Imagine you've been a loyal customer to the coffee shop around the corner from your house for years. Every Saturday since the weekend they've opened, you've ordered the same latte, sat at the same table, and read the newspaper catching up on the events of the previous week.
I want you to explore two scenarios.
Scenario 1
You meet the owner on opening day, and casually mention how no matter what time of day it was, for the last two months, it looked like they were always working.
Instead of taking this for granted, they share this really interesting story of how their passion for coffee was ignited in their “previous life” when they had the opportunity travel the world for business, and that they wanted to bring their personal experience to a small town. As they’re telling you this story, you look around and realize the cafe’s decor reflects this sense of worldliness, and that everything seems to have some kind of meaning or story.
This is enough to get you to come in repeatedly, and as you do, the owner makes a point to get to know your order, your routine, and share another interesting story from their travels.
As they get to know you better, they ask you to “test” new things they’re thinking of adding to the menu, give you a special coffee card for being a frequent customer, and inform you that if you ever needed to “borrow” the space for some kind of function, they’d gladly work with you and provide the coffee and food at a discount.
Nearly a year goes by, and they let you know they’re thinking about growing, and ask you personally about why you come in so regularly and for some ideas on how they could get more people into the shop.
When you see new people come in, you watch the owner treat all the new customers with the same level of respect they showed you on your first visit, but they also seem to have an even deeper level of respect and appreciation for you as well.
Scenario 2
On opening day you place your order, find a seat, and grab the newspaper. The person behind may as well have been a cardboard cutout operating the cash register, because that’s about the level of personality they offered. The experience wasn’t bad or good, so much as it was just… expected.
The wall art, the music, the furniture is all pretty standard for a coffee shop. You never really meet the owner, nobody asks your opinion, remembers your order, or makes you feel special for coming in regularly.
Now, considering both scenarios, what do you do when a new coffee shop opens up near your house?
In which scenario are you more willing to ditch your current coffee shop and become a regular in the new one instead? Are you going to leave when you have been made to feel like home or are you more likely to leave when the owners simply don’t seem to care? You’ll obviously stick around.
Now Shopify doesn’t operate any coffee shops (yet), but the same principles hold true on ecommerce, specifically in email marketing with email list segmentation. With list segmentation, you can make your customers feel like you’re the owner of the coffee shop that really just gets their customers by sending just the right info at just the right time.
Case Study: Echo Club House
Echo Club House (formerly SwayChic) is a California-based women’s fashion retailer. In addition to their ecommerce store, they also have 5 brick and mortar storefronts throughout Northern California.
One interesting tactic they use to get their in-store customers emails is that they offer website promotions like coupons and gift card giveaways to their customers at the point of sale.
Since they were already running different email campaigns they had some initial data on things like “best” days for opening emails. Anything beyond that was a mystery though.
Getting Better Data
By using an outside vendor for data mining and analysis, they managed to get much more and better behavioral data including things like past purchases, clickthrough rates, time of actual conversions and more.
Extra attention above all else was put into the time of actual conversion. Perhaps a customer would open her email in the morning on her way to work, but she wouldn't have time to buy the clothing right then. So, she may go back to it in the evening to make her purchase. Since the overriding goal was ROI, the time of actual purchase largely overruled all other data.
Customer Segments
After initial testing with different behavioral data, they came up with many different “groups” for segmentation.
One group, for example, was based on the time the campaign was sent out (5 AM, 10 AM, 5 PM). while another would be based on engagement (one-time buyers, three-time buyers, no longer engaged buyers etc) and so on.
Results
After designing and running 12 optimized email campaigns per month the results were in:
- On average, email open rates increased by 40%
- Clickthroughs doubled
- Revenue per campaign tripled compared to previous campaigns
Aside from the above measurable benefits, the optimized campaigns also helped the company fine-tune their marketing voice to really look and feel like they really simply “get” their customers and what they’re all about. Brilliant.
Full case study:
http://www.marketingsherpa.com/article/case-study/lift-average-open-rate-segmentation
A Million Ways to Segment a List
Every company knows different things about their customers depending on what products and services they offer.
For example, you might know if your customers use One Drive or Dropbox for their files. If they prefer a certain brand of cereal for breakfast or how many children they have. All this can be successfully used.
There are no rules that are carved in stone on what information can or can’t be used for list segmentation - pretty much anything that can be tied back to a customer's email address is fair play. What follows are a few segmentation ideas to get you started on understanding what is possible.
In 2012 Hubspot published a massive list of 27 segmentation strategies, you can check them out here.
This is by no means an exhaustive list but rather it’s a good start to build upon when coming up with your own segmentation strategies.
1. Demographic Data
Age, gender, hometown and other geographical info, job, salary, and so on. This is your baseline data that allows to segment without getting overly granular and complicated.
Just because these segments aren’t complicated doesn’t mean they’re not effective. Remember Johnny Cupcakes from earlier? Just by segmenting their emails by gender, they were able to achieve a 42% jump in click-through rates.
If you’re doing business in the B2B realm, it’s also important to have info about your customers organizational type and industry of your contact. There are many different kinds of organizations and their respective industries and their needs and expectations are different - use that to your advantage.
Same applies for your B2B customer’s job function and their seniority level. Ideally, you wouldn’t send the same info to a marketer that you do for a developer or an accountant. There’s a difference between a marketing consultant and VP of marketing; needs and expectations differ.
2. Behavioral Data
Once you have an understanding of who is using/buying your products, try to figure out why and how they are doing it.
Are they buying it for themselves, their family members or maybe as a gift? Are their purchases spread around your whole site buying many different things or are they mainly concentrating on buying certain things or only a certain product line or brand?
