3 Easy Strategies for Email List Segmentation

December 30, 2013
By TowerData

get started with segmentationIt’s no surprise the Lyris Annual Email Optimizer Report named demographic segmentation the top email marketing practice of 2012. Leveraging the rich data contained within your email database allows you to deliver more targeted messages that increase response rates and drive revenue. Still, it’s often difficult for email marketers to know where to begin segmenting.

Here are three easy approaches to get your segmentation started:

1. Start Small

If you aren’t segmenting yet, keep it simple by dividing your list into prospects and existing customers. If you want to dig a little deeper, think about what else you know about your list; buyer personas can be incredibly helpful here. To fill in some of the blanks, try using a data append service. Consider how you can use basic demographic factors to create more targeted messages. Here are some fields we find useful:

Business-to-Consumer (B2C) Marketing

Business-to-Business (B2B) Marketing 

  • Age
  • Gender
  • Income
  • Marital Status
  • Homeowner Status
  • Presence of Children
  • Postal Address
  • Title
  • Sales Volume
  • Number of Employees
  • Industry (NAICS or SIC Code)
  • Years in Business
  • Woman-/Minority-Owned Business

Pick the most relevant attribute for your business, and use it to split your database into two. That’s segmentation at its most basic. No fuss, no hassles.

2. Think About Your Goals

Now that you’ve segmented your list, it’s time to strategize. What behaviors do you see among your customers, and what behaviors do you want to encourage? For many businesses, the RFM Model (Recency, Frequency and Monetary Value) makes sense:

  • Recency: How recently has the subscriber made a purchase? Those who make recent purchases are often more open to further or follow-up communications.
  • Frequency: How often does the subscriber purchase? You might choose to reward a frequent subscriber, or you might try to reengage an inactive subscriber.
  • Monetary Value: How much does the subscriber spend? Consider emailing your very best customers with earlier product announcements and better deals.

3. Test Everything

You have your lists. You have your strategy. Now, make sure you’re implementing it well. The marketers at Freshpair, a leading online undergarment retailer, learned the hard way never to trust their own assumptions. They initially decided to segment their list according to age but were inundated with complaints from women who had received emails about granny panties. Whoops! It pays to test before committing to one strategy.  

Through research and testing, Freshpair learned its customers shopped by aesthetics–that is, how a product looks and feels, rather than by age, gender or even brand. Additionally, the marketers realized certain segments responded differently than others. A customer who shopped in the men’s category, for example, might respond better to imagery, while a customer shopping in the women’s category might respond better to relevant offers.

The team’s biggest discovery was a complete surprise. It turns out that customers who shopped within both a primary and a secondary category were much more engaged than customers who only shopped within one category. As a result, Freshpair is now looking at ways to up-sell and cross-sell not only within a segment, but across segments as well.

Jason Scoggins, Director of Customer Experience, sees an important lesson in his company’s experience. “Thinking about segmentation beyond the traditional methods is ultimately the point here,” he says. “There are more ways to look at your customers than by demographics or even an RFM score. Think about what works for your situation and start there.”

Most importantly, he adds, “Even the simplest of segmentation strategies is better than the old ‘batch and blast’ any day.” We agree!

Take these strategies, and apply them in a way that makes sense for your business, then keep on tweaking and testing. We think you’ll find the results are worth it.

Need help getting started with segmentation? Our eBook “3 Ways to Use Subscriber Data to Modernize Your Email Marketing” has helpful tips for delivering the right message to the right person at the right time. Download it today!

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Photo Credit: Rich Anderson