In 1996, a web-hosting company, Xoom, sent an email blast to 6 million people. Ironically, they were advertising an anti-spam filtering tool. At the time, email was a radical way to blast messages to the masses. But that soon changed. By 2015, emails had exploded to over 2.6 billion users, and 50% of the messages they received were spam. Today, people still get inundated with nuisance messages that are irrelevant or don't fill a need.
Emails will always be a part of us, whether for personal or business use. However, email marketing technology has evolved past the shotgun approach.
For an eCommerce email to reach its intended recipient, it must be personal, relevant, informational, and valuable. Email segmentation can achieve this if handled correctly, making your email marketing efforts fruitful so they don't end up in the spam folder.
For this article, we'll focus on the email segmentation basics for a B2C audience.
Why Email Segmentation is Important
Currently, there are over 4.3 billion active email users. That's a lot of fish in the sea. Email list segmentation allows marketers to customize the message and fish for their ideal customers. Email segmentation works because:
- Personalized email increases customer loyalty and conversions. Emails sent to segmented lists can increase open rates by as much as 20% to 40%.
- Proper segmentation will decrease "report as spam" or "unsubscribe" issues. Sending emails to only an engaged audience can reduce deliverability issues by up to 95%.
- Dynamic and relevant content will improve customer relationships. Research shows that relevant, targeted emails drive 18x more revenue than broadcast emails.
- Targeting demographics will increase interest, engagement and address their needs. Research reveals that email recipients click on emails from segmented campaigns 75% more than non-segmented campaigns. Also, CTRs are 100% higher.
Segmentation is about understanding the people on your list and where they are in the three areas of the customer lifecycle, Awareness/Interest, Desire/Action, and Loyalty/Advocacy. Email segmentation is important because you can target prospects at the right time and place in their buying journey.
To get started, sort your email list into these six primary segments.
Top 6 Ways to Segment Your Email Campaigns
Source: Klaviyo
For a B2C list, here are the top 6 email segmentation strategies for your email campaign.
1. Demographic and Geographic Segmentation
The most logical starting point for email segmentation is demographics. This data includes information like gender, age, occupation, language, or industry. Demographic segmentation helps retailers target the varying wants and needs of people with relevant offers.
A subset of demographics, Geo-targeting, focuses only on people in specific regions, seasons, and cultures. Segmentation by location is a practical approach for national or international brands. For example, clothing retailers can market warm or cold weather apparel to the appropriate region depending on the season and the hemisphere.
2. VIP Customers and Past Purchases
A key segment for any retail brand is VIP or frequent customers. These are regular customers that purchase your products more often than others. In some cases, the top 1% of customers contribute up to 9% to the monthly revenue.
How do you distinguish VIP customers from the rest? Here are some metrics to watch:
- Multiple purchases – Multiple visits and purchases signal a VIP customer.
- Average Order Value (AOV) – AOV is relative to the retailer, but $500 per order is a good indicator that the shopper is a VIP.
- Pay Full Retail – Some customers only buy when there is a sale. For VIPs, it doesn't matter.
- Customer Lifetime Value (CLTV) – The most valuable customers have considerably higher lifetime values throughout their relationship with the store.
- High Ticket Purchases – Segment and quantify high-margin buyers by connecting high-margin product data with repeat customer information.
VIPs are typically good brand advocates too. Catering to them with exclusive offers usually returns a positive ROI. 56.8% of shoppers are likely to participate if offered a loyalty program with exclusive rewards.
While not necessarily VIP, segmenting the list by last purchase date can help marketers entice more shoppers to keep spending.
3. Segment By Each Stage of the Sales Funnel
The eCommerce name for a sales funnel is the "Customer Life Cycle." Let's translate this jargon into the three primary stages of a sales funnel.
- Top of Funnel (TOF) is the interest or awareness stage. TOF is a new customer who just made a purchase or signed up for something.
- Middle of Funnel (MOF) is the desire or action stage. They are still gathering information and getting ready to buy.
- Bottom of Funnel (BOF) is where they are about to buy or have already pulled the trigger. You want to thank them and send incentives to keep them as a customer and cultivate their loyalty.
An abandoned cart indicates that the person was at the bottom of the funnel and ready to buy. It's an opportunity for the marketer to send a follow-up email reminding them that their item is still available or a message detailing the features of the products.
4. Behaviors, Actions, and Engagement
Although tracking cookies are going away, there will always be some way of collecting a customer's behavioral data in-store. Currently, retailers can track a shopper's scrolling behavior, pages visited, icons they clicked, time active on-page, menus visited, and more.
Marketers can send personalized emails relating to specific behaviors that can increase a shopper's engagement. One example of a behavior is in footwear marketing, where someone only buys the Nike brand. They won't respond to any other promotions unless it involves their favorite brand.
Along with in-store behavior, tracking the customers' engagement rate is another email segmentation strategy.
Email Engagement Rate
By understanding how much they engage with email campaigns, retailers can customize the flow. Some customers love to see emails all the time, while others consider it spam.
Segmenting the list by email engagement rate can help you send the right number of emails per month. For example, notify low-engagement users only when there are significant sales or events.
Interest-Based Segmentation
Segmenting a customer list by personal interests or lifestyle is an excellent way to ensure that people receive relevant, exciting offers.
The advantage of this segment is it allows your eCommerce shop to personalize, prioritize, predict your customers' behaviors for better engagement and sales.
5. Discard Unengaged and Unresponsive Individuals
One segment marketers need to know is who NOT to send an email to anymore. The criterion for this group is anyone who has not actively responded to your emails from anywhere between 3 months to a year.
Removing unengaged people from your list will reduce costs and possible spam triggers.
6. B2B vs B2C Segmentation
Some companies serve both B2B and B2C customers. It's imperative to keep these two lists separate. You don't want to send retail promos to wholesalers or kill your margins by accidentally quoting wholesale prices to retail customers.
Sending emails to the wrong group can also damage your reputation with your customers. Keeping them separated will save problems.
These are the top 6 email segmentation best practices. However, there are plenty of other segments retailers can create depending on the quality of their email service provider.
Get Granular with Segmentation
Source: Klaviyo
Some additional email segmentation strategies include:
- Acquisition Source – How did the customer find you? Market to these segments accordingly.
- Abandoned Cart – Segment by why they left, what point they abandoned it, and what was in their cart.
- Browse Abandonment flow – Send messages based on where they left your site.
- Cross-Sell - Market to customers with similar or related items that they purchased.
- Average Order Value – Send offers relative to the average spend of that customer tier.
- Holiday Shoppers – Send Holiday promotions based on the other segment and engagement level of each customer.
Incorporating as many segments as possible is an effective way to personalize your email marketing.
80% of Customers Expect a Personalized Brand Experience
Customers want to feel special. In a survey of 1,000 consumers ranging from 18 to 64 years old, 90% of them said that they want to be treated like an individual, also known as a "personalized brand experience."
Segmentation provides the customer data to send personalized promotions and messages. An improved customer experience makes for loyal customers and a higher marketing ROI. The other email segmentation benefits are the ability to create custom and look-a-like audiences for your social media ads.
If you need help with strategizing or implementing segmentation, reach out to a marketing agency that has email marketing experts who can help your team come up with the best segmentation strategies for your email lists.
