The document discusses different "grades" or levels of segmentation and targeting for a charity, ranging from a simple single offer to a single audience to more complex segmentation involving tailored offers for different audience segments identified through more in-depth analysis. More advanced segmentation can help recruit new supporters and maximize existing support, but it requires developing tailored products, maintaining segmentation over time, and ensuring the database can adequately capture audience data and segments.

1. Making segmentation work:
Grade 1 to 8 segmentation for a charity
Joe Saxton
March 2012
Tel: 020 7426 8888
Email: joe.saxton@nfpsynergy.net
Web: www.nfpsynergy.net

2. The foundations of communicating to audiences
• The audience: who you talk to/the audience is divided
into segments
• The offer/message: what you say to the audience or
ask them to do
• The channel: how the message reaches the audience
2

3. The three elements of segmentation
SEGMENT
OFFER CHANNEL
3

4. The simplest form of communication
4

5. Grade 1 segmentation and targeting: one offer to
one segment through one channel
1 offer 1 channel 1 segment
• Make a • Direct • Donors
donation Mail
5

6. But what about when life gets more
complicated?
6

7. Grade 2 segmentation and targeting: one offer with
variants to many segments through one channel
Grade 1
Make a Direct mail Donors
donation
Grade 2
Make a Donors who
£5/£10/£20 Direct mail last gave
donation £5/£10/£20
7

8. Grade 3 segmentation and targeting: multiple offers
to multiple segments through one channel
Grade 2
Make a Donors who
£5/£10/£20 Direct mail last gave
donation £5/£10/£20
Grade 3
Make a
£5/£10/£20 Direct mail Donors
donation
Buy a raffle
ticket
Direct mail Raffle buyers
Upgrade your Direct
Direct mail
direct debit debitors
8

9. The first three grades
• All segments are based on previous buying history:
donors are asked to give, raffle buyers are asked to
raffle and so on
• All offers are static – the same offer as ‘last time’
9

10. Grade 4: cross-selling of offers to segments who
have previously bought another offer
Grade 3
Make a £5/£10/£20
donation Direct mail Donors
Buy a raffle
ticket
Direct mail Raffle buyers
Upgrade your Direct
Direct mail
direct debit debitors
Grade 4
Make a
£5/£10/£20 Direct mail Direct debitors
donation
Buy a raffle
ticket
Direct mail Donors
Make a direct
debit Direct mail Raffle buyers
10

11. Grade 5: Matrix of offers and cross-selling of offers
to segments over a calendar cycle
January
Make a
£5/£10/£20 Direct mail Direct debitors
donation
Buy a raffle
ticket
Direct mail Donors
Make a direct
debit Direct mail Raffle buyers
March
Make a
£5/£10/£20 Direct mail Donors
donation
Buy a raffle
ticket
Direct mail Raffle buyers
Upgrade your Direct
Direct mail
direct debit Debitors
11

12. Grade 6: Matrix of offers, cross-selling and a variety
of channels to maximise ROI
Make a £5/ £1 per
£10/ £20 person direct Donors
donation mail
20p per
Buy a raffle
person with Raffle buyers
ticket
magazine
£15 per
Upgrade your Direct
person
direct debit telephone call debitors
£100 per Longest
Leave us a
person home standing
legacy
visit supporters
12

13. The first six grades
• All segments are based on history of support and ROI
• So why someone gets a specific offer is pretty clear – it’s
based on their support history
• And everybody on the database can get all the offers
• So no offer is rationed or inappropriate
(although some offers might go down like a lead balloon)
So, how can a charity maximise its income and
support from its audiences?
13

14. The next level of segmentation comes from
offers that aren’t based on buying history but a
more complex segmentation or analysis or
customer insight
But let’s divert to a corporate example of
segments and offers...
14

15. How do McDonald’s segment their audiences?
Demographic
Transport
15

16. Beyond the obvious: more complex
segmentation for charities
16

17. But why is more complex segmentation needed?
• To recruit new supporters who would otherwise not be
interested
• To maximise existing support by discovering new clusters
of support
• Complex segmentation is only useful if accompanied by
complex products or channel delivery systems
17

18. Grade 7: complex audience segments matched with
offers tailored to those segments
Committed giving Breadcrumb
for specific projects
passives
Major donor peer Opulence
to peer events
seekers
UK and global Active
challenge events existentialists
Lifetime legacy
with occasional
Sotto voce
donations supporters
18

19. Where complex segments don’t work: same offers
to flash new segments
Make a £5/ £10/ Breadcrumb
£20 donation passives
Buy a raffle Opulence
ticket seekers
Upgrade your Active
direct debit existentialists
Sotto voce
Leave us a
supporters
legacy
19

20. Grade 8: Complex segments matched with tailored
offers for both recruitment and retention (and
maintained over time)
New breadcrumb
passives from
New breadcrumb
database recruitment
passives from cold
recruitment
Committed giving for
specific projects
Breadcrumb
passives
January
April
July
December
20

21. The paradox of responsiveness – the most
appropriate products for a segment may not be based
because it is the most responsive to that segment
Breadcrumb 1st. Committed giving for 1st.Major donor peer 1st. UK and
specific projects to peer events global challenge
passives events
Opulence 3rd. Committed giving Best response for
for specific projects that segment
seekers
Active 2nd. Committed giving
for specific projects
existentialists
Sotto voce 4th. Committed giving
for specific projects
supporters

22. What complex segmentation needs to work
• Identify segments easily (eg golden questions)
• Communicate with segments according to their needs
(not just giving history)
• Hold all the supporter data on a database (and covering
time, money and campaigning if possible)
• Recruit new supporters and talk to them with the right
offers (not just once or twice but always)
• Cross-sell where appropriate (but not remorselessly)
• Product innovation to dovetail with segment innovation
(think of the McDonald’s Happy Meal)
22

23. What makes segmentation go wrong?
• Campaigns, fundraising and volunteering all having their
own siloed segmentation (what does a supporter get?)
• Segmentation development without product
development
• Bored or forgotten after 9 months
• A database that can’t cope (it needs to store and
segregate based on segments)
• Forgetting about existing supporters (how are they
treated)
• Implementation is harder than identifying the segments
23

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