Welcome to our What’s Stopping You Series, looking at what is stopping you from taking your marketing to the next level. From delivering even better campaigns, performing more efficiently, or over-achieving your targets.
Here at RedEye, we love to see the marketers – and the brands they work for – become even more successful, so in this series, our RedEye experts will be sharing their guidance and tips on a variety of difficulties marketers face and how you can level up your marketing.
In the first of the series, we look into what is stopping you from segmenting your data?
It can seem like such a huge undertaking and quite intimidating before you start but we all know it’s an essential foundation for your marketing strategy. To help offer some guidance and advice I would like to introduce RedEye’s Product Marketing Manager Andy…
Introducing Andy Gilhooley
Andy has worked at RedEye for over 8 years in numerous roles and has worked specifically in email marketing since 2002 using skills such as email design, HTML/CSS coding and marketing automation strategy.
During that time, He has sent millions of emails – if you’ve ever been in higher education or bought from some of the most well-known UK brands there’s a good chance you’ve opened an email campaign that he’s been involved with!
Andy, one of the top misconceptions we hear is ‘there is no point segmenting my database’, What would you say to that?
I think this often comes from small businesses and those that have seen extreme growth in a short period of time. When starting from near zero and acquiring new customers for a new business, there is no need to segment.
To flip this on its head, the entire database is already a niche segment for the narrow product offering and focus of the business!
The challenge comes when a business takes off and suddenly the product range has increased, and you have thousands of customers. It’s hard to break the cycle of doing what you’ve always done. Why? Because it’s been a tremendous success previously and is working.
But, with a few notable exceptions, it’s working well in acquiring new customers only.
If your customer database consists of mostly single purchasers who are not converting or even engaging with your current campaigns – then this is a red flag that you need to develop a segmentation strategy.
Why is segmentation important for email marketers?
Segmentation is literally the foundation on which all marketing activities sit on. Campaigns can only do well if the foundations are strong.
Without segmentation, there is no email personalisation
As marketers, myself included, we often prefer to put our efforts into the ‘pretty side of campaigns’ – whether that be product photography, email template design, playing around with font choices or writing compelling copy. It’s satisfying seeing everything come together and look great.
However, what’s the point – if few people are interested?
The end result of all of your hard work is a customer receiving your email, glancing at it for 2-3 seconds and saying “Meh, that has nothing for me, this company doesn’t get me” and then deleting it. Rinse and repeat this exercise for a few months and the customer won’t even open your emails anymore.
Sounds familiar? We’ve all done this ourselves as customers of brands that email too frequently with completely irrelevant offers.
Take a look at your own database engagement levels, do you see a spike in more customers becoming unengaged? Then you need email personalisation! And email personalisation can only be achieved by having segmentation as a strong foundation.
How to start segmenting your customer database
Not all subscribers have the same interests, desires, or preferences. Email personalisation starts by using segmentation to divide your customer database on criteria such as:
- Customer behaviour
- Purchase history
- Engagement levels
Using one or a combination of any of the above you can start to craft tailored messages that resonate with each customer segment, increasing the chances of engagement.
Personalised emails are the end goal of good segmentation
By sending personalised content, you demonstrate that you understand your customer’s individual needs, which naturally leads to higher open rates, click-through rates, revenue and ultimately, customer loyalty – where they actively enjoy opening your latest campaign to see what you’ve specially selected for them.
For me, a select few brands have my preference settings and product offering just perfect. They’ve extracted money out of my Apple Wallet I had no intention of giving them from well-executed campaigns.
That’s the power of good personalisation, good segmentation, and great marketing. Though, I’m sure, my bank would strongly disagree!
Another myth we hear is ‘We won’t hit our revenue targets if we don’t send the same campaign to everyone’ What is your opinion?
It’s not a myth. It’s simply a numbers game. If you send to everyone your campaign will generate more revenue. The spray-and-pray approach will hit the target with some of your subscribers and help hit that monthly target.
However, it’s a short-term gain in exchange for long-term pain. I refer back to my previous point regarding that ‘Meh’ feeling when you receive an email that has no relevance to you.
Repeatedly sending generic campaigns to everyone will quickly turn them into unengaged subscribers who no longer open any emails. You run the risk of them unsubscribing thus losing out on any future revenue.
