Using RFM segmentation to support alumni reunion fundraising

John Orange, Selim Sharif and Cynthia Uviedo

Journal of Education Advancement & Marketing, 2019, vol. 3, issue 4, 325-339

Abstract: Alumni reunion planning is a major annual undertaking for US colleges and universities. Alumni reunions are cherished events that provide opportunities for alumni to reflect and reconnect with classmates. In the current environment of declining federal and state financial support, fundraising has increasingly become an integral part of the alumni reunion planning process. One of the problems that alumni reunion planners encounter is the development of messaging that is tailored to influence the broad pool of potential donors. This paper provides a strategy to address the messaging problem by using RFM (Recency, Frequency and Monetary Value) segmentation to identify and group potential donors in a manner that supports effective target messaging. The reunion fundraising strategy guides the development of messaging that is intended to influence the donor pool. The donor pool is a mixture of major gift, leadership gift, and annual fund prospects. One common characteristic among the prospects in the donor pool is that they all have some type of historical record of financial activity with the institution. The historical record of financial activity is a valuable resource that provides the basic data requirement to conduct an RFM segmentation. The RFM model is an analytic tool that is designed for analysis of data from prospects with historical records of financial transactions. Higher education fundraisers and industry database marketers have used the RFM model with k-means cluster analysis to create segmentation structures that can be used to improve the planning and efficiency of philanthropic and commercial solicitation efforts. Our segmentation results successfully classified each of the alumni reunion potential donors as a member in one of the unique segments of major gift, leadership gift, and annual fund prospects. The characteristics of each identified segment provides information to guide the planners on developing tailored messaging to selectively influence the potential donors.

Keywords: Alumni relations; fundraising; messaging; RFM; segmentation; cluster analysis; database marketing (search for similar items in EconPapers)
JEL-codes: M3 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jeam00:y:2019:v:3:i:4:p:325-339

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