Segmentation – a must or a must not?
Over the last decade technology has advanced our donor knowledge beyond our dreams – we can cut and slice donorbases in so many ways. But is segmentation a fundraiser’s dream for great targeting or is it the trigger for a nightmare? Does it encourage pigeon holing in a bad way?
The OED defines segmentation as:
“one of the parts into which something naturally separates or is divided; a division, portion, or section
It is the word “naturally” which concerns me. Do we each naturally fall into a section? At my age I should be an empty nester but I have two young children. No way am I settling down yet and with young kids I will probably start being active in retirement when I am 75+.
Segmentation in the corporate world is probably more widely used than in charities but has it helped them? In 2002 Nokia had 31% of the mobile phone market and an American Business School said the following about Nokia’s strategy:
“Nokia has based its product strategy on a few product platforms that have been adapted to all digital standards, … an intelligently conceived market segmentation plan that looked to consumer desire for inspiration, not simply engineering ability.”
Now, Nokia has 5% of the market. May be they focused on the segments and not the product.
With this in mind I decided to discover how fundraisers feel about segmentation at the Institute of Fundraising Legacy Conference. The 150+ delegates were aged from their early 20s to early 60s. To me this was the biggest focus group or the smallest survey I have ever done. And analysis of the outcomes was unscientific ( a show of hands) but the outcomes were fascinating!
I asked them their views on segmentation on 15 issues, below are the answers to the biggest issues:
| Question on segmentation | Issue based on donor discussions in focus groups | Vote |
| Should we segment by gender? | Older women and men tend not want different story telling and information. Older men want facts and finances. Older women prefer stories then facts | Only 20% agreed gender segmentation was important |
| Should we segment by age? | Different generations use different language and often prefer different methods of communication.The outcome was fascinating because only about 5% of the charities present had supporter ages. | 95% said it was important to segment by age. |
What is old?I gave options to define the entry age of being old: 40+ 50+ 60+ 70+ 80+ | We live to an average age of 82 (men) and 87 (women). Typically the last Will is at the age of 80 so the 70 year olds are a key target market. They are “young” enough to change their Will and have spare time and mobility to come to a great legacy event. How do 70-80 year olds communicate? Print is still is the favourite. For 60-70 yr olds it is likely to be the internet | One delegate said 40+ (she was 26). The overwhelming response was 70+ with hardly a hand showing for 60+ or 80+ |
| Do young people feel differently to old about Will making offers. | We make our Will on average three times in our lifetime with up to a further two changes being likely, Age of first Will is likely to be 38 and the last one at 80. I think most do not want them at all. | The delegates felt age was irrelevant. |
| What about changing a Will. Who prefers a Codicil versus a Letter of Wishes | A codicil is legally binding a letter of wishes is just an informal morally binding “wish” addressed to your executors. The way we update our Will is changing with a Letter of Wishes becoming very popular. | Loads of hesitant hands went up and down but most preferred a letter of wishes |
| Are tax savings worth promoting? | Only 4% of those who die pay inheritance tax. The further north I go in focus groups the less the tax advantages are liked because it gives the perception that only the wealthy leave legacies | Only about 2% said it was worth promoting and only to the wealthy. Segmentation was important! |
| Direct mail: which is the most important in donor behaviour for a legacy letter: recency, frequency, value or loyalty/length of support | I fully admit this is a very limited segmentation. But I was interested to see if delegates had a focus on “the best prospect” so they could only choose one.The answer they gave I believe is correct. Loyalty regardless of wealth, age, gender, gift value etc etc is the biggest driver for legacies | 90% said loyalty. |
Richard