Personalization might seem like the latest buzzword, or just another ploy to increase the costs of email marketing. However, neither is the case.
By segmenting your customer database, you can reveal and use the very data you need to successfully personalize your email messages and increase sales conversions and dollars earned in the process. That is, it can, if you do it right.
What Is Segmentation?
Customer database segmentation is the process of breaking up a single list into different groups. These groups can be based on what a person purchases, how often they purchase, how they signed up for the list, how much they spend and so on.
For example, a medical retailer might create one segment for those who buy prescription medications, another for over-the-counter medicine buyers, a third for supplement buyers, and a fourth for medical device buyers. A home and garden retailer, on the other hand, might only segment by whether a customer makes purchases seasonally or year-round. You probably already segment your customers in your mind even if you haven’t formally split apart your lists.
Why Use Email Segmentation?
By segmenting your customer database, you can personalize the emails you send to better meet customers’ desires, needs, and expectations. You can accurately target them in a meaningful way by taking particularly specific details into account and increasing each email’s relevance.
Increasing your relevance can have a big impact on the ROI of your email campaigns. In one study, marketers experienced a 39% lift in open rates and a 24% lift in deliverability and revenue. Meanwhile, a survey by MailChimp shows 10.37% higher unique opens and 58.21% increased clicks in segmented campaigns over non-segmented ones.
As an illustration, consider Totes Isotoner Corp., which took data about customers who repeatedly visited particular categories (e.g., umbrellas, gloves, boots) and developed a targeted campaign for each segment. This converted customers who were merely browsing into paying customers.
How to Collect Data
A successful database segmentation program begins with the data you collect on your customers. You need to understand all you can about them, as early as you can, to make sure you continue to meet their information and promotion needs in the days and years to come.
For example, a home and gardening business might want to know how advanced their customers’ gardening skills are so they can make sure they aren’t boring advanced gardeners with basic information. A health and beauty retailer, on the other hand, may need to know how important brand names are versus discount pricing to properly target and hold on to new customers.
However, there aren’t too many consumers who are willing to provide a lot of personal information to a company they barely know or trust. That’s why you should consider using a progressive method of questioning that can help reveal new information as time goes on. Here are a few places you can use to collect data:
- Within the online order account creation or checkout process: This method can provide basic demographic data and allow you to start tracking transactions. It can also provide optional areas to gather information.
- Via loyalty program: Loyalty programs provide basic demographic data and allow you to start tracking transactions. It offers a built-in way to engage customers as well as target them.
- Through a survey (on site, in person, via email): Surveys provide insight into customer satisfaction as well as interests and preferences. Survey design could enable the acquisition of specific customer data.
- Via digital tracking: Digital tracking provides insight into customer habits and behavior across the internet through services like Google Analytics or Facebook Pixel.
- Competitions, contests, and similar: Contests provide rewards for sharing information and can go a long way toward developing brand ambassadors.
Legal and ethical concerns
There are specific laws and regulations governing how data can be collected, stored, and shared by private organizations and businesses regarding identifiable individuals (i.e., specific customers and clients). This is true both in terms of both domestic data on the federal and state level as well as international data, so you should familiarize yourself with certain foreign regulations (or hire a professional) to ensure you protect your business. Some of the things you’ll need to review include:
- FTC Do Not Call List
- HIPAA (medical related industries only)
- Privacy Act of 1974
- CAN-SPAM Act
Aside from the law itself, there are also other ethical concerns surrounding the way customers perceive how you treat their data. Most importantly, you need to explain your process to them in a straightforward manner, and you need to clearly give them the option to opt out of certain aspects (e.g., receiving marketing materials). However, this can also extend to other ways you interact with them, including how you collect data. Hit them with too many questions (especially if they’re in any way personal), and they will feel as though you’re just data mining to sell more products. It isn’t enough to simply respect the letter of the law; your customers need to feel as though you respect them as well.
