What is Segmentation?
Segmentation is an important tool for targeting email-marketing campaigns. Segmentation is when you filter your list by certain criteria in order to create smaller, more targeted groups for a more personalized email marketing experience.
By grouping customers, emails can be tailored to achieve specific goals based on the segment. Segmentation can increase open rates, provide better customer experiences, and solidify customer loyalty, among other things.
Why Use Segmentation?
Personalization is expected to grow as a trend in 2018, and segmentation plays a big role in that. If you’re targeting your audience to provide customized content, you’re gaining a competitive edge for improving the business customer relationship. According to Home Business Mag, using segmentation increases customer trust and engagement.
According to a poll by Ascend2, segmentation was listed as the most important personalization tactic by 51% (the top response) of marketing influencers.
Mailchimp found that segmented marketing campaigns produced 14.31% higher open rates than non-segmented ones, and that clicks were 100.95% higher.
According to Campaign Monitor the Direct Marketing Association (DMA) in the UK discovered that 77% of their ROI came from segmented campaigns and that they produced 58% of total revenue back in 2015.
You may already be familiar with some businesses that have an amazing segmentation game.
Groupon knows that its customer base is constantly looking for location relevant services and activities, so it segments its list by location. They consistently use email marketing to invite their customers to search for Groupons in their neighborhood., as well as suggestions based on prior purchases.
Amazon tracks shopping history and interests to continually provide marketing email with highly relevant suggestions. This one, for example, took our recent purchases and invited us to purchase additional items that their system predicted we would like. They also make suggestions based on search history, and send targeted emails to inform customers of new offerings from their service programs like Audible, Music, and Fire TV.
How to Use Segmentation
Segmentation is a relatively easy tool to implement. There are many ways to utilize it though, so there are a few things to keep in mind while developing a segmentation plan.
First, you’ll want to define why you’re segmenting your email list. What goals are you trying to achieve? Use those goals to match who you are targeting with why you’re targeting them. Some popular goals include:
- Increase open rates
- Customer conversion (movement through the sales funnel)
- Increase revenue
- Regain inactive customers
- Increase brand loyalty
- Educate the customer
- Get customer feedback
Second, you’ll need some background data on your customer base or audience. You’ll use your data to create segmentation groups, so you’ll want to be sure you’re collecting information that’s relevant to your sales goals, and your customers needs.
You can collect data from a few different sources:
- Website analytics
- Social media analytics
- Previous email experiences
- Polls or Surveys
- Predictive technology (AI)
For example: If you want to use demographics like age, location, or gender, you’ll have to track metrics and create separate (or combined) lists of those categories. Then, build separate email campaigns for each group you want to target, and send one campaign out to each segmented list. Each group will then receive information that is relevant to their interests.
It’s also important to note that email segments aren’t set in stone. Some groups may overlap, and many can be combined for greater specifics. You could create a segmented group that meets the following descriptions: Women, age 30-40, who live in the Northeast, are married, and do not have children. A personalized email campaign could be made to target their specific interests based on data collected from their shopping habits, poll results, or other information you have collected.
Demographics aren’t the only way to segment although they are a great place to start. Here are some additional suggestions for segmentation groups.
- Income level
- Cultural affiliation
Habits and behaviors:
- Buying history
- Search history
- Method of referral
- Social media preferences
Segmentation Best Practices
Now that we’ve covered the what, why, and how, here are some best practices to keep in mind while developing your segmentation strategies and practice:
- Start simple. If you’re new to segmentation, start with two or three clear cut groups, track the data, test your methods, and then consider adding additional groups or layers to your plan.
- Focus on personalization. Make sure the content you’re providing to your segments is specific to each group. Relevant content is the key to successful segmentation.
- Follow the data. If your analytics show the highest engagement from 40-50-year-old men, then make sure one of your target segments is geared toward 40-50-year old men. Likewise, if your data is showing more activity in Brazil than Mexico, make a specific segment for Brazil and target their cultural interests and relevant topics. If you’re not sure who your target audience is, then take a step back and start with buyer personas.
- Test and optimize. The best way to continue to grow and perfect segments is to test them! Start with some simple segments like demographics and run some test campaigns. Try two different campaigns both geared specifically towards men, and see which campaign does better. Then, use those analytics to create sub-segments to better personalize the customer experience.
- Automate. As you grow from only a few segments to many, your segmentation system may become more complicated. Many email services offer segmentation services to help track, optimize, and simplify the strategy on your end.
Keep in mind, the only wrong way to use segmentation is to not use it at all! Share your tips tricks and segmentation ideas with us in the comments!