Why Email Segmentation is Critical For Store Growth?
Highly targeted communications focus on getting the right message to the right audience at the right time. When lists are segmented and targeted to a small portion of an email total list, campaigns are sent to subscribers that are receptive to communications they prefer to consume. Highly segmented mails are sent to <20% of the list, segmented emails are sent to 20-90% of the list and unsegmented emails are sent to 90%+ of lists.
According to a Klaviyo Segmentation Benchmark Report, highly segmented lists return more than 3X revenue per recipient vs. unsegmented lists – $0.19 vs $0.06 per recipient.
What is Segmentation?
Email List Segmentation is a technique used by ecommerce brands to send highly targeted emails to their subscriber lists by splicing them down into smaller homogenous groups called segments. Each category represents different demographics and buying habits. Segments give you more insights about your customer. Consumers today consume incredibly relevant advertising or messaging through social media, search engines and email. Today, personalization is not just nice to have it’s a must have. According to Segment, 71% of consumers feel frustrated when a shopping experience is impersonal. According to Accenture, 83% of consumers are willing to share their data to create a more personalised experience.
It is highly recommended that ecommerce brands, adjust the content of email marketing campaigns to each distinct segment. This greatly enhances conversions and engagement with your core target audience.
According to Klaviyo’s statistics on average, it was found that companies with an annual revenue of under $100K in 2016 had 13.36 segments. Those with annual revenue of $100K to $1M had 29.96 segments; companies with $1M to $10M had 43.96 segments. Meanwhile, companies with more than $10M in 2016 annual revenue had an average of 133.97 segments. Such is the power of segmentation as it directly impacts a brands ability to offer personalized experiences that match a specific customer need or target audience to the offer.
Learn how to use email segmentation to personalize your marketing messages and grow ROI.
Benefits of Segmentation:
The marketing path starts with awareness and progresses via a succession of actions that lead to engagement, desire, and the conversion of a prospect into a customer.
The sale is not the end of the journey, it is the start of the journey. Your marketing efforts will then result in repeat sales, increase in AOV, increase in customer lifetime value (CLV), reviews and user generated content (UGC) promotion to raise awareness even further. List Building and Segmentation is crucial in email marketing, it is tracking consumer behavior and targeting segments with relevant messaging to take the next step to assist the customer journey. Some of the main benefits we see are as below:
1. Helps send relevant content
List segmentation allows for sending out relevant content to a focused audience, it helps a brand connect with its target audience effectively. The more relevant an email content and communication is the more engaging the audience will be. Personalizing content and sending targeted emails to the target group helps marketers also understand their customers better. The target consumer doesn’t want generalized content anymore they are looking for tailored content that meets their need or serves their purpose in finding solutions for their problems. This in turn helps in conversions.
2. Helps optimize frequency to improve engagement
When an ecommerce brand has a segmented email list one can optimize the frequency of emails sent to relevant groups and not send too many or send too less. For example, you can determine which of your subscribers are the most engaged, and specifically target them leveraging the email list segment. You can then send them more emails without spamming the rest of your list. This ensures you do not annoy subscribers that do not want more of your communication and engage more with those potential customers that are receptive and enjoy or consume your communication.
Alternatively, you can utilize segmentation to deliver less frequently to the less active areas of your list. With a re-engagement campaign, you could even try to get them to open your emails again.
3. Assists Customers to progress down the funnel
The goal of any email marketer is to drive an increase in revenue. By sending emails of relevance and content that align with the said segmented list knowing which stage of the funnel they are in, is a sure shot way to conversion. Learn more about email marketing services.
4. Accelerates Targeted Promotion Creation
List segmentation helps segment a group of loyal consumers based on their purchase and engagement preference, geo-location, gender, age and purchase history. Targeted campaigns and promotions can be created to effectively market to this customer base. Loyal customers are already custodians of your brand, they don’t need to be introduced to your brand. A well created campaign or promotion is what they can be sent with special offers or offers on new product launch or a specially created product bundle available for a specific period.
A well-designed messaging with a catchy subject line is the crux of a successful email content, the consumer can decide immediately whether this message resonates with them. Thus, email list segmentation, helps target with relevancy and improves open rate and click throughs.
