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Customer Retention. Automated

Customer Segmentation 101

Posted by Polly Flinch on Jan 19, 2016 12:23:05 PM
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ThinkstockPhotos-73224060.jpgIn the 2015 Retention Survey, we uncovered that 50% of retailers who were surveyed did not segment regular promotional campaigns. This number was and continues to be stunning because of all the research out there touting that segmenting promotional emails can have an overwhelmingly positive impact on open, click, and unsubscribe rates. In fact, MailChimp did a study on customer segmentation, and found that segmented campaigns saw 14.47% higher open rates, 58.89% higher click rates, and 7.88% lower unsubscribes when compared to non-segmented campaigns.

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Now these results will vary for retailers based on their industry, how engaged their newsletter list is, and other factors. But no matter what you sell, there are certainly ways to hone in on the correct customer segments to really ensure that your message resonates. So, what do you need in order to segment your customers? At a very basic level, you need access to data that is associated with your customers’ email addresses. This can be anything you want: gender, shipping zip code, products purchased, categories purchased, date of last purchase, etc. The other obvious thing you need is a way to send emails, so if you aren’t doing any email marketing, that’s the first place to start. Here’s a list of some great email providers.

 

Next, you need to figure out what criteria you want to use to segment your lists. Most companies have a list of promotional campaigns they will be running throughout the next couple of months, as well as big releases that are coming up. Take some time to really digest your email calendar and figure out what segments should get each message. Make sure that you also note any suppression lists you need to include.

 

How does one decide on suppression lists? It can be tricky to understand when to suppress a customer or subscriber from a send, so I’ve laid out a few scenarios for you below:

 

SCENARIO 1: 

You are planning a promotion on one particular item or even a few items.

Suppression List: Anyone who has purchased this exact item(s) in the past week or two. Having been the victim of buying something at full price only to receive an email a few days later saying that the item is now on sale, I can honestly say it’s one of the most frustrating emails to receive. An ill-timed email can be the reason why someone who was on the path to being a loyal customer drops off the face of the planet. As the old saying goes, “ignorance is bliss.”

 

SCENARIO 2: 

Promotion on a specific category.

Suppression List: This is more a judgement call and may apply to particular industries more than others. However, it’s important to weed out customers who buy from certain categories that seem like they would have no interest in another category that is being promoted. An obvious example: if you’re doing a promotion on women’s bathing suits, you may want to suppress anyone who only purchases men’s apparel.

A real world example comes from my parents: my mother is a painter and buys lots of supplies online that all reflect her preference for painting (i.e. brushes, paints, canvases, etc.) However, on a fairly regular basis she receives promotional emails for ink printing tools, sculpting equipment and more. The number of times I’ve gone over for dinner to find her grumbling about receiving these messages is more often than I’d like to admit. In fact, she’s been shopping around for a new art supply company to buy her supplies from. With a simple suppression list this entire scenario could have been avoided.

 

When it comes to segmenting your promotional campaigns, planning ahead is the key to scaling the practice. The most important thing to remember when designing your segmented promotions is that it’s much easier to tweak creative and copy, rather than designing a whole new message for each send. Bottom Line: work with what you've got instead of reinventing the wheel.

 

 Customer Segmentation Guide for Retailers

 

 

 

 

Topics: Customer Retention, Best Practices