In a nutshell, segmenting your audience basically means that you are looking at slices of your audience that have similar traits. The defining trait(s) can be something as simple as where the "slice" is physically located (zip code for example), whether or not the “slice” has purchased your product, or what types of subject lines they responded to previously. Probably the most important reason as to why you would segment your audience is to be able to craft your content to be of specific interest to that segment.
Success in email is driven by a long list of variables, but the most important driver is relevance:
- How relevant is the content to the audience?
- How relevant are the promotions to your readers’ needs?
If the content and promotions are not relevant, your email program will never get off the launching pad. Do a great job understanding your audience by segmenting, and you will be amazed with your results.
What is a customer segment?
A customer segment can be defined as any group of customers that behaves similarly to each other and different from other groups of customers. Sound simple? All we have to do is find customers that behave similarly, and then we can craft relevant messages for them, right? Well, the challenge is, of course, in identifying those groups.
Based on our experience, there are two basic ways to create customer segments:
- The first, “A Priori,” means segmenting customers based on some logical and recognizable trait such as age, gender, income level, physical location, etc. There is really no limit to the variables you can use, provided that they are clearly identifiable so you can reach that particular group of customers.
- The second is “Post Hoc.” Post Hoc means that we determine customer segments by doing empirical analysis on some set of researched information. We may, for example, ask consumers a number of questions about how they make decisions, what they do for a living, and what they buy. With that information in hand we would then do some statistical analysis to find groups within the data that, statistically, behave similarly.
In most segmentation studies, we recommend starting with an “A Priori” assumption that can then be refined. Usually, we have some idea of how to begin to categorize people into groups that we believe may behave or react similarly. Looking at the data you collect on your customer base, newsletter lists or whatever database you maintain will give you a good place to start for “A Priori” segmentation.
Then, you can use focus groups to explore your ideas further and uncover new ideas. Once you’ve done that, you can launch into some quantitative research to statistically validate the segmentation concepts.
In a future issue of NewsLever we’ll delve into specific tools you can use to better understand your audience using qualitative and quantitative analysis.
How do you use customer segments?
Be relevant with your new found segments
Now that you’ve identified a segment, you need to focus your efforts on developing the relevant content for that specific segment. When you’re ready to send your emails, be sure you think about making the copy, subject lines, design, etc. very relevant and informed by what you learned in your research. Then, begin testing.
Continual data capture and testing drives continual improvement
Once you begin emailing your newsletters, promotions, or whatever else you’re sending, identify additional criteria that you think would be good to know about your recipients to segment even better. If your recipients like what they see and become more engaged with you, they’ll be willing to share a little more information about themselves. Two-way interaction is what leads to increased engagement, loyalty, and, ultimately, sales (or whatever your call to action is).
Blasting emails to thousands just doesn’t drive the results desired. A critical way to keep your response rates up is through effective segmentation. Get smarter about your segments, develop rich relevant content, and you can dramatically improve your results and revenue.
If you have any questions, feel free to contact me. We’re here to help you drive results at every stage of email and interactive strategy, design, and implementation. As always, we really appreciate the referrals, so please send this newsletter and our name onto a friend or colleague.