The Illusion of Segmentation

Segmentation

Segmentation has been shown to increase email marketing KPIs. But does it actually? Or rather, does segmentation simply remove those people who would not have engaged in any case? Consider the following scenario:

You have 50 green people and 50 blue people. You’re selling green widgets. For the sake of argument, let’s say all the green people love green widgets and the blue people love blue widgets, but don’t like green widgets so much.

In your first email blast, you don’t segment and send a green widget promo to all 100 people. You get a 50% open rate, a 50% click through rate, and a 50% purchase rate.

In your second blast, you send only to the green people. You get a 100% open rate, a 100% click through rate and a 100% purchase rate.

A 100% increase!

Yet, it’s an illusion. 100% of the green people behaved exactly the same in both cases. The blue people weren’t going to respond anyway. The green people were going to respond.

So Segmentation Isn’t at All Useful? Really?

Segmentation allows you to tailor the subject line and body copy of emails to each segment and align the themes of those emails with the appropriate audience. This helps to safeguard against churn. It also allows you to measure more accurately. However, segmentation doesn’t necessarily enable you to discern non-obvious affinities or future affinities between audiences and products.

Go Beyond Traditional Segmentation and Optimize the Customer Journey

‘Customer journey’ is a term that gets thrown around a lot these days. Often, it’s used as though it were synonymous with workflows, but it’s not. A workflow is designed by marketers who are trying to model customer journeys. In contrast, a customer journey is a natural phenomenon: the trajectory the customer takes within a transactional space.

The ability to map out actual customer journeys delivers powerful advantages over artificial workflows and traditional segmentation. By identifying which products intersect with the customer journey at various points in time, you can discover which products a customer will like even before the customer is aware of the those products. Indeed, this is what Coherent Path does for our clients. Moreover, by leading customers along a sequence of products, you can gently nudge them towards areas of the transactional space that result in more cross-sells, higher margins, increased revenue, better engagement and firmer loyalty.

The Takeaway

Segmentation does not in and of itself improve results. On the surface, it may seem to, but often these “improvements” are illusory. Still, segmentation can provide clearer measurement, allow you to align your messaging more precisely with various audiences and help reduce churn and unsubscribes. But if you really want to improve results, you need to look towards new methods of marketing such as customer journey optimization.

Download: A Closer Look at the Science Behind Coherent Path