Importance of Email List Segmentation and How to Do It

Importance of Email List Segmentation and How to Do It

When it comes to email marketing, the more targeted you can be with your audience, the better. Learn how to segment your email list for increased engagement.

Long story short, people engage better with marketing emails designed around their interests and needs. Achieving this is only possible with a segmented email list. No wonder one of the most popular email marketing software, Mailchimp, noticed that their segmented email marketing campaigns earned 49% higher CTR and 23% higher open rates than the non-segmented ones.

Imagine the magnitude of revenue loss non-segmentation could potentially bring you! So, stop sending the same email to everyone right now. Even the mightiest email pitch in the world is not 'one size fits all. Instead, invest a significant amount of time brainstorming an email list segmentation strategy with your team. And, allow us to help you in this endeavor of yours.

Email List Segmentation and Its Primary Purpose

Email segmentation is precisely what it sounds like. Through this process, you break up your prospect email list into smaller, more targeted lists. The primary purpose of this exercise is to gain a deeper understanding of your leads and offer them a more personalized marketing experience.

Why is personalization critical? A staggering 91% of customers in a study by Accenture say they are far more likely to purchase from brands who remember what they prefer and provide relevant offers and product recommendations.    

So, the logic at play here is simple! The more you segment and regroup your email contacts based on certain parameters such as age, gender, location, past purchase behavior, etc., the finer your email pitch. For example, if you're an automotive dealer, you won't suddenly bombard a prospect's email inbox with ads for SUVs when all they've bought in the past 15 years are sedans.

Why Do You Need Email List Segmentation?

The incalculable advantages of email list segmentation are countless. It lets you forge long-lasting relationships with your customers. It is one of the foundational reasons behind repeat business. You send more relevant content to recipients, progressing them down your sales funnel.

But, let’s for a minute focus on tangible, measurable email marketing metrics that are positively impacted by list segmentation.

1. Boosts Email Open Rates

Here's the thing! If you send a perfectly crafted email pitch to an unsegmented prospect, they won't open it – even if it carries a scintillating offer. But, if you send a somewhat decent marketing email to a segmented prospect, they will at the very least open it, which will boost your email open rates.

Needless to say, the more prospects open your email, the higher your chances of engagement and subsequent conversions.

As proof, we have the example of a fashion website called SwayChic. All they did was segment their email list based on previous buying behaviors and time of high email engagement and ended up with an average open rate that was 40% more than their previous rate.

2. Improves Click-Through Rates

Email click-through rate depicts the number of people who clicked on at least one of the links or CTAs provided in your email. Since Email segmentation helps you send relevant content that increases your open rates, your click-through rates also go up.

The more prospects like your email content, the higher the chances of them opening it and clicking through the links provided.

3. Bumps Up Conversion Rates

A purchase made after opening and clicking through your email counts as a conversion. The metric that measures it is your conversion rate.

When you send an email to segmented prospects at the right time, the chances of them opening, clicking through, and purchasing your offering go up substantially. All this happens when you remove as much resistance as possible by segmenting your email list.

4. Decreases Unsubscribe Rate

The primary reason recipients unsubscribe from email marketing communication is that irrelevant content is sent at odd times and is sent too many times. List segmentation can help you curtail all these problems, as through this process, you've already segregated contacts based on how they connect with your content and at what times.

In addition to these benefits, know that a segmented email list also helps you avoid spam filters – recipients see relevant content and consider you a safe sender, which promotes general customer happiness.

5 Most Effective Ways to Segment Your Email List (With Examples)

It’s time to get down to action. Here are the five most effective strategies to segment your email list before you deploy your next email marketing campaign.

1. Make Demographic Segmentation Your Starting Point  

Start by segregating your target audiences according to their age, gender, occupation, location, and educational qualification. You can encourage leads to share this information during newsletter sign-ups and website sign-up forms. Or, you can purchase email lists from a reliable third-party data provider. They offer demographically segmented email lists replete with responsive prospects for diverse industries and individuals.

