What if you could spend less energy, money, and time on marketing campaigns? Customer segmentation can assist a nonprofit organization with all three and potentially increase the Return on Investment (ROI).
Segmentation enables marketing campaigns to direct targeted messages to an audience that could potential mean higher conversions for your nonprofit. For example, if your nonprofit has a volunteer recognition program yearly. You don’t want non-volunteers receiving the message. So why would you mass email your entire list, when segmenting works best to save on invitation and email cost. If you mass email non-volunteers, they would not find the email beneficial, which could lead to high unsubscribe rates. So on with segmentation!
How should you segment?
How you segment your data is up to you. For nonprofits, marketing segmentation has at least three distinct user groups -donors, clients, and volunteers. However, Steve Zimmerman proposed nonprofits segment based on five distinct user categories. Zimmerman wrote about marketing analysis, but the underlying idea is how to do segmentation with different individuals interacting with a nonprofit organization. The five segments Zimmerman proposed along with their definitions are:
- Direct Beneficiaries. The primary pool of people using the organization’s services or directly benefiting from the organization’s efforts.
- Other Beneficiaries/Funders. Beyond their direct beneficiaries, nonprofit organizations benefit multiple other groups by furthering their ideals, values, or shared beliefs, supporting their businesses and complementing efforts in a systemic way. This group also includes any group of the population that may indirectly benefit from an organization’s efforts.
- Other Organizations. No organization operates alone in a community. This component of the market examines other organizations, both for-profit and nonprofit, that share the community. Other organizations may be competitors, or potential collaborators, or—depending on the programs offered—both.
- Inputs/Labor Market. Providing effective services or benefits for the community requires a pool of qualified, talented, and compassionate individuals. Include any human capital required to make the organization work. So incldue staff, volunteers, and board members. You may also need to include potential staff and board members within this category too.
- Political/Social Environment. Nonprofit organizations are impacted by laws, politics, and other external factors. Include those actors such as politicians, people who have an influence within the scope of your nonprofit’s mission, and any external actors/ social trends. The political/ social environment will require doing research & analysis into the policy areas that effect your nonprofit organization.
Take a look at the full article. Details in Further Reading Section below.
Sanitize Your Data
If you do mass mail appeals, the importance of cleaning your mail list on a consistent bases is also important. Removing un-engaged users will allow you direct your time and energy on people more likely to make a conversion. Make sanitization a habit, it will save you a lot of time, especially on your next yearly fundraiser!
Where do you collect this data for segmentation?
Nonprofit organizatons operate on so many levels. They provide client facing services, but also interact and engage with donors and volunteers, politicians, and the general community. Clients and volunteers may not have the same demographic information. There could also be various programs and services that have different audiences. Just remember, your nonprofit works on many scales and levels. You must define the variables that will be used for the segmentation process. Variables can be measured using quantifiable or qualitative information. More about variables latter!
Start with your Customer Relationship Management (CRM) Software, paper files, and people within the organization for offline data. Online segmentation can be collected in Google Analytics by using built in segmentation and custom dimensions and metrics. Volunteer, client, and donor databases are great places to start for nonprofit organizations. Sanitize the data by removing irrelevant and invalid information. Audit various databases at least yearly (for small nonprofits with smaller databases) to monthly (larger nonprofit organizations).
If your nonprofit has events, you can collect a lot of information based on who attends those events. Connect offline data with your online data to get a better picture of how segmentation should work for your organization. The political and social environment segment requires a bit more external work. If you talk with law makers collect data on how they vote during sessions, what the actors that influenced those sessions. Political decisions are public information. Hint, hint. But you will start to see trends based on the information collected about the policies law makers support and who influenced those laws.
Who should do the segmentation?
You may notice new trends forming when you start collecting information. Make notes of those trends and most importantly, use the information!
Development directors will need to segment data for fundraising.The Executive Director or board of directors may need to know who influenced a piece of legislation, so they can take some action. The marketing team may need to segment for campaigns to create messages targeted to the right audience. In short, everyone involved in the organization should have a stake in the segmentation process.
What & Where Can We Segment?
Content develop should focus on segmenting based on the user. Creating content around your nonprofit’s knowledge area builds trust with different user groups, shows a level of expertise, and improves visibility. Remember even your segments can be broken down into subgroups.
A short list of qualitative data includes demographics such as as age, gender and ethnic background. User location information based on region, city, zip code and other variables are also possible. Read Tom Pope’s article for segmenting donor information to get more ideas about donor variables. The article does not have a complete list, but it’s a starting point. The article also explains why donor segmentation is important.
Defining your segmentation variables will be hard in the beginning, but once you have the process of identifying key variables, segmentation will get easier. This is the first step in understanding the various audiences your nonprofit represents. For example, your audience may engage, consume, or convert better during a specific time of day. You may also notice that a certain location (city, state, country, zip code) has an above average engagement or conversion rate. You would send these segmented audience highly targeted messages at a specific time and in a defined location. How you should segment your data depends on you nonprofit’s campaign goals.
Segmentation has four distinct categories: geographic, socio-economic, psychological, and behavioral.
