This document discusses segmentation strategies for fundraising. It begins by acknowledging that understanding how supporters behave allows for more informed decisions. Segmentation helps fundraising programs increase results by tailoring asks to specific groups. Recency, frequency, and value (RFV) is commonly used to segment donors based on when they last gave, how often, and gift amounts. More recent, frequent, and higher-value donors typically respond best. Additional overlays like demographics, psychographics, and location can provide further insight. Proper segmentation allows targeting the right messages to the right donors through the right channels to maximize outcomes and return on investment.

1. Practical ways to use your data to drive
up results
Exploring Segmentation
Fiona McPhee
Pareto Fundraising

2. Segmentation as your starting point
Targeting, testing
& analysis as the
goal

3. I’ve had to make a few about what you already know and do so we have time for the
good bits
Assumptions

4. Bothering has a discernable benefit
You have buy in, why is understood and it’s used
consistently so it’s not:
We Agree That You Have To Bother
With Segmentation
Underutilised Tossed Aside
Disliked by
users

5. Communicating with everyone,
every time is not effective
fundraising
• Not everyone is the same
• Not everyone wants the same thing
We agree that:

6. Understand how
your supporters
behave
Make informed
decisions
We agree that implementing some form of
segmentation will benefit your fundraising program by
primarily helping you to:

7. We acknowledge segments of One is
the goal? Tailored to
the
individual
Right ask,
right time,
right
channel
Best ROI
possible
(short-term
/ long-
term)

8. Acknowledge segments of One groups
is the reality?

9. Major Donor Program
Middle Donor
Program
Core Program
Granularityofsegmentation

10. Use Segmentation To Consistently
Target & Measure
Who What When Outcome
Inform
next move

11. Use Segmentation To Consistently Measure
•Increase gross / net income
•Increase response rates
•Increase average gift
Program /
Strategy
•Measure / Improve effectiveness of every dollar you spend – ROI
•Measure / Improve revenue generating efficiency of every dollar you spend - CPRCampaign
•Increase Life-Time-Value
•Increase retention / Decrease attrition
•Increase gifts per donor
•Increase multi-interaction (cross-sell)
Donor Base /
Donor Type

12. Use to create fairly
homogenous groups
which are likely to
respond in similar
ways to our
strategies
Use to prioritise
these groups in
order to target and
understand their
behaviour
I used segmentation
primarily by
Recency, Frequency,
Value (RFV). RFV is a
tactic – there are
other options
My starting point for segmentation

13. Psychographic Segmentation
• Powerful potential – the goal of many Marketing &
Fundraising teams
• Often revealed by qualitative research
• e.g. personal experience of services offered by charity
• Data very hard (expensive) to capture and maintain at an individual
donor level (and nearly always an additional cost to standard
database stored information such as transactions)
• Psychology is more complex than a data point or two (e.g. people
change their minds) and so even psychologists find it hard to
determine practical marketing psychographic segments that can be
effectively used for targeting.
• May be easier to use psychographic segments to inform creative
treatment only

14. Demographic Segmentation
• Social and economic information is
fairly commonly available data
(internally or externally) and therefore
somewhat practical
• Age can be a useful additional overlay
• Widowers with absence of
grandchildren correlates strongly with
bequest realisation
• Not a reliable predictor of behaviour -
no obvious practical value for a
targeted communications programme
• Helps us to know who is in our
segments

15. Geographic Segmentation
• Basic and obvious insights
• Affluent areas/ higher donor penetration areas
• Proximity to Charity service areas if relevant
(e.g. a Hospital)
• No obvious practical value for a targeted
warm communications programme
• Can be helpful for acquisition targeting
• Might be useful for local level prospect
targeting/ broadcast media/ door-drops

16. Behavioural Segmentation
• The product of psychographics and
geodemographics
• A charity’s (your) supporters are already a highly
niche, homogenous market segment (why swaps
work)
• RFV is the most common behavioural segmentation
• Adapting for fundraising & your program / donors
and your activity is key

17. Common
Fundraising RFV
Recency Frequency Value
0-12 months >1 a$1000+
13-24 1 b$500-$999.99
25-36 c$250-$499.99
37-48 d$100-$249.99
49-60 e$50-$99.99
61-72 f$25-$49.99
73-84 g$10-$24.99
85+ h$0.01-$9.99
Likelihood of
transacting
again
Potential value
of the
transaction

18. Donor
Type
RFV
Tailoring

19. 0%
2%
4%
6%
8%
10%
12%
14%
16%
Cash Donor Lottery In Memoriam Other Event
ResponseRate
Response Rate by Supporter Type
Group
lower
volume
for
ease

20. Regular
Givers
Cash Donors Campaigners
Lottery
Players
Event
Attendees
In
Memoriam
In
Celebration
Peer-to-Peer
Fundraisers
Peer-to-Peer
Sponsors
Members
Virtual Gift
Purchasers

