The Nitty Gritty of Email Segmentation

"You probably know by now that segmentation improves email marketing performance significantly, so if you’re still operating primarily in “batch and blast” mode it’s time to start slicing and dicing your subscriber file. Marketers that practice list segmentation see better open and click-through rates, fewer unsubscribes and better deliverability."

Email Strategy: How Much Segmentation is Too Much or Not Enough?

You probably know by now that segmentation improves email marketing performance significantly, so if you’re still operating primarily in “batch and blast” mode it’s time to start slicing and dicing your subscriber file. Marketers that practice list segmentation see better open and click-through rates, fewer unsubscribes and better deliverability. The reasons are obvious: segmentation creates discreet audiences we can laser-target with offers, creative, and information crafted specifically for them, at just the right time. This in turn improves relevancy and response, while decreasing complaints or blocking. Who among us doesn’t want to see more of this kind of email in our inbox: messages that speak to us as if we’re the center of attention, and show up at the perfect moment (or not at all?)

So let me begin by addressing the easy part of the above question: how much email list segmentation is not enough? Zero segmentation for one – so get on with it already! I’d also suggest if you’re not segmenting by at least these key attributes, you’re leaving opportunity on the table:

• Customer Lifecycle Stage (new, existing, loyal, inactive) – new customers have different needs - and response propensity – than existing or inactive customers, so recognize these distinct stages with message appropriate to each
• Location – Simple geographic segmentation is necessary and relevant to national and certainly global companies. Accounting for seasonal, weather, cultural and current events differences reflects an understanding of where your customers live and how geography affects their habits, lifestyle and needs. It also allows you to hyper-target distinct populations with super-relevant messaging when a specific event - like a natural disaster, sporting or political event – takes place.
• Product /Brand Interests – You’re likely not selling one product at one price point, so recognize your customers by product type, brand interests, or your different lines of business.
• Purchase History – Not all buyers spend alike, which is why analyzing them by the tried-and-true RFM (recency, frequency, and monetary amount of purchase) formula can yield insights as to who your most valuable customers are, who needs nurturing, and who deserves your most lucrative offers.

Of course there are infinite additional ways to segment (age, gender, education level, content preferences, lead scores, sales funnel stage, customer personas and more), many of which depend on your business type and marketing goals. Still, if you’re newer to segmentation starting with the four types above will at least get you moving in the right direction.

With segmentation so powerful, 1:1 email is on the rise and easier than ever to implement in most ESP and marketing automation platforms. Sophisticated marketers have embraced email automation to the point where so many of their campaigns are sent based solely on individual behavior or conditions, that they’re facing a new challenge: how much segmentation is too much?

I’m all for email marketing automation – in fact automated campaigns produce somewhere along the lines of 5x the revenue and ROI of broadcast email – so much so that these highly-targeted “triggered” emails (like cart abandonment, welcome and onboarding campaigns, up-sell offers, etc.) should be part of any program. The downside? You’re often sending to an audience of one or very few people, which can leave most of your email subscriber base untouched if you haven’t built a diverse and multi-layered messaging mix.

Consider that you might be over-segmenting if:

• You have no broadcast email campaign in your program such as a newsletter, monthly bulletin, weekly special, featured news item, monthly webinar or content, etc. Yes, broadcast campaigns have their place in your overall mix: they provide continuity, credibility and a predictably recurring touch-point for your entire list. You want this because not every subscriber will be equally engaged nor engaged to the point of qualifying for automated email.
• You’re not conducting segmentation or engagement analysis to mine for high-value customer segments and buyer correlations. Which subscribers open and click on your email the most? Who are your frequent buyers? Have you searched for correlations between product purchases and/or content interests across categories?
  
  Mine your data for the propensity and interest of customers who purchase one thing to also need a related product or service. Do women who buy a dress almost always return to purchase an accessory like jewelry or a handbag to go with it? Do guests in your resort hotel usually need to book local excursions and activities – or ground transportation to and from the airport? Do first-time diners come back within the next 30 days to eat in your restaurant again – or recommend it to friends? Searching for behavioral correlations like these can yield opportunities not only for automated 1:1 cross-sell, up-sell and follow-on offers, but also for campaigns segmented to a group of like customers based on purchase history.
• All of your email campaigns are automated based on individual behavior. Yes, you want as many 1:1 automated campaigns as possible relevant to your business, but these are by far not the only email campaigns you should be sending.
• You’re seeing declining open and click-through rates across your list. Again, likely an indication that you’re not engaging often enough with large swaths of subscribers to keep them interested.

Optimal segmentation is both art and science and is achieved by creating a multi-layered email campaign strategy that ranges from broad to specific and includes a mix of general, promotional, categorical, segment-specific, and individually-triggered messages. True, the most sophisticated (and successful) email programs can become complex due to the risk of high frequency and/or overlapping campaigns for certain subscribers, which is where suppression and campaign prioritization rules can help. But once we accept that balance – neither too general nor too specific a level of segmentation – is key, and that subscriber engagement is our priority, we’re fully harnessing the power of email.