Segmentation: The Key To Successful Nonprofit Direct Mail

Direct mail is a longstanding tactic nonprofit fundraising professionals have consistently used to reach their target audiences and solicit donations. However, July 2024 will mark the United States Postal Service’s fifth increase in postal rates in less than two years. Is it even worth it for nonprofits to continue to use this method as costs keep rising?

The simple answer to this question is yes. Nonprofit direct mail aimed at existing donors has an average response rate of 5.3%, which is extremely high compared to other marketing channels. So, how can nonprofits ensure their direct mail approach is strong enough to justify the costs?

The key to maintaining a high return on investment (ROI) for direct mail is segmentation. When you find groups within your audience with similar characteristics and personalize your communications with them, they’ll be more likely to respond to your appeals. In this guide, we’ll share tips for how you can effectively segment your supporters and supercharge your direct mail campaigns.

1. Review your nonprofit’s database.

Before you start segmenting your donors, take stock of the supporter data you have and make sure it’s accurate. Auditing your database is the first step of the data hygiene process and it ensures you’re basing your segments on organized, complete, and consistent information.

During your audit, you may ask questions such as:

• What information are we currently collecting about our donors?
• When was the last time we updated our donor database or CRM?
• Are all entries standardized?
• What are some ways we could group our supporters based on the information in this database?
• Is there any additional information we may need to form segments for our direct mail campaigns?

With a better understanding of the current state of your data, you can start your direct mail segmentation strategy on the right foot and provide more direction to your campaign.

2. Append additional information as needed.

After you’ve completed your audit, you may notice you’re missing vital information about your supporters that would help you reach your audience and personalize your direct mail appeals better, such as up-to-date salutations and accurate mailing addresses. You can source this information through nonprofit data appends, which add data to your CRM from trusted third-party sources, and national change of address, which ensures that your mailing addresses are as up-to-date as possible.

A data append allows you to gather up-to-date information that you may not necessarily collect from your supporters. This data may include:

• Contact information, such as mailing addresses
• Demographics, such as age, level of education, and interests
• Wealth indicators, such as employment details, stock ownership, and home value

Once you’ve fully fleshed out your donor profiles with new data, you can use this information to group your supporters into relevant segments. Plus, appending mailing addresses will ensure your personalized direct mail appeals reach the right donors, maximizing your campaign’s ROI.

3. Create your segments.

When it comes to developing donor segments, there’s no one-size-fits-all approach. The segments you create will depend on the goals of your direct mail campaign, your specific audience, and the information you have readily available.

If you’re unsure how to best group your donors, AlumniFinder’s donor data guide recommends starting with segmentation based on donors’ gift levels and relationships with your nonprofit. This strategy may prompt you to create segments for:

• New donors. When someone contributes to your cause for the first time, they’re likely eager to learn more about your organization and open to exploring all your nonprofit has to offer. Use direct mail to thank these new donors for their gifts and welcome them to your organization by inviting them to any upcoming events they may be interested in.
• Recurring donors. If someone has indicated they’re supporting you for the long-term, you can occasionally reach out to them via direct mail and other channels, as long as you recognize them as recurring donors.
• Major donors. Since major donors give such large gifts, it’s important to craft direct mail campaigns that strengthen your relationships with them. For instance, you may illustrate the impact of their generous contributions and invite them to exclusive events.It’s typically especially helpful to add more personalization for this group.
• Lapsed donors. Having a physical reminder of your nonprofit in their hands may encourage lapsed donors to re-engage with your organization. Spark their memory of your organization by referencing their specific involvement and explaining that your community misses their presence and support.

As mentioned, if you run a recurring giving program, you should also create a segment for recurring donors. For example, you may send monthly donors a physical copy of your monthly newsletter so they can understand the exact projects their funds are going toward that particular month.

Other common ways to segment donors include by age, location, and interests. For instance, many nonprofits group their donors by location so they can send them information about upcoming events in their area.

4. Personalize your direct mail materials.

Now that you’ve created your segments, it’s time to put them into action. Remember that the messaging and content of each direct mail campaign should align with the segment you’re trying to reach.

For example, Bloomerang recommends sending major donors handwritten letters to show your appreciation for their generosity. While sending donors direct mail shows them that you care, writing letters for major donors by hand takes it a bit further. In these letters, you may share stories of specific beneficiaries who have benefited from your major donors’ contributions and have your major gift officer or executive director add their signature for a personal touch.

To cater to different supporters’ interests, highlight unique ways to keep supporters engaged. You may do this by:

• Promoting matching gifts. Help donors feel even better about their recent donations by giving them the opportunity to increase their impact. When eligible donors fill out a matching gift request form, their employers will match their contributions to your nonprofit, typically at a 1:1 ratio. As a result, donors can double their donations to your organization, and you can put more funds toward your mission.
• Showcasing volunteer opportunities. If donors have expressed interest in becoming volunteers, send them information about your volunteer program and any upcoming opportunities. That way, they can increase their involvement with your organization and build a deeper connection to your cause.
• Inviting supporters to events. Note, these can be virtual events, insider meetings, and the like. Consider creating segments of past event attendees and potential first-time event attendees. Then, send them personalized invitations to your next event accordingly. While you may thank past event attendees for coming to your last event, you can convince potential first-time event attendees to join by recapping what made your past events so special.

In addition to tailoring your messaging and content to each segment, remember to also personalize your direct mail for each individual. Address donors by name, and reference their specific involvement with your organization to show you value your relationships with them. Consider postcards as options, as they too can be easily customized!

5. Track your results.

Assess the effectiveness of your direct mail campaigns by tracking your results. Determining which elements worked well and which didn’t will allow you to learn more about your audience and improve future campaigns.

To get a comprehensive sense of your campaign’s performance, use a combination of:

• Quantitative metrics. While there may not be as many direct mail metrics to track as there are for digital marketing efforts, you can still measure campaign success using figures such as response rate and conversion rate. If you’re sending a fundraising appeal, for example, you may track the average gift amount or cost per acquisition (CPA) of new donors.
• Qualitative feedback. Beyond crunching the numbers, get a sense of how your supporters feel about your direct mail communications by sending them a survey. Ask them if the campaign resonated with them and inspired them to get more involved with your organization. It’s also important to leave room for open-ended feedback so donors can share their uninhibited thoughts and input.

Once you’ve gathered your metrics and feedback, sit down with your team to analyze the results and note any key findings. For example, if your recurring donor direct mail campaign has a high average gift amount and donors report that your communications felt personal and inspiring, you’ll know to take a similar approach to your next campaign for this segment. Remember that an increasing number of donors will go online after receiving a direct mail appeal so bear this in mind when reviewing your metrics. Use a custom click through link for your direct mail and a QR code.

Direct mail can be an expensive channel for nonprofits to use, but with effective segmentation in place, your investment will be well worth it. Continuously audit your database to ensure you’re basing your segments on accurate, updated information, and gather more data about your supporters as needed to group them appropriately.

Guestblog.