Making segmentation work
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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.
Making segmentation work
- 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
- 24. 2-6 Tenter Ground Spitalfields London E1 7NH (w) www.nfpsynergy.net (t) 020 7426 8888 (e) insight@nfpsynergy.net Registered office: 2-6 Tenter Ground Spitalfields London E1 7NH Registered in England No. 04387900 VAT Registration 839 8186 72