Segmentation: Yes, You Can!

  |  March 5, 2009   |  Comments

Tips for overcoming three barriers to delivering segmented e-mail marketing campaigns.

Whether you're a veteran e-mail marketer or just learning the ropes, you have likely heard that segmentation tactics can deliver better results for your e-mail program because it allows you to send more targeted and relevant messages. With this more relevant messaging, you can expect to see a higher return on your e-mail investment. In fact, segmented campaigns have been shown to deliver two to five times the ROI (define)of typical broadcast campaigns. The bonus ROI is reduced list churn and fewer spam complaints.

Sounds great, right? So why is it that, according to a recent survey, only 25 percent of marketers use segmentation at least once a month? Why not 100 percent of marketers? Why not more often? In this column we'll work to break down the barriers and reveal the secrets to successful e-mail segmentation.

The Challenges of Segmentation

Marketers cite many reasons for why they haven't yet adopted segmentation:

  • Limited creative resources (70 percent)

  • Lack of data (50 percent)

  • Lack of time to plan (50 percent)

I've also heard these objections from marketers who are still in the mode of sending single-message broadcast campaigns:

  • "I don't know how to do it, and there's no time to learn."

  • "I know I should be doing it, but I don't have the extra money in my budget to pay for an add-on data program to integrate purchase or clickstream data."

  • "I'm getting decent results now with broadcast e-mail. Why should I mess with success?"

Segmentation: It Doesn't Have to Be Complicated

Perhaps you assume that moving toward e-mail segmentation means overhauling your entire e-mail program or buying a high-priced recommendation engine so that each customer can get his or her own personalized message.

Truth is, you can begin to see positive results from segmentation with just a few changes. Start small and use incremental steps to achieve greater success.

Let's look at the three main challenges listed above. For each one, there's a relatively simple solution that can get you started with segmentation right away.

  • Limited creative resources: You don't have to create a completely new message for each segment. Instead, break the message down into components and use a dynamic content template that will change the components automatically according to the segment.

  • Lack of data: You already have some basic data you can use to begin segmenting: e-mail metrics such as click activity, browsing activity at your Web site, and length of time on your mailing list. More data will enable you to do even more, but this is plenty to get started.

  • No time to plan: Set aside one day each month and call it "segmentation day." Look at your promotional plans and consider how to generate a different story for one or two additional segments. In this meeting, decide how you will identify those segments. Knowing what data you will need (browsing, profile, or transactional) takes the last-minute guesswork out of segmentation planning.

Overcome these barriers, and try segmentation. I guarantee once you try it and win, you'll keep playing. Because then you are playing with the house's money, not your own.

Case Studies: Incorporating Clickstream, Profile/Behavior Data

These two retailers employed relatively simple segmentation strategies, using data most e-mail marketers have access to, in order to achieve dramatic lifts in ROI.

Apparel retailer: An online-only company had seen flat performance in its broadcast campaigns and did not have a reservoir of sophisticated data to create segments.

So, the company created segments by matching e-mail subscribers with the product categories they clicked on in the e-mail's left-hand navigation bar, and tailored messages to reflect that activity.

Result: The company realized a 300 percent lift in conversion, using data that was native in the e-mail platform and required no external integration.

Takeaway: Create relevant segments using the information you collect from subscribers' e-mail activity. Every e-mail marketer has easy access to this data, and it works surprisingly well for many.

Under Armour: This retailer of men's and women's performance clothing, footwear, and equipment found that a high percentage of its e-mail subscriber list had not purchased. So, the company targeted subscribers with more relevant messaging based on its profile data and on where they browsed on the Web site.

Results: Segmenting based on profile data brought a 22 percent lift in revenue per e-mail (RPE). Segmenting on browse behavior generated a 200 percent lift in RPE.

Takeaway: Behavior-based data is more powerful than profile data. But if you have profile data on someone who hasn't visited the Web site, use that too. Both provide significant lift.

What Are Your Segmentation Issues?

In my next column, I'll outline my top 10 triggered marketing programs, which you can use to make more money, even in a down economy.

In the meantime, please click the "Post A Comment" link at the end of this column and pass along your questions about getting started with segmenting or your own experiences for possible use in a future column. Please let me know:

How is segmentation working for you?

If you aren't doing it, why not?

What's your one wish to make segmentation easier?

I look forward to your input.

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Ed Henrich

Ed Henrich is vice president of professional services for Responsys, leading the company's creative, campaign development, strategy, and analytics teams to produce award-winning and profitable client e-mail marketing programs. Ed is a pioneer in the e-mail marketing industry, having joined Post Communications (now Yesmail) in 1997 when it was a five-person startup. For eight years, he was the company's vice president of client services, then president. Before that, Ed was a venture capitalist at Internet Capital Group and a senior consultant with McKinsey & Company. A former Fulbright Scholar to Australia in Control Systems Engineering, Ed holds a PhD and an MS from UCLA and a BS from Drexel University. Follow him at his blog, LinkedIn, or Facebook.

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