5. Reduces Bounce Rates and Unsubscribes
Email segmentation ensures deliverability, helps identify healthy open rates, clicks, bounce rate and unsubscribe rate. Subscribers who are inactive can increase your bounce rate and increase ESP costs. Segmented email lists improve engagement rates, increases open and click-through rates, reduce bounce rates, and help grow email marketing as a highly successful channel for driving revenue.
Klaviyo recommends using these conditions for segmentation
a. What someone has done (or not done).Tracking activity via Klaviyo, we shall call them events or metrics.
b. Properties about someone segment via attributes associated with profiles in your list, or assign properties to profiles creating your ideal persona
c. Where someone is located when targeting customers in the US, EU, or Canada, this option allows you to segment based on a certain radius of a specific zip code.
d. If some is or is not in the EU (GDPR)This option allows you to exclude people from the EU from a particular segment if you haven’t collected GDPR compliant consent.
e. If someone is in or not in a list. This option is great if you want to combine two or more lists or create a segment of a specific list, which is a best practice when sending campaign emails.
f. If someone is or is not suppressed. By excluding contacts that are suppressed a more accurate count of specific subscribers one can email can be ascertained and at the same time meet segment conditions.
g. Predictive analytics about someone Predictive analytics allow you to segment based on CLV or predicted gender, which in turn can help you identify customers who are likely to become repeat purchasers
Ground Rules To Follow When Segmenting
a. Target less than 5% of the full email list
b. Define not more than 1-2 conditions
c. Include specific recipient behavior
d. Define the timeframe of the recipient behavior
Five Steps to an effective Segmentation Strategy
1. Focus on an Engaged Audience
The overall performance of all three categories, highly segmented, segmented, and unsegmented – is affected by the poor performance of campaigns aimed at unengaged audiences. It is recommended to focus efforts on smaller, higher value segments of audiences first
2. Define Goals and Your Core Strategy
Identify your business goal. Once goals are defined, one can decide how email could be leveraged to meet the same business goals. Define your audience, messaging and offer. Once goals are identified also shortlist KPIs that would define success
a. Define key segments:
Define your audience segments with a minimum of 2 conditions and base those conditions first on a person’s time-bound behaviors and then demographics. Effective examples of behavioral targeting include past purchase frequency, purchase amounts, and abandoned cart history. Using Klaviyo’s reporting suite, build benchmarks-if your segment is more than 20% of your list. Then identify ways to segment further
b. Review Performance Metrics:
As you test performance against core benchmarks and key KPIs continue to test new segments and review performance
c. Learn Advanced Practices:
Once the basics of email segmentation is mastered, one can begin to action advanced practices for building segments and creating an operational and easy framework
3. Test Segment Specific Effectiveness
Test! Test! Test! there is nothing that testing cannot reveal in terms of insights. It is the only sure shot way.
a. Demographic based segmentation:
The basics of email segmentation begin with demographics. When a consumer subscribes to your email list, capture basics like Age, Gender, Location. One can also get a bit deeper information like Job Title and Industry. One cannot ignore such information or underestimate it because the relevancy of campaigns or focused targeting would depend on foundational basics
b. Location Based segmentation:
It’s likely that your target audience lives in many parts of the world. It’s worthwhile to collect all of these data. With this knowledge, you can modify your messages based on where your audience originates from, making your material more relevant to your customer
c. Time Based segmentation:
Because your email list may include customers from various geographical areas, they will open and interact with your emails at different times. You also want to send a message to your target audience at the proper time if you want to achieve more clicks and opens. By keeping a track of your subscriber’s time, you will know when the best time is to send out a communication, when they are online. You can make a job simple and efficient by scheduling emails to arrive in your audience’s inbox at the right time by using a good email tool that helps in automation too
c. Age and Gender Based segmentation:
Capturing the age group is important, this can be done through surveys and quizzes. This information is crucial as one can promote products targeted to certain age groups.
d. Profession and Industry Based Segmentation:
Different people in different industries may require different types of communication. For example, a beauty expert may already know lot more about your skincare brand, whereas a young college graduate may require a lot more information to build loyalty and trust with your brand. Therefore, the communication to both will be different based on age first and profession & industry second.
e. Purchase and History Based segmentation:
This helps in building a long-term relationship with your consumer. This has helped brands understand their consumers better and cater to their needs more efficiently.
