As year-end approaches you are making your list and checking it twice. Because most nonprofits depend heavily on year-end appeals to meet their annual fundraising goals, it’s important to get all the value you can from your list.  I am often asked at this time of year, “How should I segment my list of donors and prospects to get the best response and ultimately the greatest return?”

There are a number of answers to that question, and much of the answer depends on what data you have available to use as segmentation criteria.  Following are some suggestions, ranging from simple solutions where there is little data to select from, to more sophisticated, and ultimately more effective, solutions.

Segmentation based on internal data including giving history. 

Many organizations base their segmentations and ask amounts on past giving.  For example, if your last gift amount (LGA) was $50, I will ask for 2x $50, or $100, this time.  A simple formula for upgrading donors based on last gift amount is to offer an “ask string,” or choices, such as:

  • 2x LGA
  • 1.5x LGA 
  • LGA
  • Other $____

Sometimes the last gift amount was not the largest gift amount.  In these cases, sometimes largest gift amount is substituted for last gift amount. Under this scheme, those who haven’t yet donated and therefore have no LGA are often asked for the average gift amount, or average first gift amount, for all donors to the organization.

Segmentation based on giving capability. 

For organizations with ratings indicating a donor’s capacity to give, good results can be achieved by asking those who can afford to give more to give more.  While capacity ratings are based on an individual’s ability to give a major gift over a period of five or more years, the ratings can also serve as a directional pointer for annual giving segmentations.  For instance, you might divide your list into three capacity bands: high capacity, mid-range capacity, and low capacity. Those in the high capacity ranges may be asked for 5x their last gift amount; while those in mid ranges are asked for 3x LGA and those in the lowest capacity tiers are asked for the default of 2x LGA. 

Non-donors can be asked for the average first gift amount of the donors within their capacity band, which I am quite certain will be higher for higher capacity donors than lower.

Segmentation based on predictive modeling.  

The most effective way of segmenting your database or list for an appeal is to use the ever more accessible process of predictive modeling.  Predictive modeling can be used to predict anything – a next gift amount, the likelihood of a prospect responding to an appeal, the probability of a donor giving a gift over a certain threshold, and more.  For annual giving, a likelihood to give model, along with capacity ratings, can provide powerful segmentation criteria.  You can use the combination of ratings to create several segments of those most likely to give with ask for amounts tailored to their ability to give.  You can determine at what point it makes sense not to mail to a specific group, based on the prediction that they are unlikely to give.  This combination of ratings produces some appealing economics:  you can maximize your gift revenue with tailored ask amounts for a higher average gift, and minimize expenses by not mailing to those not likely to respond.

I hope these ideas stimulate your thinking about the best way to segment your list for the best results this year-end.  If you’d like information on obtaining capacity ratings or opportunities for predictive modeling, don’t hesitate to let us know.

And if you’d like to learn more about annual giving, download our free three-part series, “The Data-Driven Annual Fund.” 

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