attention to get the message?


Target Efforts for Best Results

Successful change is almost always specific, not general. 
You don't have a chance to make mass change, 
but you can make focused change.

Unfortunately, most managers – development managers included – tend to think more in general than specific  terms.

Thus, they set their objectives on overall numbers rather than segmenting supporters and assigning specific goals for each segment.

A few years ago, we worked with a local organization, Harvesters–The Community Food Network, to help them establish a basis for segmenting supporters. Now, some five years later, follow-up analysis underscores the validity of this approach.

First, some background. 

In late 2007, we looked at data on Harvesters supporters from the prior four years. This included fundraising (donors and event attendees), food acquisition and volunteering. 

As a starting point, we divided supporters into three groups:
• Advocates (active in each of past three years)
• Tryers (active this year, but no support the prior two years)
• Buyers (anything in between)

There were some interesting results across all types of support. But one of the most noteworthy was that Advocates, while always a minority (from 5% to 20% of total count), also always gave more...were more likely to give again...and were more likely to increase their giving.

This launched an organization wide effort to nurture these advocates. 

First, managers in each area – fundraising, volunteers and food acquisition – refined their definitions of advocate, both to reflect department objectives and to ensure a manageable count. Next they begin to develop strategies to retain existing advocates and to nurture/convert existing buyers into advocates.

Has the focus on this specific segment been effective?

Take a look at what has happened with volunteer hours (translated to dollars based on the Independent Sector's National Value of Volunteer Time).



 20% of the volunteers provide almost half of the service.

The perspective is similar in the other areas of support as well. 
  • Just over 10% of individual donors account for more than a third of revenue from that segment.
  • Less than one third of company donors account for more than two thirds of the revenue. 
  • Almost half of the food from food drives is generated by less than one fourth of the organizers.
Harvesters decided to focus first on the segments that offered the greatest potential return. And, even as they continue to tweak those strategies, they've moved to develop and implement strategies to address the other segments as well.

Specific strategies. 

Successful change.