Email list segmentation is simply the practice of dividing your email list into different parts or segments. The reason for doing this is so you can tailor unique messages to each segment – thereby delivering relevant information and ideally increasing response rates.
But is it worth the effort? And if it is, what’s the best way to segment?
Well, according to Campaign Monitor research, marketers have noted a 760% increase in revenue from segmented campaigns – so I hope we can all agree that segmentation warrants some further consideration.
As for the best way – well, like most things, it depends.
What Makes Sense?
There are a lot of different options based on your audience, your business, your market, and more.
But before you get to the ‘slicing and dicing’ and creating all these creative segments…let’s give this some thought because some will be more segments will be more productive than others and you/your business can only do so much, and you don’t want to try to do too much.
Let me give you some examples – and the first example is I am going to segment my presentation based on the audience served. I’ll start us with ways to segment consumer audiences; then I’ll cover business audiences in my next post.
Ways to Segment Consumer Audiences
There are three popular approaches to segmenting consumer audiences – demographic, psychographic, and behavioral segmentation. Let’s dive into what they are as well as their benefits and weaknesses.
Demographic segmentation divides the market based on demographic variables like age, gender, marital status, family size, income, religion, race, occupation, nationality, etc. This approach is one of the most common segmentation practices among marketers. Demographic segmentation is seen almost in every industry like automobiles, beauty products, mobile phones, apparels, etc. and is set on the premise that the customers’ buying behavior is hugely influenced by their demographics.
Demographic information is easy to obtain from sources ranging from the US Census to local/statewide sources. And it’s free, which helps it fit into most everyone’s budget.
With a simple database and collection device (survey, CRM data field) you can easily collect demographic data from customers and prospects so you can begin to get a picture of who your customers are, and where others that are like them live in your market. This approach helps generate high-quality leads!
And when you start looking at this type of data over time, you can see shifts in the area you serve and how [ex] your audience is increasing or decreasing in number in your area. This approach helps you identify opportunities and threats in advances so you can prepare for them rather than be blindsided by them.
Psychographics can provide you with precious insights into your audience’s hobbies, interests, social status, personality traits, lifestyle, and loyalty.
Where demographics will show you [ex] your most profitable segment is 20 to 29-year old males, single, college-educated and earning $50,000 to $79,999 annually, psychographics will help you segment based on those that like to hike and camp versus those that prefer going to the theater and museums.
And that can have a significant impact on your messaging strategy and creative presentation. Think about it for a moment – let’s say your product is a smartphone app that provides users with relevant information based on where they are located.
Your creative and messaging for those that prefer hiking and camping would be significantly different from what you would use with those that prefer theater and museums.
As you can see from the example above, psychographics can have a valuable impact on creative presentation and messaging, as well as offers.
Collecting this data can be a bit of a challenge.
Typically, you should be gathering psychographic data via interviewing your audience (prospects, inquiries, clients) so that over time you have a broader picture and more in-depth understanding at a personal level as well as across your audience so you can segment.
This process requires time, experience, and efficient operations. And a team effort that could include customer service, sales, marketing, and other departments that interact with the audience.
Behavioral Segmentation is based on patterns of behavior displayed by customers as they interact with a company/brand. This approach to segmentation allows you to divide customers into groups according to their knowledge of, attitude towards, use of, or response to a product, service, or brand.
For example, you could segment based on the benefits your customers want. And let’s take toothpaste as an example. Some want a toothpaste that whitens their teeth. Others want a toothpaste for sensitive teeth. And others want flavor; others want natural ingredients.
Or another common approach is to segment based on where the customer is in their decision-making process. This approach could address the early stages of identifying a need, gathering information on options, engaging with their ‘top 2 or 3’ to learn more and compare them based on a fixed set of criteria…to first-time buyer, repeat buyer, and loyal customer.
This data can help identify those most likely to buy and become loyal, long-term customers, with a high-lifetime vale.
And it can help identify those that are least likely to buy so you can qualify and determine what resources should be invested in them to maximize your success.
Capturing this data takes time, and efficient processes to ensure accuracy – and failure to have efficient processes in place can lead to a lack of quality data.
And what typically happens with low-quality data is that it drives low-quality decisions – which costs businesses opportunities, and can lead some to believe that this isn’t worth the effort.
And when someone arrives at ‘this isn’t worth the effort,’ that low-quality data drives the low-quality decision to terminate rather than to fix processes.
A Few Closing Thoughts on Email Segmentation for Consumer Audiences
Download Your Complimentary Consumer & Business Buyer Persona Templates
Simply complete this form, then click the button and I will email you my Consumer and Business Buyer Persona Templates.
Above is an example of a consumer persona – which uses geographic, psychographic, and behavioral factors to turn data into a ‘real person’, who was named ‘Traveling Tina’.
The way ‘Traveling Tina’ was ‘created’ was by taking existing customer data and working with a database/list broker like Claritas PRIZM.
Claritas appended their data to my client’s data, which led to the identification of 3 significant segments doing business with my client. Tina happens to be one of them.
Take a look at the detail – and know that this helped our email marketing efforts by having us focus on topics of interest and selection criteria that mattered to members of this segment.
The results were double-digit increases in open rates, click rates, and sales.
Did it take some time?
Yes – from start to in-market tests, about three months but that including the identification of the segments as well as the creation of relevant emails and offers for each segment.
Did it take some money?
Yes – but not nearly as much as most assume. Under $10,000 for segmentation with the email campaign development falling under ‘staff compensation.’ (They were getting paid to work, and all this led to was new creative briefs that directed their work efforts.)
Did it generate an acceptable ROI?
Yes. With double-digit increases in leads generated, sales closed, and repeat purchases; the result was extremely profitable for the client.