Market Segmentation in Fundraising | npENGAGE

Market Segmentation in Fundraising

By on Oct 26, 2010 | NONPROFIT-FUNDRAISING

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Strategic marketing requires that the right message be sent to the right prospect at the right time in the fundraising decision making cycle.  The messaging needs to be timely, appropriate, and influential enough to inspire its recipient to write a check and support your mission. 

Non-profits were more likely to be forgiven in the past for sending the direct mail pieces to their “Dear Friends”, but times are changing, and donor expectations are such that you show them you are as loyal to them and meeting their needs as they are loyal to you and meeting your needs.

So, how does a non-profit get up to speed in its targeted marketing efforts?

Define Your Market Segments

Take some time to think about your constituents.  What populations are you serving?  How might they respond differently to your cultivation and solicitation efforts?  It is all too easy to parlay constituent codes into market segments, but is that the most appropriate use of the constituent code?   When you think of your fundraising efforts, are you really devoted to setting up different solicitation plans for each constituent code you are using in your database?  Because you are marketing your mission and hoping to garner support of it through gifts, it may make more sense to define your market segments based upon the gift type that is appropriate for solicitation.  Many non-profits have turned to this model.

Surely you have some generic ideas of how to assign prospects into market segments based on gift type.  Some might consider age or regular giving frequency to identify the planned giving segment.  Board members and known high asset prospects might be identified for major giving efforts.  Should that mean everyone else should be identified in the annual fund segment?  Is it possible that there are needles in the haystack that should be identified in certain segments?  How do you identify them?

Consider Predictive Modeling

It can be fairly straightforward to use single variable analyses to determine, for example, which zip code produces the highest average gift – or which major has the highest giving response rat within a college or university setting.  You probably have several data points that you can analyze within your fundraising database.  And while your gut might lead you to identify some of the appropriate data points that should inform market segment selection, predictive modeling enables you to let the statistics take care of the details and simplifies your workload by allowing you to solely focus on a score.

What makes predictive modeling so powerful is that it finds the right combination of elements that statistically make sense for the type of giving you are pursuing.  Once you’ve been relieved of your analytical duties, you have more resources to do what you do best – raise awareness and funds to support your mission.

How do you segment your fundraising database for cultivation and solicitation purposes?

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