The Segmentation Equation

Last week, I had the privilege of moderating a panel discussion at the INBOX email conference in San Jose. Our topic, segmentation, should be near and dear to email marketers’ hearts. Yet it appears to be anything but. In fact, a recent JupiterResearch study found using Web analytics to target email campaigns can produce nine times the revenues and 18 times the profits of broadcast mailings. Yet the same research says few marketers are using such techniques.

With me on the panel to discuss the topic were Tricia Robinson, VP of marketing services with Premiere Global Services (formerly Accucast); Barry Stamos, senior director of strategy at Responsys; Carole Ashworth, manager of email operations and channel management at Delta Airlines; and Joe Colopy, CEO of Bronto Software.

As some of our audience members asked questions during the session, one reason for the lack of segmentation became clear. So many people in charge of email programs, whether they’re publishing newsletters or sending offers, are trying to do great things with little time and few resources. Following, some ideas my panelists suggested over the course of the session to cope with the challenges and still take advantage of the opportunity.

Start Slowly and Simply

There are so many possible ways to get bogged down in segmentation. You can try to collect 100 different data points about each one of your email subscribers. You can append behavioral data that tells you everything they’ve ever done on your Web site. It’s easy to get overwhelmed by the amount of data that’s available to you as a digital marketer. In the end, though, my panelists said, it’s best to start with the basics.

Try the Basics

You might look at customers versus non-customers, for example. Or you might consider messaging differently to those who historically click on your email messages. B2B marketers might segment based on a subscriber’s reported industry or job title.

For retailers, ClickZ columnist Mark Sakalosky gave a fantastic introduction to RFM (recency, frequency, monetary) segmentation in a series of columns in 2002. It’s basic, classic stuff that really stands up to the test of time.

Don’t Be Dynamic

Despite all of the whiz-bang technological gizmos that can allow you to dynamically serve a different message to every one of your thousands of subscribers (should you have that many content elements), my panelists advised against it.

It’s needlessly complex, they said, and difficult to test. You’d be better served by keeping it simple (see above) and developing different newsletters for different audiences from scratch. That gives you the opportunity to use your human editing skills to tailor the content to the audience. (We’re all about human editing here at ClickZ.)

Use Your (or Others’) Customer Knowledge

If you’re a marketer, especially if you’re one steeped in traditional direct marketing, you probably already know who your valuable customers are. But if you’re not, and you’re a publisher, perhaps you should talk to your advertisers about the characteristics of the people they’re trying to reach. That would enable you to build content, and a segmented list, to target individuals that will provide the largest profit, by way of advertising and sponsorships.

For B2B, Work on Lead Nurturing

We seemed to have quite a few B2B marketers in the audience. They were seeking ways to use event-triggered emails in their businesses. The answer, according to my panelists, is lead nurturing. This will depend on your particular product and sales cycle, of course, but in many cases the sales team will dismiss a lead because the person isn’t white-hot and ready to buy this very instant. Bring these warm leads along with an email program timed to a typical sales cycle. Perhaps you can segment further and get even more targeted as you observe how prospects engage with the initial email messages in the series.

Here’s hoping my distillation of the conference session has won some converts for segmentation. It’s not as easy as blast emails, but by all accounts, the extra effort is worthwhile.

Meet Pamela at Online Video Advertising Forum in New York City, June 16, 2006.

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