How to Develop Segments
There are different tools that will help you manage the technical side of how to segment your customer database, whether it’s an existing set of customers or you want to integrate new customers into different lists as they subscribe. In this section, we’ll focus on what kinds of segments you want to start with to develop effective targeting and email lists.
A broad spectrum of users can become a member of your newsletter, from the youngest (Centennials) to the oldest (Boomers), and yet each age bracket will have different needs and expectations for how they interact with your brand. Furthermore, by knowing their birthday (most likely, month and day, unless the year is a specific requirement), you can target them with special offers in a way that makes them feel special and acknowledged.
- Example: If you work in the medical industry, then your elderly customers likely need access to completely different kinds of products and services than a 25-year-old Millennial.
This is one of the most basic segmentations, but it can also be fairly important, especially in conjunction with other demographics such as age or marital status. Just consider the differences between teenage girls and boys, or between a married Gen X mom and a single millennial man.
- Example: Beauty products don’t necessarily need to be limited to a particular gender, but by segmenting your email lists, you can talk to each gender in the way that most appeals to them and utilize language and other creative (e.g., images) that appeal to them directly.
Depending on your industry, product, and services, identifying infrequent users or customers can lead to your understanding of why, which will help you improve your service or products.
- Example: A medical company could offer a client or patient portal that offers a range of frictionless services, including setting up appointments or making payments. By instructing those customers that aren’t using it, the company would increase the number of people utilizing the portal.
You should definitely use this type of segmentation if you have physical locations; this ensures targeting the audience of customers that will actually utilize a particular store.
- Example: A gardening store with locations in Arizona, Utah, and Colorado should develop targeting based on each, as well as regions within each, as the people there will experience different climates and have different seasonal needs.
This particular segmentation method works in two ways. First, you can eliminate customers who don’t purchase often or haven’t purchased in a long time from particular types of mailings, while also targeting them with remarketing campaigns to try and earn back their business. Second, you can identify loyal customers and invite them to your loyalty program or offer other loyalty incentives even if you don’t offer a program.
- Example: An entertainment company can target frequent customers with exclusive access to special events, member only discounts to premier products and services, or early access to different events or offers.
A customer’s purchase history can be the most telling behavior you can track. It helps you identify preferences as well as help predict intent, especially if the customer is loyal or makes purchases often. This also presents the opportunity to upsell the customer to premium or store-brand options (thus improving your revenue) or cross-sell related products and services.
- Example: An automotive company can email a customer a reminder that it’s probably time to change the oil in their car, and that reminder can offer other services, such as tire rotation or a tune-up, as well as upgrades to the type of oil or oil filters.
Using data to understand a customer’s path to purchase can help you be there in the most important moments within their buying cycle. The more you can key into what type of information or attention your customer needs and when they need it, the more often you can present your brand as both attentive and valuable from awareness to purchase and beyond. After all, a customer who’s only just starting to consider whether they’re interested in a purchase isn’t going to have the same needs as someone who’s almost ready to buy.
- Example: A home improvement store can generate awareness and intent by emailing customers with project suggestions then progressively provide information that helps in research (comparisons and how-to videos). This can also be helpful in remarketing to those customers because they trusted the brand through one or more projects.
Customers Who Refer
This segment includes your best brand ambassadors, and should serve to reward them while also encouraging more referrals. After all, this builds up your audience base with qualified customers.
- Example: A medical company could offer refer-a-friend service discounts, or even free trial offers on products and services that could generate genuine buzz.
Segmenting your customer database offers a lot of benefits for your company, and the sooner you can begin segmenting your audiences, then the quicker you’ll begin seeing results. Need help getting started? Contact your local Valpak representative for assistance with customer data segmentation today!
Start Segmenting Your Email Lists Today!
- As long as your resulting segment offers a large enough audience, the more nuanced you can make your segments, the better. You can develop these more nuanced segments over time to increase your efficacy.
- Remember that psychographics and behavior in conjunction with preferences can be key to more efficient personalization.
- Train your staff and ensure it understands the importance of the segmentation process. This applies to encouraging them to ask customers for the right information as well as the imperative nature of security.