30 Jan 2018
Are you overcomplicating your marketing segmentation?
The email marketing world of 2018 can’t stop talking about audience segmentation.
It’s so hot right now.
With all this buzz, one could be forgiven for assuming that there must be oodles of definitive statistical performance data floating around to justify all the hype.
Yet everyone seems to be segmenting anyway.
Why? Because we’ve been told we have to.
Many of email’s biggest brands have been extolling the virtues of audience segmentation for some time, reporting huge revenue uplifts for segmented campaigns compared to their “one size fits all” counterparts.
With impressive graphics like that, it’s easy to see how the idea that “more segmentation always means more revenue” has been able to take hold.
Sadly, things aren’t quite so simple (are they ever?).
“Segmentation is an absolute no brainer for most brands. The problem is that many brands spend days and days running complex CRM queries without knowing if all that work will actually make a difference. Everyone tests their subject lines, their images and their content, but no one seems to test their segmentation strategy. – Stefan Britton, CCO, Phrasee
Yes, segmenting your mailing list can indeed produce fantastic results. The question is, where does it end?
In a world filled with over 7 billion people, each and every one of them a beautiful and unique snowflake, segmenting an audience can be a rabbit hole. How far down that rabbit hole a brand chooses to go can have very real email marketing ROI ramifications.
Over-segmenting an audience can often amount to little more than wasted time, statistically insignificant performance data, and even lost revenue.
A leading insurance brand (no names allowed… NDAs are a sacred trust!) invested 3 people and 4 days (that’s 12 working days!) to segment their emails into specific groups based on age, income, location, life stage and contract renewal date. Once the segments were created, the company sent personalised emails to each segment. The thing was, each group’s “personalised” emails were almost exactly the same. They even used the exact same subject line for all of them!
What was the point? Did the ROI (measured in time spent on all the personalized campaigns involved vs actual sales) make it worth the effort?
Not even close.
They could’ve done far less work, and probably received the same number of opens and clicks (or maybe more!), if they’d decided to personalize their subject lines instead!
The truth is, segmentation is great… up to a point. Segmenting your database into obvious segments (prospects, engaged, ex-customers, etc.) is a sensible thing to do. These are all clear stages within the buyer’s journey which necessitate different messages. It makes sense to talk to such groups in different ways. Building a segmentation strategy to reflect this fact will positively impact your brand’s bottom line.
Just remember: Beware the rabbit hole!
Chase the limited benefits of segmentation too far down the hole, drilling deep into demographic, behavioural and characteristic data, and all you’ll find will be diminishing returns.
“Excessive segmenting can result in the law of diminishing returns. Marketing ROI suffers the more finely an audience is segmented, as economies of scale are lost” – The IrI’s “The Art and Science of Segmentation” report
For any brand looking to improve its email marketing strategy, segmentation is well worth looking into. Just remember to ask yourself a few questions before you dive in, and ask yourself again throughout the process:
- Why am I doing this?
- What is the benefit?
- Am I seeing results that warrant the input?
Be aware of email marketing brands pushing an agenda. It might be in the interest of a number of services to promote segmentation and more segmentation, but it might not be in yours.
Here at Phrasee, we believe that a segmentation “sweetspot”, aligning great email marketing efforts with data sizes that produce results, exists for every brand.
We’ve helped many brands find their “sweetspot” already, and the results have been awesome.
Stop wasting your time over-segmenting your audience, and give Phrasee a call instead!