Email segmentation can be a game changer for your marketing plan. We, of all people, know that when you’re running a business, sometimes it’s all you can do to keep up with client deliverables, much less do email segmentation. But hear us out on this one.
No matter the size of your organization, segmenting your emails can increase your open rates, click rates, conversion rates, and above all, revenues.
What we’re trying to say is – without segmentation, you may be leaving a good chunk of money on the table. (If you’re wondering why use email at all, read this).
Curious about the what, why, and how of email segmentation? Read on.
What is Email Segmentation?
An email segment is a group of people within your broader email list that have some key characteristics in common. The goal of segmentation is to increase relevance by sending targeted messages to each group.
For example, you could create a group that includes only people from a specific city. Then if you were hosting a special event in Denver, you could email only those in that area.
In a day and age when people are hypertargeted online and everything is personalized (you are using names in your emails, right?), it’s almost required that email messages should be relevant.
The Sacred Trust
As a matter of fact, having someone’s email address is like a sacred trust. They gave you their personal information because they trusted that you wouldn’t spam them. That you would treat their email address with the same decency and respect that you would treat your own. Maybe even because they liked you.
But when they receive irrelevant messages, it’s like you violated that unspoken agreement. And sometimes you don’t get another chance. If you really think about it, you’re one irrelevant message away from an unsubscribe. Or worse, being flagged as spam (gasp!). No pressure.
Why Use Email Segmentation
We’re usually all about heart. And that’s crucial – we do what we do for the greater good. But we all have to admit it. We can’t actually do much of anything without money.
So let’s talk about emails and money. Did you know that emails generate a higher return on investment than all other marketing channels? This includes, TV, social, video, paid search, affiliate, radio, and display. For every $1 spent, there is an average return of $38 for emails. (If your email list is sparse, here are some ideas on how to grow it.)
On top of that, segmented emails can generate more revenue than regular emails. A lot more. We’re talking in the range of a 760% increase over traditional emails (source: Campaign Monitor).
Don’t believe me? Check out these two case studies.
Case Study #1
One ecommerce retailer decided to segment their list into 4 groups: best customers, non-purchasers, churning customers and other. Then they sent 2 targeted campaigns to each group.
The results were a 278% increase in revenue. The 41% increase in open rates, 138% increase in click rates, 233% increase in conversion rates, and 39% increase in average order value – all had a part to play in that stellar performance.
Case Study #2
A fashion store made one new segment: those who had made only one purchase. They sent a targeted campaign with a ‘small incentive’ to make another purchase.
The result? More opens (about 140% more), more clicks (about 135% more), more conversions (about 550% more), plus a higher average order value. The difference in revenue over the non-targeted campaign was 1,570%!
Notice the simplicity of the segments in both case studies. Those groupings are totally doable for most organizations.
How to Segment
Step 1: Start Small
First, let’s just say it. If your list is small, you actually don’t need that many segments. It’s just hard to measure the benefit of segmentation if your email is going to 25 people. So let’s not overthink it here.
For example, you could split your list by prospects vs customers. Boom. Done.
Or how about active vs inactive (your email provider should definitely have this in their system somewhere). You could send your inactives a little re-engagement note; maybe include an incentive. Or just send them emails in text-only format in case it’s getting sent to junk folders.
You might even be able to implement those segments right away.
Step 2: Gather Data
For larger lists, you can start by thinking about ‘personas’ that could make a meaningful group. If you cannot identify which of your subscribers would fit those characteristics, then you’ll likely have to go out and get the data. Depending on what is missing, you may need to integrate with website data, append your list using a 3rd party, or create a survey/web form (with an incentive) to gather information.
Step 3: Test your Segments
You’ll probably need to be flexible and keep testing over time (but don’t forget to start small!). Here are some ideas on what to segment, depending on what makes the most sense to your organization:
Location – You could use a billing address, or IP address provided through your email provider or a 3rd party.
Demographics – Examples include race, gender, job function, industry, family, education, or income level.
Behavior – For example, past purchases (including frequency and size), site pages viewed, abandoned carts, products viewed, opens, clicks, etc. If they have purchased more than once, you may consider adding them to a VIP group with special perks.
Source – Did they subscribe online, at an event, through a sweepstakes (which is usually lower engagement, so they may need more nurturing), or as a first-time customer? You could send a series of automated emails depending on the source.
Sidebar: We recommend automating as much as possible after an initial test so you can get back to other deliverables, making dinner, or making your social impact – more on automation here.)
Don’t forget to make sure you can track the results of your campaigns (especially revenues/donations) so that you can compare them to non-segmented emails.
The Bottom Line
No matter the size of your list, you can benefit from some email segmentation. Segmented emails generally outperform the batch ’em and blast ’em approach, driving a significant increase in revenue. Segments have the added benefit of being more relevant to subscribers. So what are you waiting for? Give it a try!
If you’re still not sure where to begin, we can help.