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Segmentation is an important part of any successful email marketing effort, particularly as consumers are coming to expect brands to send them personalised correspondence.

Email marketers need to be aware of all segmentation and targeting opportunities in order to improve relevance and increase clickthrough rates.

It’s a topic we focused on in our recent Google Hangout with directors from Amazon and J. Crew, and it’s likely to become more important as email marketing evolves.

With this in mind, I spoke to Experian Marketing Services data analyst Helen Taylor to find out some of the dos and don’ts of email segmentation...

In the simplest terms, what is segmentation? 

Segmentation is a method used to categorise customers into groups that have similar traits. Segments can be based on almost anything - age, gender, email behaviour or spending habits. 

Using segmentation allows for a greater level of targeting and consequently more relevant marketing for customers, improving the customer's experience with a brand or company.

How many segments is it advisable to have?

There’s no hard or fast rule, but implementing some degree of segmentation within your customer database will always give your email campaign an edge over those who don’t. 

As a starter for ten, segmenting your data by active and inactive customers is a must; it's vital that a brand understands who their engaged customers are and whose attention they need to recapture in order to target their campaigns effectively.  

Brands can then further segment their customers to tailor campaigns even more closely. Segmenting based on level of activity, for example, allows you to create a unique segment for high value purchasers and offer exclusive deals for your “VIP” customers, while segments based on gender, age and income all help to create stronger more personal email campaigns that will resonate with your customers.  

But it’s a fine line to tread. Over-segmenting can inadvertently limit your email outreach by over targeting customers and could end up costing more to create than the ROI you generate. 

Ongoing monitoring of the segments you have to ensure consistent levels of engagement is essential to finding the right balance.

Where should marketers place the emphasis when segmenting customers – on engagement or on revenue/purchases?

Ideally segments should encompass engagement levels, revenue and purchases in order to give a rounded view of customers and enable marketers to tailor specific emails based on different criteria.

Knowing who your purchasers are gives you an added edge when addressing promotional or loyalty campaigns, but engagement is central to this. 

Over what time period should I apply my segmentation?

Segmentation to address inactive users should be down to the individual business needs:

  • If you have a high turnover of inactive users, segmentation over a shorter period of time to try to capture customers who are likely to leave is preferable.
  • If your customers show higher levels of loyalty then you need to apply a greater time constraint on your segmentation programme.

The frequency of emails also plays a large part when deciding on time periods.

If you only contact customers once a month, then it’s reasonable to segment based on six months worth of data; if you send daily emails, six months is far too long a time period as your deliverability levels will be quickly affected if you don’t change the number of emails you are sending to inactive users – so a fortnightly segment is advisable.

When should I consider a customer to have become inactive?

Again – this depends on timeframes. If a customer has received over 15 emails within a consistent and reasonable time period and they have not engaged with any of them, then they are likely to be inactive moving forward. 

However, it’s worth bearing in mind that just because a customer appears to be inactive it doesn’t mean that they can’t be reactivated; reactivation campaigns experience open rates of around 7%.

Is it possible to have too much personalisation?

Personalisation goes a long way to ensuring engagement with customers. If you are able to greet them with their name, send tailored information or an offer on their birthday then you’re more likely to experience higher engagement levels and loyalty. 

Problems can arise from too much personalisation. Just because someone has shown an interest in certain products it doesn’t mean that they won’t be interested in something completely different, so be sure not to be too limited in what you share with them.

Should I segment by email domain?

Although not an often-used segment, this is a useful tag to have against each email address in your database, especially with recent changes pushed by individual ISPs. 

If you see problems with deliverability or want to improve your deliverability levels, this is a good place to start as you can change your campaigns based on specific criteria and tailor your emails to suit varying ISP rules.

Is there a good way to segment/target my inactive customers?

Targeting and segmenting your inactive segments is notoriously complex, as often you know little about them. 

Segmentation by length of inactivity is one option, allowing the marketer an understanding of how volume of emails sent could be changed, when reactivation campaigns should be sent and when the inactives should be removed from the database.

How has Priority Inbox affected email segmentation and open rates?

With priority inbox, effective use of segmentation to create targeted emails really comes to the fore, with engaging content ensuring your email gains pride of place within the inbox and grants your company more inbox ‘sticking power’. 

What level of investment is required to setup and maintain an effective email segmentation programme?

If there is a data analyst in-house then a segmentation programme should be relatively easy to set up and maintain. If the work needs to be contracted out then costs will be higher (but obviously you won’t need to pay for an in house analysis – so possibly cheaper in the long run).

The best way to get an understanding of true costing is by talking to your email provider.

How can segmentation be used to target customers that are towards the end of the purchase cycle to help maximise conversions?

By segmenting customers based on their purchase history, marketers have the ability at their fingertips to send campaigns based on when customers are expected to repeat purchase. 

By engaging them via well timed emails towards the end of a purchase cycle, marketers have a touch point with the customers before competition can be involved; offering them a product you know they are in the market for and thus maximising the potential for conversion and cross-sell.

Orange segments images taken from kathryn_rotondo's flickr stream

David Moth

Published 24 September, 2012 by David Moth @ Econsultancy

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

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Comments (1)

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Rob Shaw

Depending on the level of information and the objectives of the campaign, decision makers tend to be the best people to target once you have been given access to their email addresses. However, it is important to be selective with the content you send them because they get loads and loads each day.

almost 4 years ago

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