According to Internet Retailer, 4 of the top 20 websites grossing between $25MM & $100MM online send out 20 or more emails per month in 2009. This seems counter-intuitive as sending a mass email to your entire list will surely burn leads. How is it done?
The answer is email list segmentation. Sending relevant emails to targeted segments of a customer database ensures that they receive information about products they’re actually interested in. Rather than bulk emails to your entire list, custom messages, subject lines and products can be used to substantially increase Return-On-Investment (ROI). In fact, a 43-to-1 or higher ROI can be achieved through database segmentation and a strategic, yearly email plan.
For example, let’s say you own an online pet store and you carry products for hundreds of dog breeds. If one of your customers owns a Golden Retriever, would he be more likely to open an email with a subject line that reads, “Sale on Dog Products” or one that reads, “Sale on Golden Retriever Products?” If you were to segment your database by breed, then it would be very easy to generate targeted designs and subject lines like this. The resulting emails will be opened and clicked-through more frequently, the products would be better matched to your customers and the result would be higher conversion and order size.
Follow some of these tips for segmenting your customer data for optimal returns:
- Divide your list by actionable data. For example, men and women tend to make different purchasing decisions (actionable). This is a more relevant criterion for segmenting data than say, alphabetically by customer’s last name, as the customer’s name will have little to do with their purchasing decisions in most cases.
- Divide by product type purchased. For example, we know that a customer who bought a supply of toner for his laser printer will need to replenish his supply within a given timeframe. Through advanced segmentation software through companies such as Blue Hornet, you can automatically remind these customers to buy a new ink cartridge just prior to their existing supply running out. Once the rules are set, the notification process requires little, if any maintenance and the result is a life-long customer instead of a one-off sale.
- Divide by past activity
- No opens, no clicks, no conversions
- Opens, no click, no conversions
- Opens and clicks, no conversions
- Opens, click, conversions
If your budget is tight, then keep things simple: men vs. women, dog owners vs. cat owners, etc. If you have a real online business rather than just a website, then it is wise to invest in proper segmentation. Group customers by those who don’t mind paying full price vs. those who only buy things on sale, or automate toner-replenishment for customers who bought a specific make and model of laser printer. Even small lists should be segmented early on, in preparation for a time when it makes sense to send more variations of emails customized for specific customers.
Email marketing yields an extremely high ROI, and segmentation will maximize the performance of your campaign by getting relevant information to the right customers, at the right time.