For example, you target customers who have purchased a particular skincare product like a moisturizer, this segment of customers can be sent a communication about complementary products that might be of interest such as sunscreens and information about how crucial it is to step out with sunscreen as a skincare regime. This helps in generating higher revenue and gives you a better ROI on your marketing efforts for specific products.
f. Survey and Quiz Based segmentation:
You want people to sign up giving as much person information possible, but not everyone is comfortable giving out personal details specially when they have not yet built a relationship with your brand.
Shoppers abandon opt in forms when it asks too many questions. Thus, the best way to gather information that you need about your customer is to create surveys and quizzes from time to time and reward them for giving you information.
An email marketing campaign created for survey can gather a lot of information for the relevancy of your future communication and targeted email strategies. The questions should be engaging and thus you can build segment based on the answers you derive. You will be able to segment based on needs, emotions, and interests.
g. Abandoned Cart segmentation:
This is the most common issue for almost all e commerce brands. This segmentation is crucial as it is targeting consumers who have almost bought and thus its important to segment these consumers and target them with offers to complete their purchase.
Learn more about how to reduce shopping cart abandonment and increase customer loyalty.
h. Email and Website Behavior Based segmentation:
Email tracking can give you insights that help create engaged and non-engaged customer segments. By layering insights on device and browser using data, the unengaged segment of customers can be sent emails at defined intervals that can lead to high re-engagement.
Website activity data can also be leveraged to create segments of visitor’s basis what they are looking for on your store. Thus, enabling them to engage differently by sending them communications that are need based and customized in the form of product offers.
i. Sales Stage Based segmentation:
Each consumer’s stage in the sales funnel determines a segment. An email strategy can be formulated to move customers seamlessly down the funnel with the ultimate goal to convert visitors to buyers.
It is necessary to foster new subscribers, drive awareness, nurture leads, engage both visitors, first time buyers and repeat buyers across the funnel. Subscription offers, bundled deals via cross-sell and upsell strategies must be presented to customers who are already engaged. Email marketing is an infinitely powerful medium to attract, engage, convince, and convert these visitors and buyers.
j. Device Based segmentation:
This segment gives you an insight of which device your consumer is using. As per Oberlo-nearly 3 out of 4 dollars spent online is done so via a mobile device. Focused efforts to ease consumption based on device specific behavior becomes important. Device based segmentation allows for targeting audience providing relevant user experience enhancing customer experience and conversion rate as well.
The email reading experience is different, most statistics point out that there is growing trend of access to inbox via mobile thus leading to a larger percentage of open rate.
Email Monday backs this stat by saying 61.9% of email opens occurred out of mobile devices in 2019. This trend is projected to continue making responsive email more vital than before. So, making sure that your email segmentation is grouped by mobile and desktop users is essential.
k. Customer Lifetime Value based segmentation:
Customer Lifetime Value (CLV) is part of Klaviyo’s predictive analytics and can be a powerful tool to use in segmentation. It is the total amount, both past and predicted, that a customer will purchase from your brand over time.
CLV segments allow you to group customers based on this amount so that you can send them relevant content and trigger segment-based flows. For example, you can use historic CLV to build a VIP welcome flow or use predicted CLV to send targeted campaigns to customers who will likely spend a certain amount over the course of a year
l. Customer Type Based Segmentation:
a. New Customer segmentation:
Here the focus would be to build and nurture this new relationship. This segment of customers would be treated with a set of welcome emails to engage them and make sure they are returning customers.
b. Loyalty Based Customer segmentation:
This group of VIP customers have been with you for a longer period, have trust in your brand and look forward to more of your brand offerings. VIP customers are your high value customers with a high customer lifetime value (CLV), repeat purchase rate (RPR) and average order value (AOV)
Thoughtful engagement with personalized offers and discounts, first previews, free shipping, brand, and product education are great initiatives to woo the almighty customer. To ensure, your brand truly understands its customers – surveys done at regular intervals can provide important cues that could help plug customer service gaps, help inform product strategy and drive innovation for your brand.