Poor segmentation can lead to deliverability problems
Even worse you can end up annoying them that they mark your email as spam. Getting hit with spam complaints (and it only takes a few), coupled with low opens and clicks can send you straight to the junk folder – for all your subscribers for that ISP! And, as you know, hardly anyone buys from the junk folder.
Suddenly your “send to everyone” campaign could actually be going to less than 50% of your database if you’re in both Gmail’s and Microsoft’s bad books.
And, if you were unaware, it takes weeks to turn around a bad domain reputation into a good reputation. That’s a lot of lost revenue. Everyone loses!
Segmentation strategy needs senior buy-in
I really feel for marketing managers who are under this constraint of “send it to everyone”. It often comes as an edict from the directorship level when targets need to be instantly met. I’ve been there myself on many occasions over the years.
It’s why it’s incredibly important to have senior leadership buy-in for a marketing segmentation strategy that is focused on long-term results, customer happiness and the underlying principle that customers need to be treated as individuals to foster loyalty and repeat purchases.
This makes for a sustainable customer database compared to one which has substantial numbers of single purchases and high churn rates. More importantly, it makes for happier email marketing managers who have confidence in giving the best customer experience through email personalisation.
Segmentation opens the door to many more campaigns – which are automated
A fully segmented customer database will open up opportunities for many automated workflows and customer journeys. This is where marketing automation platforms earn their stripes by doing all the leg work for you.
By setting up triggered workflows, your customers will automatically be sent relevant and timely campaigns which dramatically increase the chance of conversion.
By excluding these customers from your tactical campaigns, you reduce the overall sending volume of your one-off campaign but increase the number of total campaigns you send each day.
You’ll find that automated triggered emails account for more revenue than tactical campaign emails and make your customers happier. Plus, once they’re set up, they’ll send every day without any extra resources needed from you. Win-Win!
If you were advising a marketer on the best data to use in segmentation, what would you suggest?
Let’s go back to the criteria I highlighted in my first answer and go into a bit more detail on each one.
Demographics provides a basic understanding of your customers and allows you to segment based on characteristics such as age, gender, location, income level, occupation, and education.
It’s often the foundational start for a segmentation strategy and will categorise your database into large groups.
However, this means that individual preferences and behaviours can vary dramatically within these large segments so is best to combine with other data to segment further.
What continues to surprise me is how so few clothing brands are using gender as an overarching segment in their campaign. By looking at someone’s gender, purchasing history and browsing behaviour you can quickly get a clear picture of what an individual customer buys.
Yet, I’m still receiving emails on a daily basis promoting womenswear and accessories when I’ve only ever bought from their menswear department.
Customer behavioural-based segmentation is often the most popular form of segmentation as its self-profiling and easy to automate with a good marketing automation platform.
Most behaviours come from websites, including browsing history, and specific actions taken such as signed up to receive newsletters, add to basket, add to wish list, or request a back-in-stock notification.
It’s surprising that some brands still don’t send abandoned basket emails – they are the most profitable automation there is. Many brands don’t send last viewed product emails either which are also high revenue earners.
Behaviour is not just limited to those that operate websites.
Customer behaviour segmentation can come from many sources, including offline, other databases, and in-store data. At RedEye, we’re adept at combining multiple sources of data to create advanced levels of segmentation.
Engagement level segmentation is commonly used. Again, it’s self-profiling so limited involvement is needed from marketers. It’s also essential to keep a good domain reputation.
Engagement level segmentation involves looking at email metrics such as open rate, click-through rate and conversion rate. They can also include website or store visit frequency too.
From these segments, you can identify who is active with your brand, and those who are less active or completely inactive. Customers who fall into these different segments will require different sending frequencies.
Those that want to hear from your regularly will receive all of your campaigns, whereas those less engaged will need a different content approach to what you normally produce and be less frequent.
Again, using the clothing brands example, it baffles me how few brands are using anthropometric data to personalise their product offering in email campaigns.
Once you know someone’s clothing size, trouser length, or shoe size – either gained from preference centre data, purchase history or email click – you can start sending product-specific campaigns that are in their size.
I’m sure you’ve experienced a comparable situation to mine. I receive a sales email with a trainer that I really like, and it’s 50% off. Amazing! I’m buying that right now. Click through to the website for it only to be available in sizes 6, 7 and 8, sold out in size 10. Instant disappointment.
