Email Marketing Segmentation - Setting Objectives

The previous post introduced the challenges of segmentation. Let's now talk about harnessing objectives.

It's vital you set yourself some overall objectives for segmentation. Start by thinking about your business: What the key factors of success are outside of the email program & decide what the most important success metrics are for you. For example, if your goals are focused towards customer retention & satisfaction, your choices are likely to be different from measuring success around sales driven by campaigns. Segmentation objectives may also differ from B2C to B2B:

Graphic Source:

The segmentation process doesn't have to be overly-complex either: even the simplest segmentation methods can greatly boost performance. However it is important to note that each of your customers & prospects are different and need to be treated individually. For example, you may have new purchasers, regular purchasers or lapsed purchasers - each one is likely to have a different relationship with your brand.

Here are a few key objectives to segmenting your database*:

Increasing relevance:

An understanding of different customer segments allows you to tailor your offer & make the email capture the attention of customers. Therefore the key objective of segmentation is to increase relevance.

Increasing your Return on Investment (ROI):

Segmentation is one of the most effective methods of reducing costs - primarily because your message can be sent to a smaller number of recipients to achieve the same conversions. By targeting offers to different segments, you can avoid sending the same message to the whole file, thus saving costs.

Growing your response rates:

Similar to ROI, segmentation should see your campaign performance increase a great deal, as the content is more relevant to the viewer. This may also encourage 'forwarding' and should reduce your unsubscribe rate.

Identify patterns and behaviour:

Creating segments allows analysis of the performance of different content or offers against different groups.

Retaining customer interest:

Segmentation will help the move away from sending blanket emails that are often deleted without being read. Emails that are targeted and catered to specific interest / pursuits should encourage a more responsive user. This graphic is a useful summary of the relationship between email engagement & customer value.

Graphic Source: eCircle, "Effective Email Marketing — An essential tool of any business", 02/02/2010

-= David

CRM Principal

* - whitepaper "simplified segmentation"