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Audience segmentation by attitude and lifestyle is just one of the ways that charities can make sure they get the right message across to the right audience. But what is the theory of segmentation and how? This presentation explores how charities can make sure they extract every ounce of value from their investment in research and marketing
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Making segmentation work: Grade 1 to 8 segmentation for a charity
Joe Saxton
March 2012
Tel: 020 7426 8888
Email: [email protected]
Web: www.nfpsynergy.net
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
The three elements of segmentation
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SEGMENT
CHANNEL OFFER
The simplest form of communication
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Grade 1 segmentation and targeting: one offer to one segment through one channel
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1 offer
• Make a donation
1 channel
• Direct Mail
1 segment
• Donors
But what about when life gets more complicated?
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Grade 2 segmentation and targeting: one offer with variants to many segments through one channel
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Grade 1
Grade 2
Make a donation
Direct mail Donors
Make a £5/£10/£20
donation Direct mail
Donors who last gave
£5/£10/£20
Grade 3 segmentation and targeting: multiple offers to multiple segments through one channel
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Grade 2
Grade 3
Make a £5/£10/£20
donation Direct mail
Donors who last gave
£5/£10/£20
Make a £5/£10/£20
donation Direct mail Donors
Buy a raffle ticket
Direct mail Raffle buyers
Upgrade your direct debit
Direct mail Direct
debitors
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’
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Grade 4: cross-selling of offers to segments who have previously bought another offer
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Grade 3
Grade 4
Make a £5/£10/£20 donation Direct mail Donors
Buy a raffle ticket
Direct mail Raffle buyers
Upgrade your direct debit
Direct mail Direct
debitors
Make a £5/£10/£20
donation Direct mail Direct debitors
Buy a raffle ticket
Direct mail Donors
Make a direct debit Direct mail Raffle buyers
Grade 5: Matrix of offers and cross-selling of offers to segments over a calendar cycle
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January
March
Make a £5/£10/£20
donation Direct mail Direct debitors
Buy a raffle ticket
Direct mail Donors
Make a direct debit Direct mail Raffle buyers
Make a £5/£10/£20
donation Direct mail Donors
Buy a raffle ticket
Direct mail Raffle buyers
Upgrade your direct debit Direct mail
Direct Debitors
Grade 6: Matrix of offers, cross-selling and a variety of channels to maximise ROI
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Make a £5/ £10/ £20 donation
£1 per person direct
mail Donors
Buy a raffle ticket
20p per person with magazine
Raffle buyers
Upgrade your direct debit
£15 per person
telephone call
Direct debitors
Leave us a legacy
£100 per person home
visit
Longest standing
supporters
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?
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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...
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De
mo
gra
ph
ic
Tra
nsp
ort
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How do McDonald’s segment their audiences?
Beyond the obvious: more complex segmentation for charities
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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
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Grade 7: complex audience segments matched with offers tailored to those segments
Breadcrumb passives
Opulence seekers
Active existentialists
Sotto voce supporters
Committed giving for specific projects
Major donor peer to peer events
UK and global challenge events
Lifetime legacy with occasional
donations
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Where complex segments don’t work: same offers to flash new segments
Make a £5/ £10/ £20 donation
Buy a raffle ticket
Upgrade your direct debit
Leave us a legacy
Breadcrumb passives
Opulence seekers
Active existentialists
Sotto voce supporters
Grade 8: Complex segments matched with tailored offers for both recruitment and retention (and maintained over time)
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January
December
July
Committed giving for specific projects
Breadcrumb passives
New breadcrumb passives from
database recruitment New breadcrumb
passives from cold recruitment
April
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 passives
Opulence seekers
Active existentialists
Sotto voce supporters
1st. Committed giving for specific projects
1st.Major donor peer to peer events
1st. UK and global challenge
events
3rd. Committed giving for specific projects
2nd. Committed giving for specific projects
4th. Committed giving for specific projects
Best response for that segment
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)
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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
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