How Segmentation Leads to More Profitable Email Marketing Programs
In a keynote presentation at the Retail Email Exchange conference in San Diego, Kevin Hillstrom, president of MineThatData, a cross-channel retail marketing consulting firm, discussed how segmenting your customers based on factors such as age, geography and past behavior can go a long way in determining how successful your email program is.
“Think of your customers via spreadsheets,” Hillstrom said. “One row for every customer in your database, and each column in that spreadsheet represents something about that customer.”
The age of the customer should occupy one of those columns, Hillstrom advised. Customers 55-years-old and over are unlikely to tweet or embrace social media (although there are outliers). On the other hand, younger customers prefer to consume media via mobile devices, Facebook, Twitter and other newer technologies. The most responsive (i.e., dollars spent per customer over time) customers to email marketing tend to be middle-aged (age 40-49).
Customers often act differently based on their age. For example, an email to one of your older customers who still prefers direct mail is likely going to push them to call the company to transact. An email to a younger customer is going to push them online to transact, and in many cases in a nontrackable manner — you can't see that they've opened or clicked on the email you sent them, but over the course of the year you can see that they've spent more money with you.
If this is the case with your brand, Hillstrom suggested running a three-month holdout test with a group of your younger customers. You'll likely find the performance of the group that receives emails is significantly better than what the open, clickthrough and conversion rates would suggest. Consumers are more responsive today, Hillstrom said, but marketers aren't attributing the performance of marketing campaigns properly. It's very difficult to do proper attribution with email marketing programs without A/B holdout tests, Hillstrom added.
Related story: Getting Started With Email Segmentation