21. Regular
Givers
Regular Givers
Only
Regular Givers
& Cash
Donors
Regular Givers
& Members
Member &
Cash Donor
Cash
Donors
Members
Only
Virtual Gift
Purchaser
Other
Lottery
Players
Event
Attendees
In Memoriam
In Celebration
Cash Appeal

22. Cash
Donors
Members
Only
Member &
Cash Donor
Virtual Gift
Purchaser
Other
Lottery
Players
Regular Giving Conversion

23. Practical Applications To Improve
Results
Use segmentation to manage
tactics and testing to increase
response rates and net income

24. The question “How much of our warm donor base is optimum to mail (or phone, offer lottery)?” is often
asked of a data set. The best way to answer this is via a segmentation model which will help identify not only
those donors that will respond to appeals, but the value of the responses.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0-12 13-24 25-36 37-48 49-60 61-72 73-84 85+
Response
Recency (months since last gift)
Typical effect of Recency on Response

25. More recent supporters respond better than those donors who haven’t transacted for some time.
0%
5%
10%
15%
20%
25%
30%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59
Response
Recency (months since last gift)
Typical effect of Recency on Response
Those who did
it recently are
the most likely
to do it again

26. The purest way of considering frequency in a RFV model is to look at the giving interval.
0%
5%
10%
15%
20%
25%
30%
35%
<3 3-5 6-8 9-11 12-14 15-17 18-20 21-23 24-26 27-29 30-32 33-36 >36
ResponseRate
Cash giving interval
Typical effect of giving interval
on response - Multi Donors

27. Split by 12 month intervals – highly predictive, but more so for 0-12 donors than the 13+ that may be
unprofitable
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
<12 12-23 24-36 >36
ResponseRate
Cash giving interval
Typical effect of giving interval
on response - Multi Donors
Resting (not
giving a chance
to do it again)
will affect
response in
short-term

28. An alternative, and simpler to implement, way of looking at frequency is simply to look at the number of gifts a
donor has made.
0%
5%
10%
15%
20%
25%
1 2 3 4 5 6 7 8 9 10+
ResponseRate
Cash Gifts
Typical Effect of frequency on response
0-12 recency
Jump in
response once
a donor has
made 3 or
more gifts

29. When we look at the 13+ recency donors, the jump in responsiveness comes at the 2nd gift
0%
1%
2%
3%
4%
5%
6%
7%
1 2 3 4 5 6 7 8 9 10+
ResponseRate
Cash Gifts
Typical effect of frequency on response
13+ Recency
The more gifts
given in the
past the more
likely they are
to give, useful
for reactivation

30. In response to the original question, who are profitable to mail, then this becomes a question of focusing on
the lapsed donors to eliminate those that are not profitable. For practical reasons, splitting by single and multi
donors provides good distinction in for these lapsed donors.
0%
2%
4%
6%
8%
10%
12%
14%
16%
1 >1
ResponseRate
Cash Gifts
Typical Effect of frequency on
response

31. “How much of our warm donor base is optimum to
mail?”
• Those who gave more recently
• Giving interval /number of gifts predictive of
response
– More gifts = better (for both recent and lapsing/lapsed)
Summary

32. When we look at the value, we have several options to consider. Total giving, Value of last gift, Average gift or
Highest Gift. The total giving is usually excluded because it effectively combines the frequency and value.
$0
$10
$20
$30
$40
$50
$60
$70
Incomeperdonormailed
Value (Highest Gift)
Typical effect of Value on Income
Highest Gift
$0
$10
$20
$30
$40
$50
$60
$70
$80
Incomeperdonormailed
Value (Last Gift)
Typical effect of Value on Income
Last Gift
$0
$10
$20
$30
$40
$50
$60
$70
$80Incomeperdonormailed
Value (Average Gift)
Typical effect of Value on Income
Average Gift
Potential
Actual

33. © Pareto Fundraising 2013
Targeting
Example Charity

34. © Pareto Fundraising 2013
Targeting
Donor
type
Example Charity

35. © Pareto Fundraising 2013
Targeting
RFV
Example Charity

36. © Pareto Fundraising 2013
Targeting
Strategy
Example Charity

37. © Pareto Fundraising 2013
Targeting
Counts
Example Charity

38. © Pareto Fundraising 2013
Targeting
Strategy
Example Charity

39. Active
Regular Giver
F2F
Recency of
recruitment
Upgrader
(Y/N)
Phone
Recency of
recruitment
Upgrader
(Y/N)
Regular giving example

40. • System (Database)
• Expertise (staff expertise)
• Capacity (staff resource)
• Size of program (what level of granularity is
worth it)
Behavioural / RFV Challenges

41. SCORING
Another application of segmentation analysis is to take the
significant variables, and create a scoring model that
combines response and value predictors.

