Home  › Email › Email Marketing

Segmentation: Learning From Best Buy

  |  September 12, 2005   |  Comments

Still making excuses for not segmenting your e-mail list? Jeanne puts four to rest.

Best Buy has a successful new strategy that produced an 8.4 percent increase in in-store sales for the last quarter, including an impressive 30 percent revenue increase in one California store. It’s profiling its customers, identifying the most profitable segments, reconfiguring its brick-and-mortar stores, and retraining in-store associates accordingly. So what does this have to do with email?

Lots.

Best Buy is taking online concepts, which are the foundation of great email marketing, and applying them offline. The lengths it’s going to are impressive. For its "Barry" segment, which represents wealthy professional men, it’ll add leather couches to some stores to create a comfortable environment for watching large-screen TVs and listening to high-end sound systems. Stores targeting "Jills," who are soccer moms, train sales associates to help customers without using such terms as "gigabytes" and "megapixels," which may be intimidating.

These changes are a major capital and training investment for Best Buy. It’s much less expensive to implement this type of strategy with email. So why don’t more organizations, even big ones with household names, do it?

  • All our customers are the same. You’d be surprised what you can learn about people if you look past what they buy. One real strength in Best Buy’s segmentation model is it looks at the way people shop for things, not just what they buy. Jills aren’t as comfortable in electronics stores as Barrys, so sales associates work harder to make them feel at home. Your prospect base probably differs in some way, in either their comfort and knowledge about your offering or the way they’ll use it. If you’re not sure, look back over past sales. Identify different approaches you’ve taken with different customer types. Then determine why you took the different approach and how to identify other prospects for whom that approach might work.

  • We don’t have the necessary information to segment. Get it. If you have a good relationship with the people you email, if you provide them value, and if they like what you send, they should have no problem giving you additional information. Explain you want to better target your content. Also, offer an incentive, either something for everyone (special reports, a discount on an upcoming purchase) or a chance to win something bigger (free conference admission, a gift certificate of a significant amount). It’s a quid pro quo. They give you something of value, you provide something of similar or greater value. For more tips, check out "Know More About Your E-Mail Subscribers".

  • We don’t have the ability to implement. It’s 2005, folks. If your email-sending system can’t manage and implement targeted campaigns based on segmentation, upgrade! E-mail isn’t an experiment to be dabbled in. It’s proven itself as a viable marketing channel. Part of its success, however, is being able to use the channel to its fullest. That means segmentation and targeting. There are server-based and email service provider (ESP) solutions to fit every budget, and most provide some segmentation and targeting capability (cross the ones that don’t off your list). E-mail service offerings that don’t offer tracking, reporting, segmentation, and targeting are behind the times; don’t waste your money on a subpar system. E-mail is too important to your business’s future.

  • It’s too expensive. It does require some investment, but if you have a solid plan, it should pay off. Calculate your breakeven point. Gather your information on costs, then figure out how much of a revenue lift you need to break even. The higher the price of your product or service, the fewer sales it will take to break even.

I was curious to see if Best Buy was pursuing a similar customer profile strategy online; it appears to be. Questions about how I use my computer (work, digital photos, gaming), how knowledgeable I am about technology, and whether I visit consumer electronics stores just to browse would seem to give the company the necessary information to segment me. I look forward to seeing what email it sends me based on my profile. And coming from someone like me, who already gets more email than she can read, that in itself is a victory.

Want more email marketing information? ClickZ E-Mail Reference is an archive of all our email columns, organized by topic.

ClickZ Live Toronto On the heels of a fantastic event in New York City, ClickZ Live is taking the fun and learning to Toronto, June 23-25. With over 15 years' experience delivering industry-leading events, ClickZ Live offers an action-packed, educationally-focused agenda covering all aspects of digital marketing. Register today!

ABOUT THE AUTHOR

Jeanne Jennings

Jeanne Jennings is a recognized expert in the email marketing industry and managing director of digital marketing for Digital Prism Advisors. She has more than 20 years of experience in the email and online marketing and product development world. Jeanne's direct-response approach to digital strategy, tactics, and creative direction helps organizations make their online marketing initiatives more effective and more profitable. Digital Prism Advisors helps established businesses unlock significant growth and revenue opportunities in the digital marketplace; our clients learn to develop and implement successful digital strategies, leveraging data and technology to better meet bottom line goals. Want to learn more? Check out Jeanne's blog and Digital Prisim Advisors.

COMMENTSCommenting policy

comments powered by Disqus

Get ClickZ Email newsletters delivered right to your inbox. Subscribe today!

COMMENTS

UPCOMING EVENTS

Featured White Papers

Gartner Magic Quadrant for Digital Commerce

Gartner Magic Quadrant for Digital Commerce
This Magic Quadrant examines leading digital commerce platforms that enable organizations to build digital commerce sites. These commerce platforms facilitate purchasing transactions over the Web, and support the creation and continuing development of an online relationship with a consumer.

Paid Search in the Mobile Era

Paid Search in the Mobile Era
Google reports that paid search ads are currently driving 40+ million calls per month. Cost per click is increasing, paid search budgets are growing, and mobile continues to dominate. It's time to revamp old search strategies, reimagine stale best practices, and add new layers data to your analytics.

Resources

Jobs

    • SEO Specialist
      SEO Specialist (HeBS Digital) - NEW YORK                             ...
    • GREAT Campaign Project Coordinator
      GREAT Campaign Project Coordinator (British Consulate-General, New York) - New YorkThe GREAT Britain Campaign is seeking an energetic and creative...
    • Paid Search Senior Account Manager
      Paid Search Senior Account Manager (Hanapin Marketing) - BloomingtonHanapin Marketing is hiring a strategic Paid Search Senior Account Manager...