4 Simple Steps to Completing a Market Analysis for Nonprofit Organizations


Many people associate market analysis as an endeavor primarily useful in the for-profit and business arena. Nothing could be further from the truth. Conducting market analysis is not only extremely useful but essential when it comes to achieving long-term strategic goals for growing membership.

If you're not situationally aware of what's going on in your market, where your organization fits in among other organizations, exactly how you are performing, and your community reputation, how do you determine your opportunities for growth?

You might think you need a business school degree to conduct a market analysis. The reality is that you already have all the skills needed to be successful! With a little planning, and a sense of purpose, you can craft a market analysis plan in just 4 easy steps:

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What is a Market Analysis?

Market analysis is often used interchangeably with the term "market research," but the two are actually separate terms. Market research is a means to an end. Market analysis describes the entire process of researching, gathering data, interpreting that data, spotting trends, and developing conclusions. A thorough analysis will include information including, but not limited to:

  • Demographics of your audience

  • Impact and effectiveness of your efforts

  • Potential reach of communications

  • Identifying your competition

The analysis itself can be housed in a variety of forms e.g., a document or an Excel workbook. A collaboration platform like Notion would be great for this as it has everything you need to keep organized. However, an organization is nothing without the right skill sets. Ensure you utilize your staff effectively. You will want someone with excellent attention to detail and an analytical nature for investigations, a great listener who is a natural facilitator to conduct interviews, and possibly a spreadsheet guru to synthesize large amounts of data.

Once you have the right people and tools identified, it is time to start your analysis. Here are four steps to get you started.


#1: Define Your Goals

Thinking through exactly why you are conducting the analysis is extremely beneficial. Having a sense of what objectives you are hoping to achieve is always a valuable endeavor even though it may be challenging and time-consuming. As you brainstorm the possibilities, try to identify one main goal. You may have a laundry list of potential options to choose from so potentially expand to two or three but try to cap it there. Focus your energy on the areas where you will see the biggest benefit. 

market-analysis-define-goalsRyan wants you to take a closer look at your
goals before starting your market analysis.

Perhaps your goal is to increase your membership. Your data gathering process will largely be focused on an audience outside your organization. You’ll want to know who are people that are likely to be receptive to your messaging. How old are they? How much money and time do they spend and on what?

If your goal is to enhance the member experience or launch a member referral program, then you’ll be looking at how your current activities and efforts are being received. You already know a lot about your members when they signed up, now you want to know their level of satisfaction. This sort of internal assessment may come back to you ten-fold in terms of recruiting new members!

It's important to make sure to keep your goals simple and well-defined. If they don’t have a tangible objective, the data you receive may not match the questions you are asking.

Some examples are:

  • What are future opportunities for my organization? 

  • What are the weaknesses in my organization? 

  • Why is my membership declining?

  • What is the cause of our recent membership increase?

  • How can we best serve and retain our new members?

  • What characteristics define our most common member demographic?

  • How can I best reach our target market?

  • Which programs are the most/least popular and why?


#2: Conduct Market Research

Once you have defined your goals and know what you are trying to achieve, you can move on to actually conducting the research. First, think through which tools would be most beneficial.

Data Collection Tools

Data can be collected using many different methods. Here are just a few examples:

  • Google Analytics

  • Web searches

  • Online surveys

  • Interviews

The method you choose will depend on your goals, but will likely include a mix of a few different methods. Some of these methods will be low-cost. For example, searching the web is free! However, if you want targeted demographics, you may need to purchase data from companies that specialize in targeted, searchable, filterable information on whatever geographic area is useful.

The technology behind data-gathering is improving every day, and these improvements yield faster and more accurate results. Whatever technique you use, be sure to proceed carefully as bad data can lead to incorrect insights.

For nonprofits with small budgets, there are often creative ways to obtain useful information through publicly available information like census and public tax data. Another low-cost example can be found in utilizing existing resources to conduct interviews. Perhaps several members left your organization in the last year. A skilled interviewer can reach out to them to meet in person or over the phone to ask about why they left and what your organization could do better in the future.

Pro Tip: Make sure your interview is purely feedback-based and resist the tendency to be defensive or to try to justify sticky situations the interviewee may reference. Even if it is difficult to hear that your organization played a part in losing your member, it is a gift that will help you improve your organization in the future!

Type of Data to Collect

The exact type of data you collect heavily depends on the goals you’ve identified. Regardless, almost every organization will need to understand both the current state of the market as well as the historical trends.

market-analysis-typesThere are several types of data you can collect.
Nina says "Think about which are the strongest for your organization!"

For example, a racquetball club aiming to increase membership will need to statistics on:

  • How many members they've accrued over the year

  • How many potential members are in the area

  • Racquetball’s popularity trends among different age groups

Or, a nonprofit dealing with food scarcity might want to know:

  • Who is a typical client?

  • How many members in a family we might serve?