According to Loyalty Lion, 65% of users said they were motivated to be loyal by receiving personalized offers and 61% by personalized product recommendations.
c. AOV Based segmentation
Another best practice is to group customers by average order value. This helps you suggest products based on budgets, upsell, cross-sell according to what they are looking for on your site.
A quick read on how to grow your AOV with 7 powerful product bundling strategies.
d. Win-Back segmentation
This set can be difficult to convert as they have not engaged with your brand for more than 90 years. One must not give up easily. Identify their pain point, identify their reasons not to convert and create specific campaigns to get their attention. It may even require going more than a mile to reach out with heavier discount or product bundling. But this can be beneficial in the long run.
e. Holiday Shopper Segmentation
This segment can spike revenues considerably with increased customer engagement. There are specific groups that shop considerable amounts only during holiday season or events like Black Friday, Cyber Monday, Mother’s Day, Father’s Day, Memorial Day, Valentine’s Day etc.
f. Sunset Customer Based segmentation:
These are customers who have not opened or engaged with your brand over 365 days or more than 10 received emails. This is a good starting point. These numbers can be modified depending on how often emails are sent to your customers and the type of products you sell. Regular list cleaning and list suppression of sunset customers is extremely important to maintain list health. It improved the aspects of all other segments and helps build good deliverability. This will also reduce unsubscribe rate and help email marketing strategy to show desired results.
4. Segmentation Best Practices
a. Choose the right ESP tool:
To get started you must get the right ESP tool that is easy to use. Today there are many tools available that makes this easy for any e-commerce business. Tools such as Klaviyo help businesses leverage email marketing with precision
b. Sync the right contacts:
The ESP needs to have the updated master list for purposes of email marketing. Further if the list is precise and up to date it is easier to create segments that are meaningful and drive business impact
c. Keep it Simple:
To begin start with simple segments. Use engagement tiers to identify different audience interests. Suppress unengaged contacts to ensure deliverability remains strong and emails make it to the inbox. Segment based on predicted CLV to identify future VIPs
d. Know your customer personas:
Knowing your consumer and why they would choose you over competition is a step towards creating various segments for buyer personas. Creating buyer personas are important for email campaigns
e. Label Contacts Early On:
The best practice for future ease of list management would be to label contacts as early as they land in your CRM. Making this a practice will only help segmenting efficiently in the future
f. Create Contacts with user preferences:
Make sure you are listening to your customers at every interval, give contacts what they ask for. You could create segments of preference of email type and frequency. This will reduce instances of low open rates and unsubscribes
g. Keep data upto date and in sync:
It is crucial to keep contacts and their user behavior data up to date and in sync. If this is not done as a practice, you can very well run into problems related to email marketing and conversions
h. Segmentation Based Automation:
When you combine email segmentation with automation you can send the most relevant message at the right time
i. Track segment performance:
Always set aside time to read and track results, it is important to see how segments are performing and track unsubscribes
j. Test and Optimize:
Always test emails and optimize as required. It’s important to keep testing and adjusting as per required performance
When to use a Segment vs Flow
Segmentation and email flows complement each other in the process of email marketing. Without a good segmentation of users email flows can be pretty unsuccessful in its effectiveness. The email segmentation you choose becomes essential for the result you want to achieve of it. Email marketing automation platforms like Klaviyo will generate results only if flows are built well complementary to segmentation.
In Klaviyo, while it is possible to create a flow that is triggered by being added to a segment, the flow builder also has the same filter and targeting options as the segment builder. If you want to engage a first-time buyer or repeat buyer of a specific product, for example, you can do so by establishing a flow that is triggered by the Placed Order metric and then adding a trigger filter to the flow that only includes people who bought that exact item.
A metric-triggered flow can be used to build any segment that uses metrics basis a specific behavioural action that someone has/has not done. Similarly, flow filters are provided for targeting properties about someone.
Sending the right email to the right type of customer is the essential outcome of segmentation.
Concluding Thoughts
To summarize, segmentation is one of the essential pillars of email marketing. Understanding and analyzing your customers user behavior becomes important for segmentation success and for converting visitors to first time buyers and repeat purchasers to grow ecommerce stores profitably.
