11 Dec 2018
How Email Segmentation Can Increase Your Conversion Rate
11 Dec 2018
“Email marketing segmentation is the art of thinking in groups.”
Jordie Van Rijn, Email Monday
Each person is unique. What could be the first line of a self-help book works just as well as the first-line of a guide to email segmentation. Get ahead of the curve and don’t just segment your email lists, but segment them well.
So below we put together a guide on email list segmentation and some important actionable ideas marketers can use to jumpstart their email segmentation efforts.
What is email segmentation
Email segmentation is the tactic of dividing your email subscription lists into smaller groups called segments based on a set of traits or variables. Some email segmentation ideas could include geography, purchase history, interests, and so forth. Through email segmentation, marketers can tailor emails specifically for each segment.
What are the benefits of email segmentation
According to the Data & Marketing Association (DMA), marketers have found a 760% increase in email revenue from segmented campaigns. This makes perfect sense; the more relevant the message, the more likely your subscriber is to act on it.
Adding to this, an Emarketer study found that “39% of email marketers who segment their email lists see better open rates and 28% saw better email deliverability and earned more revenue.”
Finally, Optimove compared average segment sizes (i.e. average number of customer contacts per segment) to average uplift – an increase in value per customer – and found that the smaller the size, the higher the uplift.
So, of course, email segmentation works. But to reap its full benefits, marketers need to segment more intelligently and realize that not all segments offer the same opportunity and potential revenue.
Here, Optimove analyzes customer value through the RFM method, which stands for:
- Recency: when did the customer purchase this item?
- Frequency: how often do they make a purchase?
- Monetary value: how much did they spend?
Segmentation allows for a larger average revenue per customer. In the top right of the above image, the VIPs segment has the highest ROI (an average of $150 per user) and the segment of customers about to churn is a measly $8.
Note briefly: an $8 ROI still ranks well above many other digital channels. Email’s just that good ;).
Here, identifying different segments and how much value they provide will allow brands to really see who their key targets should be and how they should create their email marketing strategy.
Source: Sage CRM
As this graph shows, data capture is only one part of the puzzle. Ultimately, data should inform segmentation and customer analysis to discover key spending trends and identify potential segments that could give more profit.
Great engagement based on correctly-identified segments and content and design influenced by marketing intuition and data lead to better retention. Retention is very important. Businesses survive on loyal customers, after all. When email engagement and customer value intersect at very high values, this leads to customer retention; customers stay with the company because they value the company’s products.
How to segment your email list
There are so many ways to segment your lists, so we’ve put together three tips for you below.
Identify relevant KPIs and business interests for proper email segmentation
Email segmentation relies heavily on marketing intuition in order to work well. Before segmenting email lists, make sure that the segment criteria are themselves already relevant. For example, creating a segment based on past purchases might be relevant for eCommerce businesses, but not for blog newsletters. For newsletters, you can segment based on their location, language, or topic of interest. While this can be quite obvious, articulating this reveals insights on whether some segments are really relevant based on the business, or not.
Jordie Van Rijn, email marketing consultant at EmailMonday.com, has a simple, yet effective, formula for email segmentation:
Segmentation Model * Execution = Combined impact
(Where Execution = Relevance + Content + Design + Time)
Email segmentation is not an end in itself. Marketers need to realize that some segments might not be relevant to their businesses. Moreover, marketers might also be distributing the wrong type of content to their segments. This is why execution is important. It allows marketers to build upon their segmentation model for optimized conversion results.
Here, the segmentation model comprises the ways marketers choose various criteria used to define various segments. These criteria can be base on geography (e.g. country, city, zip code, etc.), demography (age, race, gender, etc.), industry (e.g. education, eCommerce, etc.) and so forth.
In each segment involved, the execution needs to be strong in order to fully maximize what email segmentation can do. Execution can include:
- the relevance of the segmentation criteria to the email marketing strategy and business involved;
- the content and design, which should be relevant to the segments, of the emails sent; and
- the timeline and scheduling of these segmented marketing campaigns.
Effective execution optimizes the segmentation model for a combined impact in the form of increased email key performance indicators (KPIs). Ultimately, each segment needs to have great execution in order to work.
After all, hastily creating email segments is like fitting square pegs into round holes.
Create Unique Content and Messaging for each Segment
Marketers need to make sure in sending the right content. This can include marketing promotional offers on vegan food to vegetarians and vegans, or announcing a special event to a segment of locals in that city.
Monitor results, A/B test, and adapt to continue to improve the impact of each segment
Of course, creating unique content for your segments is not only based on marketing intuition, but also on data. Data can reveal which type segments work, and which don’t. Data tracking also allows marketers to develop best practices for the next emails they send to these segments
Mailjet offers advanced email analytics from which you can easily get actionable insights. These can include:
- the email providers marketers have sent their email campaigns to;
- the open rate, or the percentage of emails opened by those in the segmented list;
- the rate of users who have unsubscribed from the mailing list after receiving this; segmented email campaign;
- the bounce rate, or the number of emails that failed to get delivered to the recipients; and
- the spam rate, or the rate of emails that go to recipients’ spam folders.
These metrics and visual graph allow you to track your segmented email campaigns in real time. Tracking the spikes and stagnations in line graphs allows marketers to identify when the email campaigns are being opened.
Additionally, marketers can even compare which version of a segmented email campaign is being opened through Mailjet’s A/B testing tool.
These three tests experiment with the content and design of the same email campaign through its CTA and text. While these changes may seem trivial, psychology tells us that they can impact the way recipients engage with emails.
A step-by-step guide to Mailjet’s email segmentation feature
Email segmentation using Mailjet is as easy as pie and allows users to effectively create specific segments. Now that you’ve come up with a strategy for segmenting your campaigns create relevant segments in Mailjet and send emails that matter to your contacts.
Here’s how we can help:
- From your Contacts page, click “Segmentation”.
Click the ‘Create a segment’ button.
2) Enter a segment name and create your filters.
When you have completed your segment, click ‘Save’. Now you can apply your segment to a campaign: Create your campaign and once you select your contact list, you will have the option to apply a segment.
You can also click the ‘Calculate number of contacts’ button to apply the segment to your selected contact list to see how many contacts will be matched.
Continue with your campaign design and send your campaign as usual!
After your email segmentation
While segmentation can become a massive part of your email marketing success, it’s important to take it one step at a time. If you don’t have any segmentation strategy now, don’t try to create a robust strategy from scratch, simply identify one segment you can create and begin testing.
Perhaps this could be segmented based on language, or country, or whether or not they are engaging with previous emails.
Test out different messages and see what works.
From there, then focus on what new data could inform more segments going forward. Do you have data assigned to their purchase history, or user history. Do you have data on the size of their business? Can you connect this to their email address? If so, maybe you can identify new segmentation opportunities and create a second segment.
And on and on.
The point is to chip away and unlock revenue opportunities, but this takes time.
Let us know on Twitter what segments you’re experimenting with. Happy sending!