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segmentation a must or a must not

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

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