The new email marketing Part 1: Segmentation

email segmentation

In the new age of email marketing, it’s no longer enough to simply build your email list and send your latest discounts or promotions. With 99% of consumers checking their emails every day, it’s no surprise that this is still one of the most popular digital marketing channels for businesses to reach out to potential and existing customers. Unfortunately, this popularity makes it an especially oversaturated channel. With only one subject line and generally short attention spans even once emails are opened, it’s harder than ever to get the most out of this channel.

Businesses and marketers alike have had to adapt. Fortunately, the technology has come right along with them and in some cases even outpaced what many believe they are capable of doing. In this three-part series, we’ll be looking at the new email marketing techniques and how they can help you improve engagement and boost conversions from email marketing. To start it all off, the foundation of it all is segmentation.

What is email segmentation

Segmentation is the process of grouping contacts in your email list into specific segments to target. You can segment your email list by a wide range of factors including their previous email behaviour, purchase history and other customer attributes. Depending on the email marketing solution you are using, you may also be able to import and use other website behaviour such as categories and pages visited on your website.

You can create simple segments based on just one of these factors such as a customer segment compared to a segment of subscribers that haven’t purchased before. You can also create even more refined and targeted groups using a combination of different factors. For example, you could create a segment of your most engaged and loyal customers interested in a specific product category on your site by using purchase history and previous email behaviour.

A single contact may be in one, many or no segments depending on whether they fit the segment criteria you set.

email marketing

Why segmentation works

Segmentation is the foundation for delivering more relevant, targeted email campaigns. Email marketing is a popular option because of the high number of people that have and check their emails regularly, but it also means many people today are inundated with pitches and promotions from all types of companies.

It doesn’t take much for potential customers to unsubscribe from email lists today and increased awareness of privacy and GDPR regulations has made many even less patient. Sending yet another blanket promotion for products or services that someone isn’t interested in is more than enough to disengage subscribers and even lead them to hit the unsubscribe button.

Using email segmentation, even at a basic level, can help you overcome this growing problem by only sending the most relevant emails to the right subscribers. Not only does it increase the chances that your subscribers will still find your email campaigns engaging, but it can also increase your email conversion rates.

An example of email marketing segmentation
An example email from one of our customers, Printernet, targeting customers who have bought a certain printer to remind them when they’re running out of ink

Segmentation can also help you target customer groups at certain points in the customer life cycle, such as when they first sign up but haven’t purchased or when they make their first purchase. The ability to identify and segment customers at specific points in the customer journey means you can serve up information or promotions that are relevant at the time to inspire a follow-up action that matters to your business. It could be a discount code on their first purchase or useful information on a product they have just bought. You can also re-engage contacts that haven’t engaged with your emails in a long time and may, be about to unsubscribe.

The more you use segmentation, the more you’ll naturally begin to focus your email campaigns with a specific target in mind. You may even begin to get more unique ideas for promotions or content that you could serve up to specific contacts, so you can email more frequently with promotions throughout the year without sending too many emails to anyone contact.

This type of relevant email content and understanding of the customer life cycle also starts to play an important role in personalisation and automation, which we’ll discuss in parts two and three of this series.

To begin using a more advanced segmentation, you’ll need a more robust email marketing platform. You can have a hunt around to see what kinds of features you get for your money with the different platforms around, but to show you how you can utilise the email marketing strategies below to their full potential we’ll be using our most used email solution provided by Dotdigital.

email marketing segmentation improves ROI

How to use email segmentation

Even with a very basic email solution you should be able to experiment with simple segmentation, such as having a customer list versus a trade list. Even at its most basic, segmentation is always better than sending blanket promotions and content to your entire email list. Using Dotdigital, we’ll show you how you can use more advanced segmentation with any email solution that offers similar functionality.

Starting with segmentation

You can start creating segments based on any existing information you have on your email list. For many email solutions that offer segmentation, this will at least include some basic email behaviour history such as the last time they opened an email or how many emails they have opened. If you have a solution that is integrated with your eCommerce platform, you may also be able to use purchase history. Additionally, you can use other attributes and information recorded with your email list such as their gender or location.

Depending on your solution you should then be able to segment your audience by creating criteria or rules. You can make these as simple or as complex as you like to make segments and deliver campaigns that are as targeted as required.

Typical segments often used by businesses include:

  • Contacts who haven’t opened an email in X months
  • Contacts who opened a certain email campaign but didn’t click through
  • Contacts who have opened an email in X months but haven’t purchased
  • Contacts who have opened X emails in X months
  • Contacts who have purchased a certain brand, category or product
  • Contacts that live in a certain location (near a local store for example)

There are virtually unlimited segments you could create and target. The key is to think about what matters to your business and experiment with creating both simple and increasingly complex segments to see how targeted you can get. For example, you can begin to include and exclude certain contacts within the same segment or set criteria that say contacts need to meet all or any of the rules. The more you experiment, the more ideas you’ll get.

