Segmenting Donor Populations
No two donors are the same. Each one has had a different experience with giving that influences the way you should communicate with them. They do, however, all share one thing in common: none of them has either a 0% or a 100% chance of giving in the future.
Organizing past donors into segments allows you to create customized messages that increase the likelihood that they will respond to your appeals. While there is an unlimited number of ways you can subdivide your donor populations (e.g., interests, behaviors or demographics), a good place to start is to consider their giving record.
Here are six ways to segment your donors based on their giving history:
- Current Donors are those individuals who have given in the present fiscal year. Since they’ve already been “counted” toward your participation goal, your messaging should focus on acknowledging their giving and its impact. While a traditional annual giving approach is to hold off on further solicitations for this group, it’s not uncommon for programs today to pursue additional gifts from current donors. If you do, however, it’s particularly important to let them know that you’re aware and appreciative of their recent support.
- Prior-Year Donors are those individuals who gave during the last full fiscal year but who have not yet given in the current fiscal year. A term that’s often used to describe this segment is LYBUNT, an acronym which stands for “Last Year But Unfortunately Not This.” Generally speaking, prior-year donors are the most likely segment to renew their giving. Among competitive colleges and universities, approximately 60% of prior-year donors can be expected to give again in the current fiscal year.
- Multi-Year Donors are a sub-segment of prior-year donors and are those individuals who have donated in more than one past year. This is important because the likelihood that a donor will renew their giving increases with each successive year that they donate. For example, someone who has donated in each of the past four years is more likely to donate than someone who has donated in each of the past two years. Among competitive colleges and universities, approximately 66% of multi-year donors can be expected to renew their giving. Moreover, the likelihood that a multi-year donor will renew their gift is over 80% once a donor gives for five years in a row. Therefore, a useful goal for any donor is to get them to the five-year mark as the “tipping point” in ensuring they become a consistent lifelong donor.
- New Donors are another sub-segment of prior-year donors and are those individuals who made their first gift last year. New donor retention rates are usually much lower than the overall prior-year donor segment. Among competitive colleges and universities, approximately 26% of new donors can be expected to renew their giving. In the case of first-year-out graduates who made their first gift as part of their senior class gift campaign, it’s not unusual for fewer than 10% to renew their giving. For this reason, new donors represent a huge opportunity when it comes to increasing the rate of renewal as well as overall participation.
- Lapsed Donors are those individuals who have given at some point in the past but who did not give in the prior fiscal year. A term that’s often used to describe this segment is SYBUNT, an acronym that stands for “Some Year But Unfortunately Not This.” Lapsing is the term often used to describe when a past donor misses or skips a year of giving. Among competitive colleges and universities, approximately 15% of donors who are fewer than five years lapsed can be expected to renew their giving. Within the lapsed donor populations are several sub-segments that deserve your extra attention: those who made a leadership gift before lapsing, those who made multiple gifts in a single year before lapsing, and those who had a streak of consecutive giving before lapsing. Each of these sub-segments is more likely to donate and more likely to upgrade than the lapsed donor population in general.
- Long-Lapsed Donors are individuals who have given at some point in the past but have not done so in a significant number of years. In the same way that multi-year donors become more likely to give again with each subsequent gift, the likelihood that someone will donate declines with each additional year that they lapse. Once a donor lapses more than five years, the chance of them giving again the following year is often less than the chance of getting someone to give for the first time. This tipping point is commonly referred to as “the cliff,” and you should do your best to avoid letting your lapsed donors fall over it.
Segmenting your donor populations based on giving history will allow you to give each group the attention it needs, create more personalized messages, and allocate your resources based on your goals and priorities. While giving history certainly isn’t the only way to segment your target audience, it’s often the best place to start.
This article has been adapted from the book Ideas for Annual Giving by Dan Allenby. Copyright (c) 2016 Council for Advancement and Support of Education. All rights reserved. Used by permission.
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