|To send or not to send: four ways to decide who gets your next mailing|
Personalization and segmentation are, in many ways, the key to effective direct mail fundraising. On its face, segmentation means dividing up a list into sub-sections or segments, but segmentation becomes meaningful only if you then proceed to treat distinct segments differently from one another.
To Send or Not to Send
At its most basic, segmentation is useful for small organizations that have been accumulating names since Day One in a "mailing list" - a list which is typically used as a target for everything the group decides to mail, including newsletters, appeals and event invitations. The first step in segmentation is to divide those who should continue receiving mailings on a regular basis from those who should not. In one fell swoop, an attentive organization can substantially increase the cost-effectiveness of its mailing program by making this simple division.
This begs a question, however: On what basis do you divide the two groups? There are four criteria to take into account, if you want to be really thorough about it:
Obviously, people who have given larger gifts are more likely to give large gifts when asked to give again. People who have given smaller gifts are much less likely to do so. Why? People vary in their giving habits as well as in their means. However, it's also true that, generally speaking, people who give more generous gifts tend to be more loyal (perhaps because they can afford to be?).
These four criteria can be used in combination to segment a donor file. The simplest application is to divide the list in these four ways:
By segmenting in this fashion, you could establish minimum criteria for inclusion in a fundraising mailing - each person you mail to would need to meet or exceed the minimum criterion in each of the four areas.
Clearly, you can extend the same logic into ever-more-complex segmentation models. In some high-volume, big-budget mailings, there may be literally thousands of segments or "cells," each of which is defined by all four of these criteria (and possibly many others as well). For a small nonprofit, the most immediate, most useful application of segmentation is to cull a mailing list, so you'll waste less money on your mailings.
Divide the More Generous from the Less Generous
On the next level up the ladder, segmentation can (and should!) be used to divide more generous and more responsive donors, on the one hand, from those who are less generous and less responsive. The former are "worth" more. You can easily justify spending more money on mailing to them - by using first class postage instead of bulk rate, for example. Or by personalizing the message on, say, a laser printer rather than sending a "Dear Friend" or "Dear Member" or "Dear Alumnus" letter.
A prime application of personalization is to cite a donor's previous gift amount and suggest one that's proportionately larger. This works best of all if you can do so both in the body of a fundraising letter and on the response device enclosed (being careful to mention exactly the same amounts in both places).
An excellent example of personalization comes from a non-profit who added small amounts of personalization and greatly increased their return. In addition to the standard name, address and salutation, the list was divided into categories such as new donors last year, ongoing donors, lapsed donors, prospects forwarded from another affiliate. Subtle changes were merged into the letters that went to each of these segments. For instance:
In the two page letter, three places were personalized in this way. This was a two pass membership appeal, with the second pass being a shorter letter, to all those who had not yet responded (5 weeks later). Combined results of the two pass campaign had a very satisfying 21% for first time donors and 37% for ongoing donors with an average gift 30% above projections.
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