Segmentation for Non-Profits: An overview that may help re-think your approach or join the trend.

Segmentation has played – and continues to play – an important role in how non-profit organizations present their needs to their constituents. The best way to raise money is to leverage connections with your reader, whether that be through messages or images.

Segmenting is a means of dividing your full mailing list into smaller groupings based on common attributes. These groupings allow you to use specific words, phrases or images to which a constituent is likely to have a personal connection.

Think of it this way: You may have direct mail piece being sent out to alumni of a fine arts college. Messaging that is recognizable to musicians may not have that same connection with those in theater, dance or visual arts. By creating a segment for each of these groups, you can have specific messaging which speaks to each group.

The advent of digital print has provided everyone from businesses to non-profits the ability to segment in that way that personalizes messaging and images that may have a strong affinity to the reader.

Creating Your Segmentation Strategy

Your segmentation strategy should be focused on what you wish to accomplish. Is it about messaging? Page design? Testing? All of the above?

Of course, how you capture, track and maintain data plays a role in how you can segment your piece to your audience. The more data you can collect and accurately maintain gives you a plethora of options to create any number of segments for your direct mail campaign. As Eric Clapton sang: “It’s in the way that you use it.”

JHL works with a number of advancement offices in higher education that use varying amounts of segmentation. The most common is breaking up the list by colleges or degree programs, as well as donor groups. Those are usually the easiest alumni-related data points to track.

What are some other segments you could consider?

Age/generation: How do you message to groups born in different generations (i.e.: Millenials, Gen X, etc)? Are the use of hashtags or emojis appropriate for certain groups based on generation?
Location: For a national fraternal organization, is there benefit in using imagery or member highlights centered on certain regions?
Married couples from same school: Couples who met in school might not be from the same degree program. How do you message to them?
Income: Do you have a separate segment (or different mailing) for those with the giving capacity to be recognized in a leadership annual giving society?
Affinity Groups/Athletics: Can you segment out Greek organizations, marching/pep band, intramurals, student clubs or those who participated on athletic teams?
Upgrading Gifts: Do you have donors who give the same amount year after year? Could you target them with specific messaging asking for a small (or not so small) upgrade?

The ultimate goal is to raise money. While the need for unrestricted giving is important, sometimes promoting funds that a non-donor or lapsed donor may have an affinity towards can get them back into the habit of giving. Once that is established, promoting the importance of the general unrestricted fund comes easier.

Test Segments (or A/B Testing)

Using A/B testing segments gives you the opportunity to see what will give you the best response – and ROI – from your current donors…or future donors. It’s an opportunity to take part of your list and try a different approach to see if the response rate changes. This allows you to use what you’ve learned on future mail campaigns.

From personal experience, there will always be that nagging concern of whether you will anger a donor and lose their gift if the format or messaging changes. On the flip side, are you losing out on added gifts or upgraded gifts by sticking with the same formula year after year?

If that is a concern you can’t shake, perhaps you could consider testing with a lapsed or non-donor group. It would have the largest upside as we are talking about individuals who either haven’t given in a few years or never at all.

What you use for your testing can be simple or complex. It is really based on a number of factors: comfort level, time, resources, creativity, data integrity and budget.

Here are some ideas to consider:

Formal vs. casual salutation
Static ask ladder vs. percentage increase ladder based last gift
Postcard vs. letter vs. self-mailer (pick two)
Tear-off vs. reply card
Early fall vs. late fall (or any timing-based mailing)
Free-mium vs. non free-mium (something added to the letter, like a sticker, cling, etc)
Direct mail followed by email vs. email followed by direct mail

There is some advanced planning involved with the process. While you are making your plans internally, be sure to work with your direct mail vendor to make sure your ideas still meet USPS regulations.

Personalization vs. Segmentation

Segmenting your list doesn’t limit your ability to personalize your piece, but using variable fields to personalize your direct mail doesn’t necessarily mean you are segmenting. Using a static letter with a “Dear Mr. Smith” salutation is more about personalizing than it is about segmenting.

The same could be said for other data points, such as an ask ladder or gift designation. Including an attractive ask amount or preferred fund list based on a donor’s giving history are additional ways you could personalize a letter to each donor with minimal preparation.

Personally, I recommend making the giving experience as easy as possible. Including name, address, recommended gift amounts and funds eases the burden of the donor to make out a gift. If we can use variable fields on the letter, we can do the same on the reply card.

(It’s also worth mentioning that your gift processing team will appreciate having the constituent ID and appeal code included on the reply card. It’s another simple way to keep everyone in the office happy, especially during times of high gift volumes.)

In conclusion, implementing a segmentation strategy is another tool in the toolbox you can use to increase donors, dollars or both. Digital printing allows for a seamless production process for any number of segments or variable fields you wish to use.

It is important to talk to your account representative beforehand to make sure files are formatted correctly, spreadsheets are labeled appropriately, and enough preparation time is provided to produce digital proofs…and your final piece.

JHL is happy to work with you on your segmentation strategy, whether it’s re-thinking your current strategy, trying something new or starting from scratch. Reach out to us to get the conversation started.

Dan Krueger
October 1, 2024