To Each His Own E-mail
In old direct marketing parlance, marketers asked, “East or west of the Mississippi?” This was how they segmented customers and prospects. Segmentation by demographics is important, but in today’s landscape, marketers have to do much more in terms of understanding their audience than simple geographic segmentation. They need to be sure they’re delivering a relevant message to their audience every time.
Let’s begin with the most straightforward type of segmentation: demographic. Demographic information probably is the most common type of information gathered from your customers, consisting of basic information such as name, address, phone and metropolitan statistical area (MSA). Their address and MSA, of course, tell you something about where they live. Do they live in a big city—an urban and cosmopolitan environment? Or do they live in a small town? Do they live in a house or an apartment? In what part of the country do they reside? Are they from the South, the Plains or New England? Knowing this much about your customers allows you to do some basic segmentation.
As your interactions with them progress, you might have an opportunity to learn more about them: age, educational level, profession, hobbies, if they have pets, what kind of car they drive, etc. Using this information, many more segments can be parsed, depending on what’s relevant to your business, your sales cycle or other factors—both internal and external. With these more sophisticated segments, your messages become more relevant to your audience. Your goal is to develop trust with every marketing communication, and the best way to do this is by providing your customers with the information they’re looking for.
Let’s take an example: Company X, an online retailer, acquires a new customer. The customer makes a purchase and some basic information about her is entered into the database. Company X adds the customer to its mailing list and sends her e-mails about other items in the product line. Whenever she makes an additional purchase, the information is added to the database. With each new purchase, Company X learns more and more about this customer: who she is and what she buys.
The ongoing capture of information is essential to segmentation. Peoples’ tastes and habits change. You can’t 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 about customers—what they buy, the lists they opt in to, etc.—and these things tell you about their tastes and, perhaps, their lifestyles.
This process should be self-propelling. Customer information continually captured and analyzed drives further segmentation and analysis, leading to an ever more refined marketing program. For the most effective marketers, this is a way of life. But only if they gather enough data on their customers.
Here are the basic data elements of successful segmentation: Start with geography/location—including name, address and ZIP code. The most important data on your customers, however, is what types of products they’re interested in. This is the absolute most important thing you can find out. Once you have this information, go back to them two to three times a year and continue to ask them—just a few questions at a time—about what types of products they’re interested in. Continually update your database.
Some marketers do this. Many do not. Those that do, often stop at the basics. 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 e-mail campaigns based on some basic audience segments. This is good, but it’s only scratching the surface of what can be done.
On Good Behavior
To truly serve your customers and address their needs, you need to capture and analyze behavior. Behavioral marketing, not surprisingly, is based on each of your customer’s very specific behaviors, in your inbox or on your Web site. Perhaps they’ve expressed an interest in a certain product. They’ve viewed it on your Web site numerous times, for example. Maybe they’ve even put it into their shopping carts, intending to purchase it—but they don’t.
Knowing this about customers’ behavior means you can market to them very specifically. They’re coming close to a purchase, but need something to tip the scales. Possibly a coupon or a discount could sway them, or a different pricing structure. Maybe they would like free shipping. You obviously can entice them in any number of ways.
Key customer behaviors that will help in the segmentation process include:
• purchases and purchase patterns;
• clickthroughs on specific products more than once (they keep looking at it, but don’t buy);
• forwarding e-mails to friends and colleagues; and
• other actions, such as phone calls to your company or other communications.
Whatever you offer them, knowing that a segment exists because you’ve captured and analyzed this behavioral information gives you the opportunity to market to customers more effectively.
A Historical Perspective
Historical segmentation—based on what the customer has done in the past—is another type of important behavioral segmentation. 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 much of his clothing from this retailer, year in and year out, and opts in to its mailing list.
The retailer starts sending him e-mails about its 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, it continues to send this customer dozens of e-mails 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 e-mails because its marketing has ceased to be relevant to him. Even if the retailer sends him an e-mail about a sale on men’s clothes, the customer won’t see it because he stopped opening the e-mails. He might even have become a bit irritated that the simplest bit of information—his historical purchasing behavior—is continually disregarded in the company’s e-mail marketing.
To better track customers’ historical behavior, and thereby segment more effectively, look at:
• customers’ purchasing behavior;
• opening of e-mails (Are people in certain segments opening their e-mails more than people in other segments?); and
• historical patterns—for instance, a customer continually clicks through on e-mails about country music, but never on rock ’n’ roll.
Understanding customer behavior and following up with the proper segmentation will help you execute more complex customer research, as well. For instance, once you have effectively segmented your customer base, you can conduct split-testing. 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; 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’re better fulfilling their needs, while at the same time further developing your e-mail marketing programs.
As well, once you have the basic data for your customers, you can move to the next level of data capture. The next level and time frame for additional information is just after they’ve made a purchase. Find out how was their purchasing experience. How can your company better serve them? You want to make sure you’re providing the right types of offers. To do this, you need to take a “deep dive”—take a hard look at campaign results and individual responses and try to determine a better way to market to those people.
Because when we talk about segmentation, what we’re really talking about is relationship-building. This is the true value of knowing your customers: being able to market to them individually and effectively. The better you know your customers, 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?
David Dabbah is director of sales and marketing at Lyris Technologies Inc., an e-mail solutions provider. He can be reached at (800) 768-2929.