Segmentation for nonprofits is a two-pronged exercise, split between market and customer segments. Each informs the other and, when worked in tandem, is one of the most powerful ways to make direct mail marketing truly effective. Getting it right avoids the scattergun effect of mailing disinterested parties.
Understanding Customer Segments
Customers may fall into any number of general segments, with the largest segment being the population as a whole. Obviously, you’ll need a far bigger grant if you were to mail the entire population, so how do you identify your prime targets within that vast pool of potentials?
Even if your customer pool is local, there are smaller groups to consider:
- People who live in certain local areas
- The more affluent people
- The less well off
- Certain professions
- Those with particular sport or leisure interests
- People in a defined age range
- Types of family groups
There are many other segment types, including those associated with behavior, lifestyle or previous engagement with your organization.
How Segmentation Helps
Breaking the market down into segments allows you to more fully understand the people who fall within certain criteria. Never lose sight of the fact that segments are not simply abstract concepts. They’re made up of people. The more deeply you understand their values, needs and motivations, the better you can craft an offer that will resonate and prompt them to action. Segmenting also gives clues regarding the type of mailing that would be most effective, for instance a long-form letter versus a short, snappy postcard.
Understanding Market Segments
Nonprofits or charity organizations face another marketing conundrum: identifying which segment of those in need your direct mail campaign will address. The entire market will be far wider than you’re able to help, so some method of narrowing it down is needed. One way of doing this is to focus on segment numbers.
For instance, a cancer charity will face a huge number of different population groups and types of disease that need help. Choices range between helping children or adults, palliative care or active treatment, men or women, treatment-based or research-based help. Pinpointing the exact market segment informs the type of customer segmentation needed to fulfill the campaign goals.
Breaking Down Segments
As an example, if the previously mentioned cancer charity were focused on fundraising for research into treatments for children’s cancer, those with firsthand experience of coping with childhood cancer is one of the most obvious customer segments. Another, larger segment, would be all parents, as they’d likely empathize with the heartbreak surrounding childhood cancer. You could break it down even further, building a campaign directed towards affluent grandparents. This would require two sets of research, first to identify those with the required income level, and then again to pick out the grandparents within that group.
The further you break down market segments, the smaller the segment becomes, but a small segment that offers a high response rate is more rewarding than a large segment with a low response rate.
Testing Market Segments
Running a test on a small sample of your chosen segment enables you to judge the likely response of the full campaign. It’s especially important that nonprofits run test mailings given the more transparent need for accountability where funding is concerned.
Whatever type of nonprofit organization you’re running, having a clear picture of the ideal customer is critical. Apply careful customer segmentation to every offer, and ever-higher response rates come within your grasp.