  • Do many of our clients have vehicles?

A great way to start is to consider your end goal. Work backward step by step to determine exactly what pieces of data you’ll need. To help you get started, it may be helpful to have some common examples of data sets that are extremely useful to many organizations.

Consider characteristics of your target audience such as:

  • Age

  • Spoken language(s)

  • Geographic location

  • Career background and employment status (full time, part-time, retired, unemployed)

By understanding who your target audience is, you can customize your messaging, membership pricing, website design, and much more. You’ll be able to gauge the impact of your previous efforts and respond to changing trends in an effective manner.

Other considerations include:

  • Location of your current or past members

  • Number of similar organizations in your region

  • Number of visits to your website

What should you focus on once you have acquired the data?


#3: Interpret the Data

Gathering the data is just one aspect of this process. The next step is to use these resources you have collected and draw conclusions and insight. Imagine a cartoon where a lightbulb lights up above someone’s head. An insight is that moment - the bridge between the data and the action you’ll take.

Imagine a car collector’s club that saw a significant decline in membership over the past several months. The club considered additional advertising to bring in more business but decided to try to identify the root cause of the reduction first. After interviewing a number of recently departed members, the club learned that a local nuclear plant was in danger of closure. Many members were employed at the plant and were ending their memberships to lower expenditures until they had certainty around their continued employment. Based on feedback from these former members, the club decided to reach out to the employees at the plant. The club offered them the ability to pay a monthly membership rather than a single yearly payment. They also promised to refund dues gathered over the next one-year period if members eventually lost their jobs. The analysis, and resulting changes, allowed the club to retain their other plant members, reinstate members who had left, and even pick up a few new members from the plant!

market-analysis-Eva-interpretEva knows that being able to effectively interpret 
your data is just as
important as collecting it!

There are two types of data that you’ll generally encounter:

Quantitative Data

Quantitative data pertains to things that can be measured or counted. Examples are:

  • How many members you currently have

  • How many of a certain set of people with demographic traits live in a certain zip code (e.g., women over 40 who work part-time)

  • The distance each member lives from the headquarters of your organization.

  • How many supporters voted for or against certain social issues in significant surveys or elections?

Making sense of a large quantity of numbers is a challenging aspect of interpretation for many organizations. The best tool for this is a graph. Looking at raw numbers often doesn’t lead to insight, but graphs can illustrate trends and make comparing data much easier. 

What about data that does not neatly fit into a graph or chart?

Qualitative Data

Qualitative data are things that are observable, but not really measurable in the traditional sense. It is descriptive and has the potential to be subjective. Examples include:

  • Open-ended responses from volunteers regarding what they enjoy most about your organization

  • Ideas from volunteers to improve events

  • Suggestions for focus areas for leadership

  • Overall customer satisfaction

Analyzing qualitative data is a bit more complicated as it is often in the form of written or verbal answers, expressing an opinion. There are a few ways to draw insights from this data:

  • You may wish to read all responses first and get a big picture of the broader response trends. You should be able to see, for instance, if there are repetitive answers concerning a particular issue or topic. Or, you may see that the opinions are largely positive, and there are a handful of outliers.

  • You can assign responses to larger groups, essentially making "piles" then looking at how many piles you have and how many responses are in each.

  • If you know who the respondent is, you can also identify trends that pertain to those traits. For example, you might see that a particular question received more positive answers from men, than from women.


#4: Take Action

Insights themselves aren’t very useful unless you link them to action. Once you understand your data you need to start formulating a strategy that will move your nonprofit closer to achieving your mission.  Here are some examples of how insight can guide your action:

Membership Growth or Decline

Your analysis can be used to identify if you are gaining or losing members, and even more importantly, why. Growth is generally good, but you need to make sure you are serving the growing needs of your nonprofit at the same time.

market-analysis-take-actionYou've collected your data and have interpreted
what it means. Simon knows it's time to take action!

Historical Trends 

Once your data supports historical trends, these can be used to predict what your future will look like. Past performance is an indicator but unfortunately cannot always forecast the future exactly. While you shouldn’t make assumptions that what happened in the past will definitely happen again, a historical trend is a great place to start for future planning.

Spending Patterns

Seeing where your money was spent, and whether there was a return or not can help guide future actions. For instance, your data may indicate which of your nonprofit marketing efforts had a large impact, and which did not. 

Behavior of Your Donors

How many donors do you currently have? Is the number shrinking or growing? Some nonprofits value a wide range of participation over higher individual amounts. Insights you’ve gained from your study will help you better communicate with your downers and build awareness of your nonprofit.

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In short

Market analysis is important in both the for-profit and nonprofit world. To get started, jump in and identify your goals, conduct pointed research, draw meaningful conclusions, and then act. Better understanding members' needs and wants, as well as local economic trends, allows organizations to provide useful services and further the causes closest to their hearts! 



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