Power of Segmentation

Summary in one sentence – when a group of customers is segmented in micro segments and targeted by many small campaigns, the accumulated uplift is much greater than mass-mailing campaigns. If a message is relevant, it makes for a better customer experience. According to DMA, marketers have found a 760% increase in email revenue from segmented campaigns. This makes perfect sense: The more relevant the message, the more likely your subscriber is to act on it (and bring you income).

Many many small groups. Segmentation is the art of thinking in groups. You have to realize that your email list consists of different kind of people, with different behavior, profiles, and interests. But if your subscribers are so different, why treat them all the same? The solution is splitting your email list into groups that are alike and the more granular the customer group, the more the offer can be tailored to customers’ specific needs and wants, and therefore higher engagement would be achieved.

How deep to go with microsegments? The overall message is – as you cater to smaller and smaller segments, the average uplift you can expect to gain from your total customer base grows. In smaller groups, each customer will generate more uplift on average than if he or she were approached as a part of a larger group.

How to segment? How to start with smarter segmentation? Segmentation occurs in a variety of forms and levels of sophistication – from simple demographic segmentations to more sophisticated segments built according to business rules or based on scientific models such as cluster analysis. Segmentation criteria can include product owners or non-users, last purchase or activity at your site, registration time e.t.c. Once you start layering segmentation criteria, the possibilities are almost endless. All the data in your database – or even combined, derived or external data – can be used to create these segmentation models. Most used criteria are by 4 large groups:

  • Geographics – country, city, language, climate, area, population
  • Demographics – age, gender, income, education, life stage, family, occupation
  • Psychographics – lifestyle, concerns, personality, values, attitude
  • Behavioral – purchase usage, intent, occasion, buyer stage, user status, engagement, clicks

What is very important – if you have behavioral data available, it is extremely important not to let this go to waste. By sorting past orders and purchases by category, price range, etc a whole new plethora of segmentation options opens up.

Segmenting on Customer lifetime value.  For instance, the customer lifetime value can be on of the segmentation criteria. It takes multiple pieces of purchase, costs and profile data to make such a calculation. But after you have calculated customer lifetime value it is possible to target your best customers, exclude your worst customers or craft specific campaigns for the part of the email list with the highest potential for growth.

There are different types of clients. Sometimes these buyer types are typecast as personas, but it can on a different level too. By selecting the people that were high spenders and have seen a decline in spending the last months, you are looking to spending patterns. Looking back at previous behavior it is possible to identify and craft your messages to fit this group.

A part of the email marketing plan – segmentation. Every time you select a group from your email database, it’s email marketing segmentation. This is a seemingly simple but extremely powerful mechanism. An email marketer can slice and dice his list and craft messages that fit the segments, ultimately lifting results. After send-out of emails you analyze – which has the highest impact per recipient affected, and which has the biggest impact on bottom line total revenue. Yes, some segmentation can be time and money consuming process.

Anyway, in today’s tough competition era segmentation should be a part of every healthy email marketing strategy.

 

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