By Felix Velarde

Everyone thinks of email as being more or less a broadcast medium. Email agencies and bureaux send millions of emails as newsletters every month to addresses lodged in databases. Some send them daily. No one expects a reply.

But email has a richer use. With apologies for the reminder, but email was the way you had a conversation without picking up the phone. You send a message to your mate, and when they're ready to answer they do. You can have conversations in real time, or with a delay for time zones, research or holidays. Email involves your counterpart in the decisions about how the conversation is paced, where it leads to, when it changes venue, when you meet up.

We appear to have lost sight of the dialogue. It's easy to do so: if you've got 20,000 addresses on your database or 800,000, managing dialogue can be a daunting prospect. And notice I said addresses, not customers. More often than not the email broadcasts marketers manage go blind to everyone they can reach. So email gets a bad reputation, and newsletters have dwindling response rates. Where once it thrashed Direct Mail, now response rates are in the lowest single figures.

We all know what the solution is though. Segmentation makes response rates leap.

Imagine you're sending an email to ten thousand people with three unbeatable holiday offers in it, one for families at the top, one for retired people in the middle, and one for singles at the bottom. And let's assume that everyone reads the first offer, two thirds read down to the second and a third scroll down to the third. If the audience is equally split between the three target groups, the maximum possible response rate is 6,666.

If we could divide the audience into three segments, and send one email with one offer to each, the maximum possible response rate is ten thousand. That's a huge difference in effectiveness. If you started with this three-part email, and it really is an unbeatable offer, just by segmenting it you increase your sales by 50%.

So that's segmentation. Segmentation is a science – one which we practice and improve all the time. It can be really simple like the example above, or it can get very complex. We can segment by, for example, behaviour (what media they consume, do they request a brochure before making a decision, which wines do they prefer), or by demographics (where they live, how many there are in the family, what they earn), or by motivation (whether they are interested in their kids' health, or the environment, or what their neighbours think). When we start working with a client this is what we address first, by looking at what data is available either in the client's hands or commercially, because this will give us insights into what messaging might work to drive increased response.

Segmented email marketing is incredibly powerful, but it's nothing to do with technology, and the technology vendors will always work with specialist eCRM partners with long experience in segmentation strategy to devise the campaigns they deliver for you.

ECRM adds something really special to all this. ECRM is channel-agnostic, in other words it's concerned with reaching the customer wherever they are - email, SMS, social media or websites. A great eCRM strategy uses every touchpoint available to deliver the right messages for the right moment in the decision-making cycle to the right person. ECRM leverages segmentation through email, but creates a relationship through observing how customers behave and what they find most motivating by tracking how they interact with the brand across every digital venue, mobile to landing pages to social media. And that's when email marketing becomes something different, eCRM, an approach and discipline which transforms businesses through radical changes in revenue.

About the author

Felix Velarde is Managing Director at Underwired Amaze. He is one of the digital industry’s pioneers, having set up one of the UK’s first digital agencies (in 1994), and is a leading authority on eCRM. He is a DMA (Direct Marketing Association) Awards judge and teaches the eCRM course for the IDM (Institute of Direct Marketing). He was recently listed in Cream’s Top 100 Innovators.

About Underwired Amaze

Underwired Amaze is a UK's eCRM (Electronic Customer Relationship Marketing) agency, delivering eCRM programmes using email, mobile and social media, online campaigns and websites. Underwired Amaze works for heavyweight brands including McCain Foods, News International, Laithwaites Wine, The Economist and AAR. Established in 1996, the agency is headed up by Felix Velarde, Managing Director, and Jason Holland, Creative Director. For more information, case studies and screen grabs, visit www.underwired.com and www.ecrm.co.uk. To view Felix Velarde’s blog, visit http://felixvelarde.blogspot.com/.