Beneficiary and donor segmentation is the process of grouping beneficiaries and donors into discrete categories that share similar needs or characteristics that are relevant to strategic decisions and actions. By classifying beneficiaries and donors into segments with specific demographics, demands or needs, nonprofit organizations can gain a greater understanding of each group and strive to serve them better.
Why it's used
Segmenting beneficiaries helps nonprofits:
- Tailor interventions and programs to meet the needs of each beneficiary segment
- Prioritize among beneficiary segments and allocate resources differentially across programs
- Identify unmet needs among certain types of beneficiaries, and determine if other interventions will be necessary to achieve the nonprofit's intended impact
- Size the pool of potential beneficiaries
Segmenting donors helps nonprofits:
- Understand whether programs are fulfilling all types of donors' expectations
- Tailor communications to clusters of similar donors
- Identify ways to strengthen donor relationship management and engagement for specific types of donors
- Size the pool of potential donors by type
- Define relevant characteristics of beneficiaries and donors. For example,
- Demographics (age, gender, income level, ethnicity, etc.)
- Needs and desires
- Level of involvement with the nonprofit
- Group beneficiaries and donors into meaningful and measurable segments based on their characteristics. Each beneficiary or donor should fit into exactly one segment.
- Identify relevant differences among the segments in key measures or outcomes (e.g., attendance or academic performance for beneficiaries, or repeat donations among donors)
- Prioritize among the segments based on their needs and on the organization's mission and unique assets
- Invest resources in tailoring programs and services to match the needs of the highest-priority segments
- Intended impact/theory of change
- Constituent engagement
- Funding models
- Donor relationship management
- Beneficiary satisfaction measurement
Examples and case studies
Barnardos as a Typical Non Profit Organization Marketing Essay
This website details the processes of segmentation, market targeting, market mixing, branding, and other aspects of segmenting an organization's beneficiaries and uses Barnardos and for-profit entities to illustrate the concepts discussed.
Bain Management Tools: Customer Segmentation
This article by Bain explains the basics of customer segmentation. While it was written for a for-profit audience, nonprofits can find parallel benefits.
10 Ways to Segment your Donors to Improve Fundraising Effectiveness
This how-to blog provides a great overview of the various ways donors can be segmented to improve fundraising.
New Strategies for Donor Segmentation
This article discusses how you can go beyond demographic and transactional data to segment your donors and maximize their giving potential.
Examples and case studies
Portland Public Schools - Zeroing In on the Causes of the Dropout Problem
Portland Public Schools segmented its students to identify those at highest risk of dropping out and used that data to develop strategies for early intervention.
Our Piece of the Pie: From Data to Decision-Making
Our Piece of the Pie segmented its youth beneficiaries and conducted analysis to identify the cost of serving different age groups with different program models, which allowed it to engage deeply with donors interested in supporting particular beneficiary groups or services.
Larkin Street Youth Services: A Case Study in Sustaining Success
Part of this case study discusses how Larkin came to focus its efforts on the beneficiary group that was most aligned with their organization's mission.
Russ Reid: Case studies
Russ Reid helps organizations acquire new donors. These short case studies provide insights into various ways organizations can segment their donors and tailor communications to increase fundraising.