Research and Segmentation

Many people are confused about marketing versus fund-raising. They’re not actually the same thing. Marketing can best be described in the for-profit world as getting the product to market, whereas the fund-raising function of your nonprofit involves receiving a donation. It is undeniable that there are areas where nonprofit marketing and your organization’s fund-raising programs overlap.

Sophisticated and effective messaging will support your insitution’s efforts to raise more money. Unfortunately, many organizations can’t afford a full-fledged marketing function and such responsibilities are often combined with – or tacked on to – development activities. Other organizations market for everything but increased fund raising. The explosion of social media and other communication channels may further complicate and distract precious marketing resources. Just because you expose your organization to thousands or possibly millions of people does not guarantee improved fund-raising results.

Nonprofit marketing is complicated by the fact that your “customers” or “clients” are often a different population than your donor constituency. Families that buy an annual membership to the zoo or a fitness membership to the local “Y” have different perspectives and needs from your biggest donors.

Certain groups of people will be more inclined to give to your orga-nization or to seek your services based on their specific personal motivations. That is why one of the earliest steps of the marketing process to to segment your market. The best approach to marketing segmentation involves the collection of demographic, psychographic and interest or identity data.

Ultimately there is no “right” or “wrong” segmentation approach, as long as you are doing something to help focus your efforts. In fact, the simpler the segmentation the easier it may be to incorporate into your strategy and actions. As development officers you should be conducting a careful segmentation of your donor file. There is a big difference between a donor who donates thousands of dollars a year and a donor who buys a raffle ticket.

Marketing is about numbers, research, and statistics. But that’s not enough by itself.Marketing, like development, is an art — it involves understanding human motivations. Those motivations determine how, when, what and why donors give.

You won’t automatically get a particular percentage of people to contribute just because they hear about your organization. So rather than paying lots of money to put your message out there for everyone, you must ffocus on the right demographic group — the one most likely to invest in what you are doing.

So how do you know who is responding to your marketing message? The answer is probably located in your donor file. Your donor database is the largest, most complete history of constituency feedback and tracking that your organization has. The challenge is to organize and analyze donor gift history so it provides greater feedback on your organization’s marketing message and your donor’s preferences.

We’ve developed just such a process that we call SMART Charts. This analysis will help you to better evaluate your fund-raising results and to identify what your donors are responding to and how they are making investments. Undoubtedly you’ve accumulated a great deal of information about your donors and their response to your messaging, but until it’s properly organized and analyzed it is of little practical use.

Once you’ve segmented your donor file by past gift level segmentation, performed a renewal analysis and considered the appeal methods and their effectiveness, you’ll be in a position to focus on the most successful strategies in the future.

Identifying the unique segments of mid-range to high-end donors creates a pool of constituents that is more manageable and financially lucrative. More than likely the people in these segments are very similar to one another, and distinct from other segments based on different preferences, needs and behaviors. This information is vitally important to an organization’s development and marketing functions.

It is easy to get caught up in the excitment of today’s new communication channels, but it ismore important to understand the sources of your current donations and to direct a full-court press of clear and consistent communications where it will yield the greatest results.

Don’t wait for someone else to tell you what your donors want. A better course is to carefully target your major donors, identify their unique perspective of your organization, and institute a plan that communicates the messages that are most meaningful to your constituents.

click here for pdf version: FRM56

For more on The Marketplace Perspective, A New Approach to the Development of Institutions access,  Goettler Series Volume 3