Email Marketing For Beginners: Segmentation
Despite our many obvious individual differences, many businesses still maintain a one-size-fits-all approach to digital marketing that doesn’t make sense in the age of social media and programmatic marketing - where customers expect heavily tailored content. Tailoring your messaging is referred to in marketing terms as “segmentation”, and is key to maximising ROI for email campaigns.
It’s also, mercifully, very easy to do as long as you know where to look and what you’re looking for. Here, in part three of our beginners’ guide to email marketing for SMEs, we’ll be covering the where, the why and the how of segmentation. Read our previous instalments here – on analytics and nurture campaigns.
In its most basic terms, segmentation means splitting a database according to chosen characteristics, which can be demographic – customer age, gender, or similar – behavioural – for example, customers signing up to a newsletter, or based on specific purchases made. Different segments can then be marketed to accordingly.
In recent years, strategic segmentation has fallen out of vogue in favour of more tactical approaches to marketing communication – focused on what rather than who. But, even in a post-GDPR world, segmentation remains as powerful as ever for all businesses, and a cheaper, more accessible alternative to truly personalised marketing. This is particularly true of email marketing, which puts businesses right in the pocket of prospects and customers and demands the right sales messages be sent to the right people.
Building segments into your email marketing strategy requires little more than an editable spreadsheet and the most basic email platform. Below, we’ve outlined a number of ways B2B and B2C businesses can use the technique to achieve different marketing goals. For each example, the relevant segmentation data can be gathered from new email subscribers at the point of contact.
Don't only ask for a name and email address; go one step further, and ask which industry the newsletter recipient works in, or their job title – whatever information is needed to define your segments. This extra step needn’t be taxing, but it helps focus your messaging and comms. The suggestions below aren’t mutually exclusive strategies, so mix and match the relevant ones to increase the returns from your email lead generation.
We’ll also go into greater detail regarding how GDPR could affect your email marketing strategy, and the precautions you should be taking to make sure you are complying.
Wants and needs
Knowing the wants and needs of your customers could make the vital difference between your email ending up in the inbox or languishing in the spam folder. Of course, your readers will all want different things; for some customers, an emoji will make them click and for others, that same emoji might send them hunting for the unsubscribe link. You need to tailor your content according to what your readers want.
The needs of your subscribers will also vary; the requirements and concerns of a client buying hundreds of units for resale will be very different to those of a customer buying only one, for personal use. This is why it’s so important to create separate communications for each segment - increasing attention, interest, desire and action according to individual subscriber need.
Whilst it would once have been advisable to derive a subscriber’s location from their postcode, or ask specifically for their preferred location, that data might cause problems for you in a post-GDPR landscape. So, make sure you create a permission-based email list that includes an opt-in checkbox, ensuring that customers knows which emails they’re signing up for, and how often they’ll be receiving them.
The sales pipeline
Different prospects require different information as they progress through the sales pipeline (or funnel), and your email content should ideally reflect these changing needs; from awareness through to prospect stage and finally to customer stage. There’s a somewhat common assumption that email marketing doesn’t really work anymore in moving customers along the pipeline, but, 83% of B2B marketers still use email marketing and 58% of that 83% find email marketing effective. This proves that in order for email marketing to work, you have to do it well and segmentation is a key aspect of that.
Define the sales stages in your existing customer journey and list the questions leads and customers are likely to have at each position in the pipeline. For example, a ‘warm prospect’ segment might include subscribers that have received a number of defined emails and clicked on specific links within these emails. Another segment, ‘needs sales call’, could have registered for a specific physical or web event. Both segments will require a different approach and a different appropriate sales email.
Opportunities for growth
Cross-selling is an incredibly powerful tool. Research demonstrates that customers buying one product are more likely to buy certain other projects, and existing customers are far easier to sell to. Indeed, according to the book Marketing Metrics, you’re 60-70% likely to sell to an existing customer, and only 5-20% likely to sell to a new prospect.
As such, segmentation that encourages up-selling or cross-selling can build sales. So, make an effort to map products that are frequently sold together and build segments based on these product groups, sending messages to customers introducing products which are often sold with products they previously bought.
The General Data Protection Regulation came into effect across Europe on May 25, 2018. Whilst B2B marketing remained largely unaffected, thanks in no small part to the legitimate interest clause, the world of online B2C marketing was disrupted in a subtle, but significant way. The concept behind the legislation was to standardise data protection practice across the continent.
There have actually been measures in place since the 1980s. However, with the rise of the internet age and social media, the way data is handled and processed has been forever changed and something drastic needed to be done to promote greater transparency between brands and customers.
Anything that can be used to identify a person can be classified as personal data and it’s this data that falls within the parameters of GDPR. Everything from social media posts and contact details to photos and names are covered. Even post-Brexit, it’s unlikely the UK’s own rules will differ dramatically so GDPR should remain a priority for all businesses regardless of what happens on March 29.
