Segmentation is one of the practical methods in email marketing that every business needs to implement. Along with the benefits of sending the right content to the right audience, segmentation also helps companies achieve outstanding results. What are those benefits? And how to adopt segmentation effectively?
1. What’s Segmentation in Email Marketing?
Segmentation is a method that breaks down a list of customers based on specific criteria. In particular, segmentation is implemented to personalize emails based on customers’ geographic location, interests, shopping history, etc. Thanks to segmentation, marketing and sales messages are sent to the right audience instead of just applying one standard content to all customers.
2. The Benefits of Customer Segmentation
Here are the benefits when businesses segment their email list:
Segmentation helps send relevant messages to customers
The more relevant the content sent to customers, the higher the percentage of interaction based on the trigger. Not all customers have the same behavior, so segmenting them into specific groups based on several criteria will help you send the right message. If the customers only view certain products, the brand can send them other relevant products that match their interests.
Segmentation helps send the right amount of email
If you send too many emails to your list, the subscribers might find it disturbing and unsubscribe from the loop. On the other hand, if you don’t send frequently enough, your business will have difficulty establishing a good relationship with customers.
Alternatively, the brand can optimize the frequency by segmenting the email list into specific groups. The high sending frequency can be applied to the customer group with a high open-interact rate. Conversely, it will be lower for less active customers.
Segmentation helps lead your audience on the customer journey
By sending the relevant content based on the stage of the customer journey, the brand can have a higher percentage of converting them into buyers. Specifically, if the audience is a new subscriber, you can send the message about the brand and key products to help them get familiar, making a good first impression. With all the loyal subscribers, it’s also very profitable to cross-sell and introduce more products.
Segmentation helps increase email marketing ROI
According to reports from SaleCycle, segmentation and targeting the right audience in email campaigns always bring positive results.
- The open rate in segmented email campaigns increased by 39%; CTR is 50% higher than mass sending
- All the segmentation email campaigns help boost revenue by 760%
- 88% of audiences agree that there’s a high percentage to interact with the email if the content is personalized
3. Implementation Tactics for Segmentation in Email Marketing
There are many segmentation criteria in email marketing; each is used for different goals, depending on the brand’s purposes. Here are a few practical ways your business can start today.
a. Segmenting Customers based on demographics
Demographic criteria include characteristics such as age, gender, location,… of customers. This information can be collected when customers sign up for newsletters or shop. Depending on the business area, the brand can adopt segmentation based on different criteria. Fashion e-commerce businesses can benefit from knowing the gender of subscribers, and sending the relevant products or offers.
An example of effectiveness in geographic segmentation is when IMP’s client launched a beauty salon branch in Canada. IMP only sends Soft Opening messages to the email list that live in or near the salon’s city, the ones who can likely attend the event.
Another example of geographic segmentation is when a client opens a store on Amazon, IMP can help increase the online store’s traffic by creating email campaigns for the right targeted customers in the US market.
Birthdays are an important demographic criterion which should not be ignored.
By segmentation and sending happy birthday emails to customers every month, IMP helps an e-commerce brand enhance its customer relationship and generate $120,000 in revenue after 12 months of implementation.
b. Segmenting Customers based on engagement
This is probably one of the most effective criteria for email list segmentation. When reviewing how subscribers interact with emails, businesses will know the better way to approach them next time. The method could be applied to audiences with a low open rate or only open a certain type of email. Hence, businesses can plan the most relevant emails to send to the target audience.
For example, in monthly discount campaigns, IMP only sends the message to customers who make frequent purchases and have open emails in the last 30 days. The reason is that they are more likely to buy more than subscribers who have stopped interacting. These emails all have an open rate of over 40% and a click rate of over 2%.
c. Segmenting Customers based on interest
Segmenting based on customers’ browsing and purchase history is also an effective method. This is ideal when a business wants to promote a certain product type. Since the customer is already interested in that product, they are more likely to have a higher conversion rate than the rest of the customers. Although it may sound simple, this is one of the most impactful segmentation strategies.
When launching the new eyebrow aftercare product line, IMP’s client only sent emails to notify customers who purchased and viewed the relevant products. As a result, these emails have high open and click rates, indicating that customers are interested in this product line.
d. Segmenting Customers based on cart abandonment
With cart abandonment rates ranging from 60 to 70%, businesses need to send reminder emails, so they don’t lose out on this potential revenue. Here’s an example from IMP’s client: They send automated reminder email series to customers who don’t make a payment after a few hours and generate more than $31,000 after a month of implementation.
e. Segmenting Customers based on purchase history
Businesses can introduce related products based on the customer’s purchase history to increase sales. It’s best to recommend complementary goods to their purchased items or similar product lines they might love. When launching new product lines, IMP’s client usually sends New Arrival emails to customers with relevant purchase histories. This both increases email open and click rates and increases conversion rate since it reaches the right group of audience.
By applying segmentation based on serving history, an IMP’s client in the cosmetology industry achieves an open rate of more than 40%.
f. Segmenting Customers based on cart values
By analyzing cart value, the brand can know which customers regularly have higher cart value and which customers are more likely to buy lower-priced items. Once these customer files are identified, companies can plan to send emails to the right audience. If customers are only buying on-sale items, there is no need to send emails to promote new and high-priced products. At the same time, if customers often buy from the New Arrivals email, there is a high probability that they will be happy to purchase and experience more.
The loyalty program is a great method for customer segmentation. Another similar idea is to offer special discounts for a specific range of purchasing. The effectiveness can be demonstrated by an example of IMP’s client who works in cosmetics. IMP comes up with a plan to amplify abandoned cart reminder emails – to whom almost meet the promotion’s requirements – and helps our client increase average order value by more than 20%.
g. Segmenting Customers based on RFM
RFM (Recency, frequency, and monetary) is a method to determine customers’ purchasing behavior. Based on these criteria, the brand can send relevant emails to attract customers to re-visit the online store and shop, which increases the conversion rate. There are 3 essential factors in this method:
- Recency: Have customers made a purchase recently?
- Frequency: How often do customers buy?
- Monetary value: How much do customers usually buy?
This method is applied to Customer Winback email (re-engage existing customers), which helps IMP attract customers who haven’t shopped for a while. As a result, the solution brings over $230,000 with a purchase rate of 1.6%.
In addition, the brand can also calculate how long it does take for customers to restock and send them a reminder email.
Finally, it’s important to remember that segmentation cannot solve everything and it must match with content and design to personalize to the right audience. After a certain implementation time, the business should review the segmentation performance to adjust and optimize email marketing campaigns.
Email segmentation will not only enhance overall engagement and minimize unsubscribes, but it also helps build a stronger relationship with the brand’s subscribers and customers.
Contact IMP now for advice on effective segmentation strategies for your email marketing campaigns.