Making segmentation work:Grade 1 to 8 segmentation for a charityJoe SaxtonMarch 2012Tel: 020 7426 8888Email: joe.saxton@nf...
The foundations of communicating to audiences• The audience: who you talk to/the audience is divided  into segments• The o...
The three elements of segmentation                     SEGMENT      OFFER                          CHANNEL3
The simplest form of communication4
Grade 1 segmentation and targeting: one offer toone segment through one channel1 offer            1 channel          1 seg...
But what about when life gets morecomplicated?6
Grade 2 segmentation and targeting: one offer withvariants to many segments through one channel    Grade 1        Make a  ...
Grade 3 segmentation and targeting: multiple offersto multiple segments through one channel    Grade 2       Make a       ...
The first three grades• All segments are based on previous buying history:  donors are asked to give, raffle buyers are as...
Grade 4: cross-selling of offers to segments whohave previously bought another offer Grade 3     Make a £5/£10/£20        ...
Grade 5: Matrix of offers and cross-selling of offersto segments over a calendar cycle January       Make a     £5/£10/£20...
Grade 6: Matrix of offers, cross-selling and a varietyof channels to maximise ROI     Make a £5/        £1 per      £10/ £...
The first six grades• All segments are based on history of support and ROI• So why someone gets a specific offer is pretty...
The next level of segmentation comes from     offers that aren’t based on buying history but a     more complex segmentati...
How do McDonald’s segment their audiences?                                        Demographic      Transport15
Beyond the obvious: more complexsegmentation for charities16
But why is more complex segmentation needed?• To recruit new supporters who would otherwise not be  interested• To maximis...
Grade 7: complex audience segments matched with offers tailored to those segments Committed giving                   Bread...
Where complex segments don’t work: same offersto flash new segmentsMake a £5/ £10/                   Breadcrumb £20 donati...
Grade 8: Complex segments matched with tailoredoffers for both recruitment and retention (andmaintained over time)        ...
The paradox of responsiveness – the mostappropriate products for a segment may not be basedbecause it is the most responsi...
What complex segmentation needs to work• Identify segments easily (eg golden questions)• Communicate with segments accordi...
What makes segmentation go wrong?• Campaigns, fundraising and volunteering all having their  own siloed segmentation (what...
2-6 Tenter Ground                 Spitalfields                  London                  E1 7NH      (w) www.nfpsynergy.net...
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Making segmentation work

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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

Published in: Career, Business

Making segmentation work

  1. 1. Making segmentation work:Grade 1 to 8 segmentation for a charityJoe SaxtonMarch 2012Tel: 020 7426 8888Email: joe.saxton@nfpsynergy.netWeb: www.nfpsynergy.net
  2. 2. 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 audience2
  3. 3. The three elements of segmentation SEGMENT OFFER CHANNEL3
  4. 4. The simplest form of communication4
  5. 5. Grade 1 segmentation and targeting: one offer toone segment through one channel1 offer 1 channel 1 segment • Make a • Direct • Donors donation Mail5
  6. 6. But what about when life gets morecomplicated?6
  7. 7. Grade 2 segmentation and targeting: one offer withvariants to many segments through one channel Grade 1 Make a Direct mail Donors donation Grade 2 Make a Donors who £5/£10/£20 Direct mail last gave donation £5/£10/£207
  8. 8. Grade 3 segmentation and targeting: multiple offersto multiple segments through one channel Grade 2 Make a Donors who £5/£10/£20 Direct mail last gave donation £5/£10/£20 Grade 3 Make a £5/£10/£20 Direct mail Donors donation Buy a raffle ticket Direct mail Raffle buyers Upgrade your Direct Direct mail direct debit debitors8
  9. 9. 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’9
  10. 10. Grade 4: cross-selling of offers to segments whohave previously bought another offer Grade 3 Make a £5/£10/£20 donation Direct mail Donors Buy a raffle ticket Direct mail Raffle buyers Upgrade your Direct Direct mail direct debit debitors Grade 4 Make a £5/£10/£20 Direct mail Direct debitors donation Buy a raffle ticket Direct mail Donors Make a direct debit Direct mail Raffle buyers10
  11. 11. Grade 5: Matrix of offers and cross-selling of offersto segments over a calendar cycle January Make a £5/£10/£20 Direct mail Direct debitors donation Buy a raffle ticket Direct mail Donors Make a direct debit Direct mail Raffle buyers March Make a £5/£10/£20 Direct mail Donors donation Buy a raffle ticket Direct mail Raffle buyers Upgrade your Direct Direct mail direct debit Debitors11
  12. 12. Grade 6: Matrix of offers, cross-selling and a varietyof channels to maximise ROI Make a £5/ £1 per £10/ £20 person direct Donors donation mail 20p per Buy a raffle person with Raffle buyers ticket magazine £15 per Upgrade your Direct person direct debit telephone call debitors £100 per Longest Leave us a person home standing legacy visit supporters12
  13. 13. 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?13
  14. 14. 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...14
  15. 15. How do McDonald’s segment their audiences? Demographic Transport15
  16. 16. Beyond the obvious: more complexsegmentation for charities16
  17. 17. 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 systems17
  18. 18. Grade 7: complex audience segments matched with offers tailored to those segments Committed giving Breadcrumbfor specific projects passives Major donor peer Opulence to peer events seekers UK and global Active challenge events existentialists Lifetime legacy with occasional Sotto voce donations supporters 18
  19. 19. Where complex segments don’t work: same offersto flash new segmentsMake a £5/ £10/ Breadcrumb £20 donation passives Buy a raffle Opulence ticket seekers Upgrade your Active direct debit existentialists Sotto voce Leave us a supporters legacy19
  20. 20. Grade 8: Complex segments matched with tailoredoffers for both recruitment and retention (andmaintained over time) New breadcrumb passives from New breadcrumb database recruitment passives from cold recruitment Committed giving for specific projects Breadcrumb passives January April July December20
  21. 21. The paradox of responsiveness – the mostappropriate products for a segment may not be basedbecause it is the most responsive to that segmentBreadcrumb 1st. Committed giving for 1st.Major donor peer 1st. UK and specific projects to peer events global challenge passives events Opulence 3rd. Committed giving Best response for for specific projects that segment seekers Active 2nd. Committed giving for specific projectsexistentialists Sotto voce 4th. Committed giving for specific projects supporters
  22. 22. 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)22
  23. 23. 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 segments23
  24. 24. 2-6 Tenter Ground Spitalfields London E1 7NH (w) www.nfpsynergy.net (t) 020 7426 8888 (e) insight@nfpsynergy.netRegistered office: 2-6 Tenter Ground Spitalfields London E1 7NH Registered in England No. 04387900 VAT Registration 839 8186 72
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