You can use that data to send your customers emails that are relevant to them, try using some of these segments to segment your list:
Buying frequency and purchase cycle - Some customers may come to you on a weekly, monthly, quarterly, yearly etc basis - figure out their buying cycles and anticipate that by sending relevant content and offers just before their buying cycle. Likewise, if a segment of customers is buying rarely from you, you can try and incentivize them to buy more from you by sending them special offers and coupons.
Past purchases and changing buyer behavior
Looking at past purchases and trying to upsell additional services or complimentary products is a classic Amazon strategy.
If you have buyers who used to buy from you often but for one reason or another are not doing any more, then these are the people that you need to pay a little more attention to and send them additional campaigns and special offers to get them back.
They are still buying their stuff from somewhere, it’s not like they don’t eat chocolate (or whatever else you sell) anymore.
Customers who refer
There are customers who repeatedly refer new business your way - those are your biggest brand advocates, use them! Targeted emails of loyalty programs, refer-a-friend discounts, even possibly trials for new products or services are ways that you can make the love you even more.
Customers who haven’t reviewed
You should always be trying to get more positive reviews of your business, so why not create a list segment that targets those customers who haven't written a review yet?
Shopping cart abandoners
According to numerous studies, the average shopping abandonment rate is ~68%, that’s huge. You absolutely have to work on it, luckily our friends over at ConversionXL have written a comprehensive guide about it. Go read it.
Engagement level
Have you noticed an increase or decrease in the number of people that read your emails and take action? Different customers have different needs and respond differently to your efforts.
Your best customer may be your worst in terms of email engagement. It might be time to start sending less email to keep them around.
3) Email Readers & Content
Different email providers and readers display your content differently, keep that mind and make sure that your campaigns look good on the providers and readers that your customers use most.
Luckily this is easy to do as most email list management apps come with build in functionality that will show you how your campaign looks on different providers and devices.
Content in terms of topic and format is another segmentation strategy that can be very useful to get customers to buy more.
Just because a customer's purchase history doesn’t show that their interested in kitchen utensils doesn’t mean that they're not interested in them. Browsing data, wish-list and simply asking them works wonders here.
Also, specific content formats can be more appealing to certain segments of your database - some like Pinterest style row of pictures, others video or more text etc. All this can be tested and used to great success.
4) Miscellaneous Others
Many businesses use satisfaction indexes to determine how happy their customer base is - Net Promoter Score (NPS) is a very popular one. If you're measuring satisfaction numerically, consider sending an email segmented based on your customers' level of happiness with your organization.
Lower scores may get emails that are more educational about your brand and your story to get them hooked in, while higher scores might a good opportunity get reviews, referrals and upsells.
If your strategy involves both a brick and mortar location in addition to your ecommerce store, segmented based on where customers mainly shop can be a good strategy for segmentation.
Ecommerce customers would receive offers that can only be redeemed online while those that prefer physical shops will get invites to in-store events and more.
How To Create Profitable Email List Segmentation
Being effective on list segmentation can be a major win for your ecommerce business, but looking at the massive list of possible strategies it can seem daunting.
If you’re not sure where to start, just follow this 5 step process to get you started:
Step 1. Figure Out Your Data Needs
Having read all the different segmentation strategies there are, you should by now have a better picture of what kind of data you need to pull off some of those segmentation strategies.
To understand what still needs to happen to get the data you need, ask yourself these three questions:
What data do I already have?
What data do I need to start collecting? This is data that you have the ability to collect, but aren’t using at the moment.
What data do I need to ask for? This is the data that you need to ask from users directly or that you need to engineer your way into getting.
It’s likely that you don’t have all the data points currently that you want or need. If so, then this is the place to spend more development resources on.
Step 2. Choose Your Segments
Now that you have an understanding of what data you have access to, it’s time to go through all the segmentation strategies again and decide which one of them to play around with.
The list above is by no means exhaustive and you can and really should come up with new ones that align with your business strategies and plans for the future.
Step 3. Enlist the Right Email Marketing Tool
You’ve figured out what data you need and how to get it. You have your segments drawn out on paper. Now is the time to make those segments work with your email marketing service provider.
There a million and one different email marketing tools. Thankfully, you can cut through a lot of the clutter by checking out the Shopify Technology Partners that specialize in ecommerce email.
All of them have segmentation features built-in and as they all work a bit different depending on the provider, the best advice we can give you is to study the documentation of your provider.
Step 4. Create Content
By now you have an understanding of and ideally would have set-up all the different segmentation strategies with your email marketing tool of choice.
The next step is to write and design the content that is targeted towards each of those groups that you have set-up before.
You don’t have to write all the content of all the campaigns at the same time - depending on your segments and the frequency that you choose to email them, you have time to figure out all the different content that you’ll be using down the line.
Step 5. Test, Rinse, Repeat
Now comes the fun part - actually sending out your emails to your newly segmented customer database and seeing the results of your hard work from all the above steps.
Once you have send out a couple of campaigns you should have enough data to compare your efforts to your old campaigns and also between your new campaigns inside the segment.
Open rates for one campaign on a specific segment went through the roof? Study what worked and use the insights to iterate on that. Pictures are improving clickthrough rates? Use them more.
The possibilities are endless and you can always improve on your campaigns - you never know everything and should always be open to new learning and applying that across the board.
Conclusion
In conclusion, email list segmentation is an amazing tool that can be used to make you look like the coffee shop owner that everyone loves and respect.
There are no right or wrong ways to go about list segmentation - there are simply too many variables and what works for me might not work you and vice versa. Take time, do the work and the results will come.