Remember, however, that the more complex you make your segments, the fewer contacts you are likely to have in each one. Depending on the data you have available, you can end up with some segments where no contact meets all the necessary criteria. It’s good practice to check the contact count as you build out each rule for the segment so you can see how each one affects the number of contacts that fit the group. This can also help you quickly spot any potential mistakes you make such as with conflicting rules which may be hard to unpick and identify once you get to the end of creating a complex segment.

Advanced segmentation

You can get pretty complex even with just demographic data and past email behaviour, but it takes even more advanced data and segmentation to stand out from the competition in today’s oversaturated market. Here we’ll take you through some of the advanced features that you might want to look out for with your email platform to get the most out of segmentation.

Website behaviour

In Dotdigital, you can also utilise website behaviour to segment contacts. Instead of relying just on purchase history, you can create content and promotions targeted to the interests of your contacts based just on their interactions on your website. Even without them purchasing a certain product, you could target them with a promotion for a specific product category based just on the pages they have visited.

RFM scoring

RFM stands for recency, frequency and monetary value. It is a marketing strategy that can be used for more than just email marketing. Many businesses use RFM scoring to put their customers into specific buckets and these scores can even be used to help create buyer personas or help with other areas of marketing. Here’s a quick overview of what RFM means.

  • Recency – the number of days a subscriber or customer last purchased. R0 is someone that has never purchased while R200 purchased 200 days or more than 6 months ago.
  • Frequency – the total number of times someone has purchased. An F5 for example has ordered 5 times.
  • Monetary value – the total spend of a particular person.

This score not only highlights your most loyal customers compared to less frequent purchasers, but the full spectrum of these scores can provide a complete picture of customers at every stage of the buying cycle. Some use the literal numbers for the scoring while you can also convert scores into a standard 1 – 10 scale.

From R0 F0 M0 contacts that are yet to make their first purchase to R500 F13 M1500 lapsed customers who were once loyal but haven’t purchased in over a year, this score can tell you a lot about individual contacts and can ultimately be used to segment them into the highly targeted lifecycle and customer groups.

You can look at ways to set up this scoring system yourself, but an email solution that has this built-in based on integrated purchase history can save a lot of time and make targeting based on RFM score incredibly easy.

Preferences and forms

Finally, you can step up your segmentation by collecting even more data from your subscribers. While demographic data can help you with some level of targeting, customer-specified preferences can help you create even more relevant and engaging campaigns. Using preference settings in sign up forms can take out some of the guesswork and exceed the limitations of purchase history or website behaviour. Customers can tell you themselves exactly what they want from you and where their interests lie. Some typical preferences you can use include:

  • Topics – what topics and interests they have
  • Product categories – ask them straight away what types of products they are likely to buy
  • Email frequency – ask contacts how often they are happy to hear from you
  • Content type – ask them what types of content and media they like, such as discounts, promotional offers, new product launches or product guides
  • Hobbies – this can help you infer what kinds of products they might be interested in

Other than providing even more information to help you segment and target contacts, allowing your email list to opt-in and out of certain campaigns is a great way to let them subscribe down rather than unsubscribe. Instead of losing contacts altogether when they get an email they don’t like or isn’t relevant, they have the option of receiving fewer emails or opting out of the ones they aren’t interested in. This is a great way of giving some control to your subscribers which can, in turn, make them feel more open and engaged with your email communications.

Again, you can collect this data with your own sign-up forms on your website to try and utilise it in your email marketing but an email solution that can provide a preference centre and sign up forms is the easiest and best way of utilising this segmentation strategy. In Dotdigital, for example, you can create preferences and group them together in categories. You can also set private and public preferences so you could assign certain contacts to a private preference list that only you can see for your own marketing purposes.

Start segmenting for success

A great email platform like Dotdigital goes a long way to help you implement superior email marketing strategies like segmentation, but it’s only half the story. At Netmatter, our digital marketing experts have specialised experience in all forms of email marketing and are certified Dotdigtal partners. This means we can help you execute tricky strategies like segmentation and make the most of your email marketing solution, whatever it may be.

If you’re interested in finding out more about how Dotdigital could help you supercharge your email marketing, want to make the most of your current solution or even you’re completely new to email marketing, our experts are just a phone call away. You can email or fill out our easy enquiry form to get a call back from a member of our team.

Stats from The Ultimate List of Email Marketing Stats for 2020, Hubspot