42. • Good for the phone (lottery, RG, cash, BQ) as the fixed costs are limited but
the marginal costs are high / cost per contact is high therefore you need a
more precise view of the return per donor
– With the mail for example the marginal costs are low and hard to calculate, lot
more fixed costs
– Requires significant variables (impacting response/desired outcome) to be
identified (and validated and refined over time) which are determined by initial
analysis which should be refreshed and assessed for accuracy/changes over time
– Example of use: higher scored donors would be called more frequently
• Mail programs tend not have the frequency fluctuations but say 12 x per year your mail saings may be
good
What about scoring?

44. RFV
Bequest
Prospect
Bequest Scoring
Demographic
indicators
Bequest
Prospect

48. Donor Attribute Score
Loyal Donor (RFV driven)
Number of gifts (e.g. 10+, 5+)
Length of giving (e.g. 10+ years)
Donor Type (e.g. RG & Cash, Cash Only)
Gift value band (RFV driven)
Payment type(s)
Age (</>)
Has children / grandchildren
Proximity to cause
Responded to survey
Changed details

49. RFV
Scoring
Overalys
Bequest
Score
Bequest Scoring

50. SEGMENTATION WITHIN
SEGMENTATION

51. Segmentation within Segmentation
• Analysis to identify
your value band /
profile
• E.g. $1k - $5k active
multi, new $1k - $5k
Middle
Donor
Program

52. Some form of
direct response
Age Longevity
Upgrade
Other channel
usage e.g. SMS
Response to a
declined payment
communication
Mailing F2F Recruits – What overlays may
indicate potential?

53. OTHER IDEAS

54. Topic of
Acquisition
Premium Type
/ Value
Premium vs.
non-Premium
recruits
Recruited via a
swap
Have been
swapped
Subjective list
then analyse
Other overlays to consider

55. Number of touch points

56. 2nd Gift rate by contact type segments & recruitment type
0
200
400
600
800
1,000
1,200
1,400
0%
10%
20%
30%
40%
50%
60%
70%
80%
Addr1
Addr1Email
Addr1EmailLandline
Addr1EmailLandlineMobile
Addr1EmailMobile
Addr1Landline
Email
Addr1
Addr1Email
Addr1EmailLandline
Addr1EmailMobile
Addr1Landline
Addr1
Addr1Email
Addr1EmailLandline
Addr1EmailLandlineMobile
Addr1EmailMobile
Addr1Landline
Addr1Mobile
Email
EmailMobile
Addr1
Addr1Email
Addr1EmailLandline
Addr1EmailLandlineMobile
Addr1EmailMobile
Addr1Landline
Addr1Mobile
Email
Cash Recruit Virtual Gift Recruit Emergency Recruit Disaster Recruit
2nd Gift Rate (Year 1) Recruits
Base: 2009 - 2014 Recruits
The more info provided =
better second gift rate

57. 2nd Gift rate by simplified contact type
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Addr1
Addr1+
Email
EmailLandline
EmailMobile
Landline
Mobile
Addr1
Addr1+
Email
EmailLandline
EmailLandlineMobile
EmailMobile
Landline
Mobile
Addr1
Addr1+
Email
EmailLandline
EmailMobile
Landline
LandlineMobile
Mobile
Cash Recruit Emergency Recruit Disaster Recruit
2nd Gift Rate (Year 1) Recruits Base: 2009 - 2014 Recruits
Simplified view of the contact segments
shows us that Address plus something
else or just address are best 2nd gift
opportunity.

58. Donor Base / Donor Type Tracking

59. -
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
1 2 3 4 5
Net Income All & ROI All
Series1 Series2
-
1.00
2.00
3.00
$-
$100,000
$200,000
$300,000
1 2 3 4 5
Net Income Newsletters & ROI
Newsletters
Series1 Series2
-
1.00
2.00
3.00
4.00
5.00
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
1 2 3 4 5
Net Income Appeals & ROI Appeals
Series1 Series2

60. Donor Type Tracking

61. Donor satisfaction with the quality of service provided by the fundraising
team is the single biggest driver of loyalty towards the organisation
Satisfaction Levels

62. Commitment Level
delivered by the fundraising team, the more likely it is that a donor will develop passive
commitment.
Risk
Trust
Personal
Link
Passive
Commitment
Active
Commitment
Loyalty
+
-
Service
Quality
Shared
Beliefs
-
-
+
+
+
+
+
Learning
Multiple
Engagements
+
+
Figure 1: Drivers of Commitment and Loyalty
Trust

63. Motivational Segmentation
Right thing to
do
Environmental
issue
Rights issue Its all three
Advocacy
Education
Basic Needs

64. FIONA MCPHEE
FIONA.MCPHEE@PARETOFUNDRAISING.COM
TWITTER: FIMCPHEE
PHONE: +6421 336 905
WEB: WWW.PARETOFUNDRAISING.COM