Segmenting, in its most basic implementation for email marketing, is the separation of a group of customers with different needs into subgroups of customers with similar needs and preferences. By doing this, retailers can better tailor and target its products and services to meet each segment’s needs. For marketers, segmenting email lists can improve open and click through rates. In fact, MailChimp’s user data showed that segmented campaigns get nearly 15 percent more opens and 60 percent more clicks than non-segmented campaigns. Sounds like a simple strategy for a decent return, right?
Not so fast. Consider the following scenario: You’re an office supply store and your list comprises 50,000 women and 50,000 men. You’re selling new rose gold paper clips. For the sake of argument, let’s say all the women love the pinkish-hue paper clips and the men love standard silver, but aren’t so into the rose gold.
In your first email blast, you don’t segment and send a rose gold paper clip promo to all 100,000 people. You get a 50 percent open rate, a 50 percent click through rate and a 50 percent purchase rate. In your second blast, you send only to the women, yielding a 100 percent open rate, a 100 percent click through rate and a 100 percent purchase rate (nice!). But is this really a victory? 100 percent of the women behaved exactly the same in both cases. The men weren’t going to respond anyway. If a marketer continues to rely on this type of segmentation alone, eventually the men will start to tune out, and so will the women – because no one is buying the same types of merchandise over and over again.
It’s not all bad, though. 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 enable you to discern non-obvious affinities or future affinities between audiences and products. This is why marketers need to go beyond traditional segmentation and focus more on the individual customer journey, rather than looking at it as team rose gold vs. team silver.
The ability to map out individual customer journeys delivers powerful advantages over 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 those products. By leading customers along a sequence of products, you can gently guide them toward areas of the transactional space that result in more cross-sells, higher margins, increased revenue, better engagement and stronger loyalty
Segmentation does not in and of itself improve results. On the surface, it may seem to, but often these “50 percent 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 a word of caution: if you really want to improve results, you need to look to new methods of marketing such as customer journey optimization.
Also published on Medium.