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Have you segmented your list lately?
With all of the concern and attention being paid to delivery issues lately, many email marketers have overlooked some of the other critical components of email marketing success - relevance, content, value and of course segmentation. Email segmentation, whether demographic, behavioral or both is talked about as a core strength of the medium, but it seems very few companies are actually doing it.
Why is this? Well it requires a bit of effort and many companies just aren't quite sure how to go about it or if there will be a good ROI as a result of their efforts. In this The Lab column, we’ll show you how one EmailLabs client improved their email results through a fairly simple approach to segmentation.
Before Getting Started
First you need to determine how you want to segment your list. This can be very simple or extremely complex. Keeping it simple for now, a book retailer may want to segment based on the types of books customers buy or are interested in, a travel site might segment based on your vacation destination interests and an apparel site might segment based on sex and past purchase habits. The key to determining how you want to segment your customers is to assess how actionable the segmentation categories are. In other words, do you have the information, resources and content/merchandise needed to actually deliver relevant emails to each of your segments?
Problem
An Internet-based retailer client of EmailLabs wanted to improve the results of their email marketing program using segmentation, but had not moved forward for a variety of reasons. To start, they wanted to segment their list based on their customers’ and subscribers’ product category preference or purchase history. The challenge was that they only had these preferences on roughly 5 percent of their list.
Solution
The first thing we advised the client to do was expand how they captured subscriber information during the sign-up process. The company was capturing preferences during the purchase process, but not during the general email sign-up form process on the Web site. These preference categories were then added to the sign-up form – dramatically increasing this data capture.
The next step was to start building the segments from their list. Because they only had product preferences for 5 percent of their list, it was felt it wasn’t worth developing tailored messages for such a small group. So to increase the segmented population of their list, the client used our click-through reporting tool to build these preferences based on specific product links that recipients had clicked on for a certain number of messages. Here is how it works:
Step 1: Select a specific or category link for products, articles, etc., or using our wild card feature, select a partial URL such as http:/www.company.com/businessbooks/* (The report will capture anyone who has clicked on a link that includes that URL string.)
Step 2: Select the messages you wish to run the report for
Step 3: Download the report to Excel
Step 4: Delete customers/subscribers who already have a preference
Step 5: Add the appropriate segment name to the remaining members
Step 6: Upload the file to the system, adding the preferences to the existing member records
This approach is obviously not perfect – not everyone who has clicked on a specific link or category link will truly fit that segment or preference. However, the 80/20 rule will generally apply in this situation – meaning roughly 80 percent will likely be segmented correctly.
Next, the email message itself needs to be tailored to the specific needs of each segment. In this case, the emails always included 14 products across a variety of categories, including two featured products and introductory copy promoting those two products and four “specials” that were included in all versions. For the two segmented versions the client ordered the copy and two featured products based on which segment was being sent. Eight “best seller” products specific to each segment were selected and subject lines were drafted highlighting specific items for each segment.
The Results
Using the link click-through approach, this client immediately increased the segmented portion of their list to 39 percent from 5 percent. Open and click-through rates improved dramatically, along with a solid improvement in conversion rates. Historically and without any segmentation, this client’s campaigns averaged about a 28% open rate and 7% click-through rate. Results for two campaigns using the segmented approach were:
Segment A – 1) 52.3% open rate and 23% CTR 2) 46.0% open rate and 19.5% CTR
Segment B – 1) 41.5% open rate and 12.5% CTR 2) 34.7 open and 9.8% CTR
What’s Next?
For this client, plans are to gravitate in coming months to using dynamic message assembly, so that the emails for each segment are built on the fly, rather than manually. Additionally, plans are to send special promotions to customers based on their segmentation and click-through actions from previous email messages.
For some companies, customer segmentation can involve from dozens to hundreds of demographic and behavioral variables and involve sophisticated tools and techniques. But for most companies, getting started with email segmentation can be quite simple with just a few variables and still produce significant gains. The key is to just get started with your segmentation and then continually learn and refine your program as you go.
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