Why Segmentation Makes Sense

In e-mail marketing, “smaller” is the new “big.”

Smart marketers are finding ways to sort massive mailing lists into smaller, targeted sublists based on common factors such as demographics and activity history to send campaigns that better speak to recipients’ needs, wants, and interests.

This process, called segmentation, helps campaigns achieve higher relevance. This is linked to better open, click, and conversion results. It also helps the deliverability bottom line because problems such as ISP blocking, spam complaints, and inactivity all become easier to spot and fix.

You can create pinpoint-accurate segments that reflect marketing goals if you collect lots of data on recipients at registration or via follow-up requests. This is why a detailed but relevant preference page is a valuable tool.

Even if you haven’t collected demographic or other data that can boost the sorting process, you can still create useful segments based on a recipient’s history with you, such as opt-in confirmation date and what actions (such as opens or clicks) the address has generated.

As with any marketing tool, segmentation must be used correctly. Otherwise, you could generate false results that will throw off the entire campaign, waste time and resources, and end up alienating a sizable share of the list. Because targeting is so demonstrably more productive than old-fashioned batch and blast, it’s worth taking the time to do it right.

Segmenting to Thin the Herd

You must be confident the segments are valid when they’re used to cull inactives from the database. No marketer wants to let go of good addresses. However, a list crammed with valid, inactive addresses often shows low open, click, and conversion rates (“When Parting Isn’t Such Sweet Sorrow” has more background on this).

From a marketing perspective, you should remove unresponsive addresses. But you can also segment a list based on addresses with spotty records, such as opening only 50 percent of mailings in a set period, or those that generate opens but no clicks. These partial respondents are the ones who often freeze decisions on segmentation tactics’ validity. Rather than make a snap decision to remove them, try campaigns aimed to engage them.

It makes sense to market differently to these people than to more enthusiastic recipients. To do so, you must create valid list segments that sort the files on your list into the proper subgroups. It’s critical to test segmenting before removing an address or permanently reclassifying it. I often recommend changing only the segments, not the creative or frequency. Monitor how the new segment behaves to see how recipients react to ensure your assumptions about their behavior is correct.

Case in point: A sender I know tried to create a segment of his most recent active subscribers; those who opened and clicked in the last 90 days. He made a filtering mistake and ignored new signups. When new subscribers joined the list, they didn’t receive any e-mail. Thus, they couldn’t respond and were incorrectly identified as dormant.

The lesson here is to change only the list segment rules. Clearly identify targets before you tackle the next step of reactivation or special messaging. Segment correctly, and you can refine it without harming the current program.

Applying Segmentation Results

Once the dormant portion of your list is identified, try changing mailing frequency. Send targeted offers that mine active subscribers and move them back into regular mailings.

Finally, ask inactives either to sign up again, update their preferences, or opt out of your program. You can then safely remove anyone who fails to respond within a set time or to a follow-up e-mail.

This might seem a drastic step, given the time and resources you likely expended to acquire the addresses in the first place. But if these addresses don’t respond to offers, you can justify the decision to let go.

In the end, you’re left with a smaller, much more active list of engaged subscribers. As respondents are opening and responding to your offers, your reputation as a sender will improve. This is what the ISPs are looking for. In the long run, it means increased delivery and increased ROI (define).

Segment for Enthusiasm

Here’s another way to use segmentation even if you don’t have a lot of subscriber data: find your most active clickers and offer them something special to keep them engaged.

Once again, you’re segmenting your list based on activity within a set period. Only this time, you’re looking for addresses associated with regular opens and clicks.

Follow the same guidelines as those for culling inactives, being sure to test before sending the offer. Watch for addresses that don’t respond to these highly targeted offers. If you generate low returns, you’ll know you need to refine the offer before you pull the trigger on the main campaign.

Once you’re comfortable with segmentation, you may be tempted to flood recipients with targeted offers. Remember that even targeted offers become unwelcome if you send too many in too short a time.

Try, Try Again

Maybe you tried segmentation in the past and got lousy results. So you went back to good old batch and blast. It’s simpler, and it takes less time than creating five or six targeted offers. But are you maximizing returns from your e-mail program?

I’d ask you to try again using the techniques outlined above. The relevance segmentation can bring, both in generating higher returns per campaign and in a more accurate picture of your mailing list’s health and vigor, is worth the time it takes to do it right.

Until next time, keep on deliverin’!

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

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