GDPR works differently for B2C and B2B marketing. The legal difference between these activities is derived from an older piece of EU legislation – Privacy in Electronic Communication Regulations (PECR) – which will remain in force after GDPR is rolled out. However, the ePrivacy Regulation is set to replace that regulation and change the way marketers can contact existing customers over email.
Currently, marketers are able to contact customers, in a B2B scenario, without asking for consent as long as they are marketing products and services that are similar to what the person has already bought, or there is another reason for legitimate interest, and have offered an opt-out option. This could be changed once the ePrivacy Regulation comes into force, closing the gap between B2C and B2B marketing regulations.
Ultimately, whilst we can surely speculate, we can’t be 100% sure what final version of the text will be agreed upon. Under Theresa May’s Withdrawal Agreement the UK will closely align with the EU on data protection law - including the ePrivacy Regulation. However, in a no-deal Brexit situation, the UK may decide to diverge on ePrivacy. There are many variables to consider. It’s also worth noting that the ePrivacy Regulation is unlikely to be enforced until Q2 2020 at the very earliest and that’s assuming a Brexit where the UK aligns not only on data protection but on a 12 month transition period. If a 24 month transition period is decided on it wouldn’t be enforceable until 2021. So, whilst it’s certainly something businesses should be considering, there’s no reason to panic just yet.
Engage your audience
Always make sure that your mailing list is engaged. Keeping every member of your list engaged can obviously prove tricky, but as long as you pay attention to the specifics of what make an email marketing campaign effective, you should be able to make sure you’re contacting the right customers and are keeping those customers’ attention.
Don’t be afraid to cut the dead weight. Of course, your mailing list might have taken a hit post-GDPR, but a tighter and more focused mailing list is infinitely more desirable than a list padded out with fake addresses and members that have no interest in your brand.
If certain members are not engaged, it might be worth removing them as they could be be affecting your sender reputation if the open rate and click rate are low. Also, you’ll likely just be bothering them rather than providing them with actual value.
Subject lines are incredibly important - they are the first thing the members of your list will read and might make that crucial difference between them opening the message or dragging it to the scrap pile. Work on making your subject lines powerful and interesting, using insight and GDPR-compliant data to personalise them wherever possible.
Exclusive content is always a strong driver for engagement. The 2019 DMA Consumer Email Tracker found that the majority of consumers (75%) said they like to be sent discounts and offers, e-receipts (61%) and advanced notice of new products and sales (58%) from brands.
Use compelling storytelling to craft your emails to make them sound less sales pitchy. Telling a story draws the customer in and will make them feel more personally connected to whatever you’re selling. Focus on what your subscribers want and use that focus as the cornerstone of the stories that you’re telling: they will start to actively look forward to your emails.
Consider asking your users to update their preferences so they’re only receiving relevant information as their needs change. The 2019 DMA consumer email tracker found that brands have reduced the number of emails they’re sending (down from 73 to 57 a week), which is an indication that they are focusing more on delivering relevant, interesting content.
Don’t go overboard. The most popular reason to unsubscribe remains receiving too many emails (59%), followed by the information no longer being relevant (43%) and not recognising the brand (43%).
Marketing automation is still drastically under-utilised but should be a clear priority for email marketers, particularly when it comes to selecting the right email service provider. The Enchant Agency found that 60% of respondents cited automation as one of the three most important attributes of an email technology provider, which was higher than for any other attribute - including user interface, GDPR compliance and cost.
Automation can be used to set up a wide range of triggers that can be used to send more relevant content to a subscriber based on their purchases or behaviour on your website. Of those surveyed by the Enchant Agency on automation, only 55% said their marketing automation were successful, so there is obviously still work to be done. Enchant’s Principal Email Marketing Consultant, Philip Storey, said: “Email marketing automation is efficient and incredibly lucrative, but most traditional email marketing platforms have been slow to develop capabilities in automation”.
Existing customers are your most valuable resources: acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one, and segmentation makes it that much easier to retain that custom. Segmenting by “lifecycle” stage can retain subscribers who might otherwise switch to competing products and brands as they pass along their customer journey.
For example, there may exist a critical period after purchase when customers start investigating its replacement. It could be a few months or it could be a few years. By contacting subscribers prior to this time, you can inform them of your new products and offers, and boost chances of re-selling to them. To do this, set up segments for each product. Schedule automated messages to be sent to each segment at the appropriate period after the product purchase date. Also, remember that once the ePrivacy Regulation comes into play, you’ll be limited by the timeframe in which you can follow-up with subscribers, which should further incentivise swift action.
Segmentation is the solution
Email marketing offers an almost uniquely direct means of engaging leads and customers, on their own terms. But without awareness of who you’re communicating with, marketing messages are likely to hit wide of the mark. Segmentation is the solution – the simplest, most cost-effective means of making good on your investment in email marketing.