Know that demographic data can tell you quite a bit about your prospects’ interests, what they can afford, where they reside, etc. Using these bits of info can help you share personalized email content at the right time.

Example – Check out this email by a bus service company reminding potential customers to make travel plans in advance for Thanksgiving. Now, this email won't work in the U.K. or anywhere outside of the United States. If your list is segmented correctly, you’ll only send this email to prospects living in the U.S.A.

Demographic Segmentation example of vamoose

Source: Vamoose

2. Segment Through Buying Behavior

Another effective way to segment your email list is according to previous buying behavior. You can get this information by studying customer purchase history, abandoned carts, previous email links being clicked on, and how often prospects make a purchase.

This method for email segmentation serves both B2B and B2C organizations well. Segmenting your prospects as per their buying behavior helps you pitch the right product recommendations deals and discounts to your prospects, thus inching them closer to conversion.

For example – Amazon does this well. Granted that they have countless customers inadvertently generating tons of purchase data, Amazon exhaustively capitalizes on it. The company keeps personalizing its product recommendations, which wouldn't have been possible without segmented email lists.

amazon example

Source: Amazon

3. Segment According to Money Spent

This segmentation practice is especially useful for B2B marketers whose offerings include both high and low-dollar items. Not to say that B2C marketers cannot leverage this strategy. What it involves is segmenting prospects based on the money value of their past purchases.

By studying the expense history of previous customers, you can easily differentiate between the ones more likely to purchase high-value products and the ones likely to buy low-value offerings. Once you've segregated email addresses as per this information, target each prospect with products within their price range.

Example – A women’s clothing retailer, Intermix, used this strategy and witnessed a whopping 15% increase in their annual revenue. What they did was toggle the value and frequency of discounts with different customer groups. How? Intermix created three segments of email lists, namely, 'Brand Shoppers,' 'VIPs,' and 'Sales Shoppers.'

The segment of Brand Shoppers contained emails of customers who were loyal to the brand but were also price-conscious. VIPs included shoppers with high disposable income who would purchase high-value items, and Sales Shoppers included individuals who felt motivated to shop only when there were discounts.

Intermix then started sending non-monetary but highly exclusive incentives like invitations to special events, etc., to VIP customers. The other two segments were only sent monetary discounts ranging between 10% to 30%.   

4. Segment Based on Sales Funnel

Regardless of the nature of your business, you must segment your email list based on where different chunks of prospects are in your sales funnel. Prospects at the top of the funnel, meaning those who have just gained awareness about your brand, should receive different marketing communication than those at the bottom, meaning those who are contemplating a purchase.

Example - A set of brand new subscribers should ideally receive a sequence of welcome emails that contain the overall information of your product line, rather than a specific discount for a product. But, this you won't share with someone at the bottom of the funnel, just clicks away from making a purchase.

You can also segment and regroup the email addresses of prospects who’ve abandoned their cart. Cart abandonment is a prime indicator that someone is at the bottom of your sales funnel. Once you have this email segment ready, send a follow-up communication featuring the products they were about to buy, as Fab did.

An example of Fab

Source: Fab

5. Segment by Industry

Do you sell to other companies? Are they non-profit establishments, startups, e-commerce organizations, or franchisees? Every organization type will have different needs, so the email content shared with each setup should be different from the other.

Example – If you want to market a SaaS email automation software to a non-profit, you won't highlight your corporate rates. You'll communicate pricing differently by saying something like, "Enjoy our special rates for non-profit organizations that make the world a better place." The pitch will be worded differently for a startup and an established enterprise. None of this would be possible if you don't have your email segments ready.  

Two Cents

Manually segmenting your email list can be a daunting task. Therefore, we recommend investing in credible marketing automation software, which comes with tools to segment your email list.

With a segmentation tool and the right segmentation parameters (listed above) in your holster, you can target prospects with relevant email communication at the right time and frequency. 

Rochelle Williams is a Senior Marketing Manager at Span Global Services, a renowned database company offering salesforce customers list. She has a strong marketing and advertising industry background and a deep understanding of SEO, SEM, SMO, branding, and allied marketing strategies.

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