Marketing Segmentation Strategies for Nonprofits

By March 5, 2019Nonprofit

One size does not fit all. That goes for shoes, clothes, and … nonprofit marketing. The answer? Market segmentation.

Market segmentation means separating constituents into categories based on similar characteristics. Your current database most likely contains current and past donors, people who signed up for your email list, and perhaps volunteers and those who attended an event. In other words, it’s a mishmash of people who have, at some time, expressed interest in the mission and vision of your nonprofit.

No two people in the database share the same characteristics, of course, but if you are like most organizations, you send them identical promotions. Loyal supporters and casual followers both receive the glossy four-page mailer with a response card or an email a week detailing your work. Perhaps the casual follower only wants to know of significant events while the loyal supporter loves to hear success stories. Yet you’re talking to them both identically, and it’s not working.

The answer is market segmentation. Here’s how to use even the most rudimentary database or customer relationship management (CRM) system to begin segmentation.

Segmentation Strategies Start with the Data

To start a segmentation strategy, review the data in your CRM or database. What have you collected? Most databases contain rudimentary information such as names, addresses, telephone numbers, and other demographic data.

Frequently, nonprofits don’t realize the many ways they can use their existing data to personalize their marketing. The constituents’ addresses, for example, can be used to alert them of events happening near them. Or, you can use the birthdate to send a birthday greeting. It’s a way to keep in touch and to keep your nonprofit top-of-mind.

Add Relevant Fields to Your Database

If you aren’t already collecting the following information, consider adding these fields to your database and begin the collecting information.

  1. Donor status: active or never donated
  2. Date of last donation
  3. Order history / purchase history
  4. Contact preference (mail, email)

With these fields, you can test messaging strategies to solicit donations based on donor history. New or potential donors may receive a tried and true message, for example, while frequent donors may receive more updates about how their donations are used.

Segmentation on a Tight Budget

Many market segmentation strategies can be achieved even on a tight budget. Lead scoring, a technique borrowed from the world of sales, assigns a value to each record in a database evaluated on sales or sales potential. You can mark your records similarly around donations, interest, or interaction. Most databases include simple spreadsheets and have an extra field or two that can be customized. You can group your list according to geography, past interactions with your organization, birth month or something similar, to test out segmentation strategies.

Shopping for New CRM Software

As you get more comfortable with market segmentation and segmentation strategies, you may find that your current database limits how much you can do. A full customer relationship management (CRM) system offers all the features you need to build a robust market segmentation strategy, track and measure the results, and improve your data collection over time.

There are many versions of CRM software on the market today. How do you know which one is right for your organization? You don’t need to do exhaustive research to find a solid starter system. Instead, ask these questions to get started:

  1. What features do I need in the CRM system?
  2. Will it need to integrate with any other systems we have, such as an email or contact management system, or can it stand alone?
  3. Do I buy a site license or seat-based licenses? Is there a usage or data cap in my license?
  4. Is this software complex? Will I need to have someone dedicated to learning how to use it?
  5. Will we need training to use this software?

Depending on how you answer these questions, you may choose a stand-alone CRM, a cloud (internet) based system, or a system that complements your existing operational software.

There’s no right or wrong answer. Just as one-size-fits-all doesn’t apply to a marketing strategy, one-size-fits-all rarely applies to a software solution, either.

Welter Consulting

Welter Consulting bridges people and technology together for practical solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.