Sending the right email to the right person can lead to a sale - versus triggering the recipient to unsubscribe from your marketing campaigns. To help minimize instances of the latter, marketers employ segmentation to send the most relevant and meaningful messages.
What is Segmentation?
While you may be thinking about your high school cell biology class, we’re going to be focusing on market segmentation. Segmentation allows you to split your audience into groups, most commonly by demographic, psychographic, geographic, and consumer behavior, and send them more relevant messages based on those groupings. Think about it this way: if you are a man who purchased a men’s button-down shirt from an online clothing company, you’re unlikely to receive an email recommending a women’s blouse for your next purchase. This is because of what you clicked/bought on the app/website (behavioral segmentation) and because you may have indicated your sex when you registered a new account on their site (demographic segmentation). Companies also consider their customer’s spending habits, sending different messages to customers who interact with their brand more frequently than others. Let’s take a look at the kinds of market segmentation.
Demographic segmentation entails the person’s age, gender, income, religion, marital status, etc. Demographic segmentation is arguably the most common type of segmentation used for marketing emails. What is the individual’s sex? Do they have kids? Do they live in an apartment or a house? Think of demographic segmentation as all of the information you would get from the census. Depending on how your registration forms are structured, you’ll be able to collect all of this information when a new user registers for your product or service. If you are missing any specific demographic information that would enhance your segmentation efforts, you can direct certain users to complete it through emails, push notifications, and even in-app messaging.
Psychographic segmentation is based on the user’s interests, values, and lifestyle. For example, a nonprofit that collects donations for rescue animals would benefit from targeting potential donors who love animals, have pets, or support companies who don’t test their products on animals. If your consumers created a profile on your product through Facebook, you potentially already have access to their listed interests (through the groups they joined and their profile) - but be careful, the information may be inaccurate and outdated! People don’t regularly update their interests on social media so take the information with a grain of salt. Psychographic segmentation can be tricky because people’s interests and lifestyle may change without you knowing, and marketing to them based on a misaligned value may lead to a negative brand experience.
Geographic segmentation is exactly what it sounds like. This type of segmentation can be useful for restaurants or brick-and-mortar retailers because it allows them to send email and push notifications based on the recipient’s location and to personalize messaging to drive consumers to specific locations. Businesses that sell geographic-specific and climate-specific items, such as winter and summer clothing, can segment by location to target individuals in certain climates for whom the product would be most relevant.
Behavioral segmentation, sometimes called “consumer behavior segmentation,” is based on the recipient’s in-app and online browsing and purchasing habits. Imagine that a consumer moved into a new apartment and bought a couch and a dining room table from Amazon. Those purchases may trigger a recommendation for additional furniture that they may need, such as dining room chairs or side tables, especially since the shopper most likely changed their shipping address. This kind of segmentation is specifically based on event tracking (actions someone took and what they clicked on) and is ideal for retail and consumer product companies. Emails using this segmentation can include recommended items based on previous purchases, abandoned cart emails, and more — but be careful! Too many or too specific behavior-based messages can be off-putting for some people.
Why is Market Segmentation Important?
Segmentation is arguably the foundation of all marketing campaigns. With the right tools, you can send your audience communications that will help them complete product cycles and continuously build lifetime value (LTV) and trust. Traditionally, marketers have used the batch and blast technique, by which they send the same generic email to everyone, and while it may have been effective in the early years of email, today’s customers expect higher degrees of personalization that enhances their buying experience. Batch and blast or poorly segmented emails run the risk of being ignored, or worse, marked as spam paired with an unsubscription. MailChimp found that segmented campaigns had a 14.31% higher open rate, 10.64% higher unique open rate, and a 101% higher click rate than non-segmented campaigns.
Technology is constantly evolving and pushing the boundaries of what’s possible in marketing. Within the last decade, there have been multiple products that have emerged and changed how companies market. Customer relationship management (CRM) companies like Braze, Iterable, and Leanplum allow their clients to communicate with their customers and personalize the multichannel communications based on customer’s behaviors in-app or on the web. Customer data platform (CDP) tools like Segment and mParticle allow their clients to attribute and centralize all of the event and user data they collect. Product analytics tools like Amplitude and Mixpanel take their client’s data and help deliver deep and insightful metrics based on their customer’s actions and behaviors. With respect to mobile marketing, current technology has become increasingly integratable and these tools have been proven to work better together than alone.
This leap in technology has revealed a clear champion from the four types of market segmentation: behavioral. Using the right CRM (alongside the rest of the growth stack), companies can not only send abandoned cart or onboarding emails but send users on deliberate paths spurred by email, web, and push notifications that will ultimately drive higher LTV.
How Do I Get Started?
Today, it is exceedingly rare for an email to be audience agnostic. Unless the communication is regarding a policy update or a fundamental change in the product that the company is offering to their clients, audience segmentation is necessary. Here are a few questions to consider when forming a campaign, taking segmentation into account:
- Is the information I want to share targeted to a specific audience?
- Is a portion of my audience not going to find the information I want to share useful?
- Is this message in response to a certain action they took?
- Is this a message that only applies to a specific demographic of the audience?
- Does this message differ by regional location? Time zone?
Be on the lookout for more blog posts in this series. We will dive into the different types of market segmentation and give examples of how they can be utilized and optimized for your campaigns.
Don’t be a stranger! If you are interested in learning more about WillowTree’s growth services or need help aligning your growth stack or optimizing you email marketing or push notification strategy, reach out to us!