List segmentation is one of the most powerful tools for optimizing email marketing performance. The concept isn’t new or limited to just the email channel. List segmentation has been a cornerstone of direct mail since long before the internet existed. Of all the digital channels, email is probably the one that most closely mirrors direct mail, which has enabled the use of many traditional direct marketing strategies to make email the most cost effective marketing channel for many companies. Email also has some distinct advantages over direct mail, that allow it to take a strategy like list segmentation and make it even more effective.
What is List Segmentation?
Let’s start with the basics. List segmentation refers to the process of organizing a company’s list of customers or contacts by different demographic, psychographic, or behavioral factors. For example, basic list segmentation might include separating current customers from prospects. At deeper levels, it might consider current customers by the product they last purchased and how long it has been since that purchase, for example. The idea is to create distinct groups of your the audience that will be marketed to or tracked separately. It is the basis for an audience based marketing approach.
The Right Message
Here is where email can go well beyond traditional, offline campaigns in how they leverage audience segmentation. Email offers the ability to create truly 1-to-1 communications with audience members, where content is tied directly to the unique combination of attributes of each individual recipient. Most email list segmentation practices happen a level or two above fully customer 1-to-1 messaging. However, the ability to customize the message for an audience group remains.
Without segmentation, marketers have to develop general messaging that will hopefully appeal to and be applicable for the majority of their list. This type of messaging tends to be generic, bland, and a little vague. It also tends to not be overly effective.
Appropriate segmentation allows marketers to develop messaging that more accurately addresses the needs and wants of a particular audience segment. Would you want to send a different message to current customers vs. prospects? How about customers who have a recent purchase vs. those who haven’t bought in 12 months? Or what if you knew that based on where a prospect lived, they would be more likely to buy one type of product vs. another? By segmenting these audience groups in your email campaigns, you can send more relevant messaging to each group. Most companies can undertake at least basic list segmentation initiatives to categorize their audience and the benefits in campaign performance are well worth the effort.
It’s All About Relevance
They key to getting the most bang for your buck with list segmentation is making sure you deliver relevant messaging to each audience segment. Sometimes that relevance is focused on the offer, product, sales pitch, etc. But sometimes it may just be in the tone of voice in the message. Perhaps you segment your audience by age group. The tone you use in an email to someone in their 50’s might be very different than for someone in their 20’s. Effective list segmentation lets you easily identify these different groups and empowers you to develop the most engaging and relevant messaging for each one.
At the end of the day, list segmentation is one of the keys to fully optimizing email campaign performance. While nothing is guaranteed in marketing, the ROI on effective email list segmentation is almost certain to be positive.
By: Tom Wozniak, Executive Director of Marketing