The brand knows my shoe size, if they’d sent me a personalised/dynamic content-generated email with size 10 trainers at 50% off they may well have had one more impulse purchase that day.
Preference data is so powerful for segmentation. Your customers have actively given you information to help you profile their content.
This can include a mixture of all types of data such as gender, clothing sizes, categories, favourite brands, activities and interests, date of birth or which channel they prefer to be sent to.
Using this data to create segments that power personalisation in email, SMS or push is a surefire way to increase customer happiness and more revenue.
Purchase history is great for creating segments. And again, this is something so many brands are not using effectively – if at all. This will sound familiar to you and is a constant bugbear of mine…
How many times have you purchased a product for it to either be sent to you again in future emails, or even worse, follow you around the internet on Social Media and other websites using Display Ads?
It’s so annoying. Even more so if it’s a gift for someone in your household. It’s also frustrating for the marketer – that’s wasted ad spend.
Segmentation has the answer! Simply create segments of product purchasers and exclude them from being included in your social and ad audience extracts.
Or even better, find relevant cross-sell products to complement the purchase and include them in that audience extract instead.
And finally, if looking at creating segments from scratch, what are some of the most important or valuable segments that marketers should be looking to get set up?
If starting from scratch, it can feel like climbing Mount Everest. Where to even start? Well, every successful climber has a team of Sherpas supporting them – and in this case, your Sherpas are a good marketing automation platform. This will do all the heavy lifting for you.
I’d start with customer lifecycle segmentation and engagement level segmentation – marketing automation platforms excel at delivering these campaigns.
And after the initial setup, there are little resource overheads that need to go into keeping them running.
This segment includes people who have recently subscribed to your email list or shown interest in your products or services.
It provides you with an opportunity to nurture them into customers, introduce them to your brand, and guide them through the customer journey.
Multi-stage welcome campaigns are ideal to send to new subscribers where you can ask them to fill out a preference centre giving you even more segmentation options.
Whether that be an abandoned basket, checkout, product or category, abandonment segmentation is easy to set up and delivers the most ROI by converting prospects that are so close to purchasing.
This has to be at the top of the list for anyone starting from scratch.
As mentioned in the previous answer, customers have a preference on how frequently they like to receive campaigns from you.
Engagement levels can easily be determined and turned into segments that power a frequency strategy that’ll keep your customers from unsubscribing and your IP reputation in good health.
1st Purchase segment
The 1st purchase segment is a time of celebration. You’ve done it! Your marketing efforts have converted a prospect. But don’t stop there.
Now is the time to nurture the relationship, express gratitude, and encourage a repeat purchase.
Create campaigns that will make them feel appreciated. Complement with cross-selling campaigns whilst they are feeling good.
Repeat customer segment
The 2nd purchase stage is the hardest to convert. Many customers only ever buy once. Why is that? It could be due to poor segmentation and personalisation.
The repeat customer segment is gold dust.
They need extra work and attention from you to increase purchase frequency. This is where you need to combine multiple data criteria together to create compelling personalised content.
Product recommendation campaigns and Replenishment campaigns are ideal for this segment.
This segment includes your most loyal and valuable customers. Recognise and appreciate their loyalty by offering exclusive benefits, personalised rewards, or sneak peeks of new products.
This segment is the lifeblood of your business. You need to identify them early and ensure this segment continues to grow over time.
Pay extra attention to them and nurture those brand advocates.
Lapsing, Win back and Churned segments
These segments consist of subscribers who have become inactive or disengaged over a time period determined by your brand’s buying frequency.
By targeting this segment with re-engagement campaigns, exclusive offers, discounts, or personalised content, you can reignite their interest and bring them back from the brink.
And for those that don’t? Sometimes saying goodbye is hard but the right choice to make. Stick them into a dormant segment ready for archiving.
Thanks Andy, that’s been so insightful. We are definitely going to be double-checking all of our segments to make sure we are utilising all of your tips.
Keep an eye out for the following interviews in our What’s stopping you series which will include more great tips and advice on hitting your targets and analysing campaigns effectively.
If there are any topics you would like us to cover, we would be happy to advise. Email us at email@example.com and we can look to get one of our industry experts to break down how you can tackle any roadblock you are facing.
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