Andrew Robinson, managing director of email marketing company Lyris UK, www.lyris.co.uk, offers practical advice on how to treat your customers as individuals

How sophisticated is your segmentation?

In today’s fiercely competitive commercial landscape, marketers are under ever more pressure to deliver increased ROI. Nowhere is this more so than within the discipline of email marketing, where results are tangible and easy to analyse. Practitioners need to be sure they’re delivering the right message to the right people at the right time – and that means customer segmentation.

Location, location, location
Probably the most straightforward segmentation is demographic, as the detail it requires is the information most commonly gathered from your customers: name, address, phone, and postcode. Their address and their postcode of course tell you something about where they live. In other words, do they live in a big city - a very urban and cosmopolitan environment? Or do they live in a small town? Do they live in a house or an apartment? And as technology enables more people to be ‘global citizens’, it is critical to know what country they live in, as well as which part.

Identifying just this much about your customers allows you to do some basic segmentation, and supplementing this with a sophisticated database service will allow you to use the material in much more detail to make your campaigns more effective. For example, just mentioning a recipient’s hometown in the subject line can increase open rates by up to five percent.

In-depth understanding
As your interactions with your customers progress, you might have an opportunity to learn more about them: their age, educational level, profession, hobbies, whether they have pets, the kind of car do they drive, etc. Using this information, many more segments can be identified, depending on what is relevant to your business. With this increasingly sophisticated segmentation, your messages can be made more targeted and therefore more relevant to your audience. Your goal is to develop trust, and the best way to do this is by providing your customers with the information for which they are looking.

Let’s take an example. Company X, an online retailer, acquires a new customer. The customer makes a purchase and some basic information about them is entered into the database. Company X adds the customer to their mailing list and sends them emails about other products in the catalogue. Whenever this customer makes an additional purchase, this information is then added to the database. With each new purchase, Company X learns more and more about this customer: who they are and what they buy.

Work in progress
This is the key to segmentation: the ongoing capture of information. People’s tastes and habits change. You can’t simply assume that what you knew of your customers when they first came to you is going to be true forever. As each bit of new information is captured, you learn more and more about that customer. What they buy, the lists they opt in to—these things tell you about their taste and perhaps their lifestyle.

This process should be self-propelling: customer information continually captured and then analysed drives further segmentation and analysis, leading to an ever-more refined marketing programme. For the most effective marketers, this is a way of life.

Some marketers do this. Many do not. Even those that do, often stop there. They have some basic data on their customers and have created some segments based on this information. They add information to the database, but they don’t use this information to revise their segments. Maybe they create a few different versions of their email campaigns based on some basic audience segments, and this is good - but it’s only scratching the surface of what can be done.

On the couch
In terms of truly serving your customers and addressing their needs, you need to capture and analyse behaviour. Behavioural marketing, not surprisingly, is based on each of your customer’s very specific behaviours, in your inbox or on your website. Perhaps they’ve expressed an interest in a certain product - they’ve viewed it on your website numerous times, for example. Maybe they’ve even put it into their shopping cart, intending to purchase it, but they don’t.

Knowing this about a customer’s behaviour means that you can market to them very specifically. They’re coming close to a purchase, but need something to tip the scales. It could be that a coupon or a discount off the product’s price could sway them. Or a different pricing structure. Maybe they’d like free shipping. You can obviously entice them in any number of ways. Whatever you offer them, knowing that this segment exists because you’ve captured and analysed this behavioural information, has given you this opportunity.

Rake up the past
Another type of behavioural segmentation is called historical segmentation, which is based on what the customer has done in the past. For example, a customer signs up for the mailing list of an online clothing retailer. This customer happens to be a single man. He starts to buy a lot of his clothing from this retailer, year in and year out, and opts in to their mailing list. The retailer starts sending him emails about their products, sale items, new seasonal items, etc.

What the retailer however fails to notice is that this customer never buys anything but men’s clothing! Because the retailer has failed to capture this information, they continue to send this customer dozens of emails on sales of women’s shoes, the new fall ready-to-wear line, the latest French cosmetics. The result: after a while, the customer stops reading the retailer’s emails because their marketing has ceased to be relevant to him. Even if they send him an email about a sale on men’s clothes, he won’t see it because he stopped opening their emails. He might even have become a bit irritated that the simplest bit of information—his historical purchasing behaviour—is continually disregarded in the company’s email marketing.

Test your theories
Capturing customer behaviour and using segmentation fully, you can do so many things with your marketing. Split-testing, for example, is another very effective marketing practice based on segmentation. Take a segment and send to that list certain content based on what you know about that segment’s preferences. Send another segment different content, and see which gets better results. If you segment your customers and then provide them with the dynamic content that is most meaningful to them, you are better fulfilling their needs, and at the same time, further developing your email marketing.

Don’t put up language barriers
Returning to the earlier reference to ‘global citizens’, today’s agile marketer must take into account that many people no long live in their country of origin. Despite being widely cited as the universal language, it cannot be assumed that everyone understands English. For example, the latest US government censure notes that 40 percent of Californians to do not speak English at home. That’s over 15 million people – and only accounts for one state in one country!

For all marketers’ talk of providing customers and potential customers with the right message, how often does this involve translating your emails into another language? It would seem that the most fundamental aspect of sending the right message to your recipients is speaking to them in the language they prefer. But how many of us actually do this?

Granted, although not native speakers, many people may be fluent in English and may be able to understand all of your emails perfectly. Or they may not.

So, as part of your initial information-gathering about your customers, one step is to learn more about what language would they prefer to receive your emails. Although it may be tempting to think that, perhaps because of your market niche, your subscribers are likely to be native English speakers, it is dangerous to make that assumption until you have asked them.

Even if they are reasonably fluent in English, how much better would they respond to your email marketing if your company made the effort to find out their language preferences and then develop email campaigns specifically for them, in the language of their choice, not yours? Even just posing the question indicates your interest in serving your readers better.

One size can fit all
So we are in agreement that we would like to send more targeted messages. The figures prove that more targeted messages get much better responses on email. Why do we not just go and do it then? The reason is time. Online marketing departments are still small, usually ranging from one to three people. The effort of getting content ready and tested for one weekly newsletter is considerable. Producing 10 newsletters, one for each segment, would seem too much. So we stick to one newsletter.

The key to getting round this issue, without employing ranks of content writers and designers, lies in dynamic conditional content functionality. This enables you to write one newsletter but use the code behind it to prioritise automatically the text and images most relevant to each recipient, based on the profiles of them that you have developed. So one newsletter can be used intelligently to make everyone feel more special – with results and conversion rates to prove this.

We all want better relationships
Because when we talk about segmentation, what we’re really talking about is relationship-building based on providing the right message to the right people at the right time. This is the true value of knowing your customers: being able to market to them individually and effectively. And the better you know your customers and your clients, the more targeted and compelling your messages will be, and the more successful you will be at providing them with what they need. And isn’t that really your goal?