Geographic segmentation is based on user location. Open source analytic programs such as Matomo, will allow you to retrieve data down to the IP address level. Be careful with IP level data! Maybe your digital marketing strategy is hyper-local and does not apply to certain geographic areas. Having geographic segmentation established early in the pre-planning process will allow you to geo-target areas of interest. If you are using paid advertising tools such as Google Ads, Facebook, or Adroll geo-targeting could reduce cost associated with ineffective ads and clicks.
Demographic/Socio-economic segmentation are based on user characteristics that are not behavioral or psychological. Age, gender, social status, income levels, and life stage are just a few of the demographics you can use to determine the right audience for your content. Google Analytics restricts the type of demographic information you can collect. But, look at your other offline data to determine your target audience. Pair this information with content creation and other marketing efforts.
Psychological segmentation requires a bit more interaction with your users. Facebook, Twitter, Pinterest, LinkedIn, and Instagram are great tools to understand the lifestyle, values, and interest of your audience. You could collect data about topics users post or reacted within social media. You could then integrate a segmentation plan based on information to improve content, marketing strategies, and determine trends. But again live events gives you more interaction and the ability to build long term relationships verses social media. You can also collect information from social media profiles too. But again, be careful with how you use, store, and analyze the data you collect.
Behavioral information in digital marketing probably is one of the best tools for segmentation. Google Analytics allows you to create custom re-targeting list to import into Google Ads. The re-targeting list can include people who have taken a specific action on your website. Creating the list means measuring conversion actions. So make plans to figure out what conversion actions are important for your nonprofit’s marketing goals.
Measuring conversions allow you to have a better understanding of your customer’s journey. Typical behaviors include a person who made a donation, downloaded content, filled out a form, social shares from your website, or made a purchase. Behavioral segmentation also includes buyer behaviors. What occurred prior to or after a donation or sale?
Most digital marketing platforms allow you to segment your audience. Facebook’s Advertising platform has one of the most advance segmentation tools. If you use Facebook Advertising platform, you can create custom segments for each campaign.
Google Ads Remarketing and Display network also allow you to target based on information from your Google Analytics account, CRM, and other external data. This is a powerful combination for your digital marketing efforts. You can reach a broader, but highly targeted engaged audience with Google Ads and Analytics combined. If you are using the Google Ads Grant account, you have limitations on targeting options (grant accounts can only use search and target by location). It could work wonders for your organization’s marketing strategy.
Marketing automation platforms like Mautic, Marketo, and Drip will send out emails and marketing campaigns based on criteria you set in each platform. You can “score” leads and when a person reaches a “score” or when an action is taken by the user, automated emails are sent to the user. Ecommerce stores do this well (remember the pregnancy fiasco by Target?). Yeap, Targe’s segmented too much and it backfired.
Each platform and example has a common theme, each is more effective with audience segmentation.
In addition to your online campaigns, it’s crucial to segment your offline direct mail campaigns. Mailing marketing pieces has become expensive! Although nonprofits can send discounted mailers, it all adds up. You have to pay the designer, the printer, someone to put mail pieces together, and the postage.
Another barrier for nonprofits to start content creation is the cost. Inbound marketing cost depends on the complexity of the content (most written content requires time to write and edit) you want to create. However, content creation and segmentation is a a lot cheaper than other items mentioned (remarketing, direct mailing, and email marketing). Videos and animations are more expensive because you usually need professionals to produce them.
If you have a good picture of your goals, segmenting will allow you to produce content and determine the budget for your inbound marketing strategy. There’s a ton of content types such as videos, written content, and interactive (like quizzes). Segmentation allows you to deliver content based on the person’s stage in the consumer lifecycle. You would not present the same content to a person in the Awareness Phase as the Action phase. It’s a wast of resources and time. Segmentation is a balancing act, but does pay off in the end.
The Measurements & Metrics
Established your goals, key performance indicators, and target audience, so that you can get a clear understanding of the metrics you need to measure. Compare your Return on Investment for each marketing campaign. You can do this in an Excel worksheet, import data to Google Analytics, or use a dash boarding platform like Tableau. But you do need to measure to understand performance.
Online digital marketing has several draw backs. Online analytics program commonly miss socio-economic and psychographic segmentation. In measuring your outcomes, you need to connect offline analytic data from CRM, volunteer management, and client databases with your online information. If you cannot connect offline and online data, you could generalize information by connecting to third party platforms such as US Census data. Connecting with third party data resources also provides another data point to better understand your audience.
Don’t become overwhelmed, so start small. Then work your way to larger campaigns. Define the variables you want to measure. Use a mixture of qualitative and quantitative data to explore segments. Don’t forget to measure the performance of your segmentation efforts. If something does not work to your expectation, ask the big question of “What were the problems and why didn’t the segments work?” If segmentation worked well repeat your previous success. Good Luck
Thanks for reading,
Sorting It Out by Tom Pope The Non-profit Times, 1 Sept. 2001, p. 41.
Zimmerman, Steve. (2018) . Community Influences: Understanding Nonprofit Markets. Nonprofit Quarterly