Ultimate Guide to eCommerce Email Segmentation Published February 27, 2018 Savvy marketers know a one-sizes-fits-all approach to eCommerce just doesn’t cut the mustard. Because not all customers are the same. Every customer has their own personality, motivations, and behaviours. Successful marketers no longer speak to every Tom, Dick and Harry (or Harriet!) in the same way. Instead they’re segmenting. They’re grouping similar types of customers together and only sending content that’s relevant to them. And it’s working. According to the DMA segmented and targeted emails generate 58 percent of all email revenue. So, if you’re working in eCommerce, email segmentation is the easiest way to pump-up profits. But, let’s face it, segmentation has a bit of a bad rep. Some people tie themselves up in knots trying to figure out the best way to slice and dice their customer data. To help, we’ve created the ultimate guide to eCommerce email segmentation! Purchase history segmentation Segmenting by purchase history means grouping customers together who have made similar purchases before. It might mean they’ve all purchased the same item or similar types of products. By using this method you can make sure each segment receives content that genuinely reflects their previous interests. This makes your marketing more relevant and more likely to result in sales. ASOS maximises the appeal of its sale by segmenting by purchase history. The brand shows dresses to someone who’s bought dresses in the past to make its sale message as relevant as possible. Pros of purchase history segmentation Segmenting by purchase history is useful if you want to send out product recommendations, replenishment, or renewal campaigns. Each of these campaigns is reliant on knowing what the customer bought before. Cons of purchase history segmentation Segmenting by purchase history might limit your ability to introduce new products and cross-sell into new categories. It’s also hard to show relevant content to new customers who don’t have a purchase history. Demographic segmentation Demographics refers to statistical data such as age, gender, income level, company position, and geographical position. These attributes allow you to group customers. Segmenting using demographics means you can make what you’re saying more relatable to the recipient’s circumstances. This retailer changes the image of the couple according to what age range the recipient falls into. Tailoring the image like this makes the message appear more relevant to the recipient. Pros of demographic segmentation Knowing someone’s age, gender or position might mean to you speak to them differently. You can include relevant products, offers or content which you think will motivate each of these groups. Cons of demographic segmentation Just because people are a similar age doesn’t mean they have the same interests or tastes. Make sure you’re not relying one or two bits of demographic data and filling the gaps with risky assumptions. Get as much information as you can and segment smartly. Buyer persona segmentation Buyer personas are semi-fictional representations of your customers types, based on market research. They tell you who they are, what they like, and why they’d choose your brand. Personas are a really clever way of getting inside the heads of your customers to make sure you appeal to them. And once you’ve built up separate pictures of your different customers you can tailor your marketing to them. Madewell clearly understands it has different types of customers. The brand seems to have created several different versions of the same email to appeal to each of these personas. The first persona is cute and casual: The second person is that of fashion diva: The third persona is more of a laid-back tomboy: Pros persona segmentation Buyer personas help you get an in-depth feel for each type of customer you have. They can help you put yourself in their shoes and understand what their motivations are. Cons of persona segmentation Segmentation based on persona is only as good as the data your personas are based on. If you don’t have the right customer research you can easily make too many assumptions about who your customers are. Customer interest segmentation You can use surveys or email preference centres to gather information about what people are interested in. You then group people together according to these interests and send them relevant campaigns. Selfridges starts off its relationship with customers by asking them what they like. It’s a simple way of making sure emails are always relevant and wanted. Pros of interest segmentation You’re getting the information straight from the horse’s mouth so you don’t need to second guess what your customers want. Cons of interest segmentation People don’t always know what they might be interested in. Sometimes we surprise ourselves and given the right set of circumstances we might change our minds! Engagement level segmentation Engagement level segmentation is segmenting according to how interested customers seem in your brand. Engagement level can be measured by how many times they opened and clicked on your emails. You could also look at how frequently they’ve visited your site or when they last made a purchase. Using this information you can create several different segments such as highly engaged, occasional, or lapsed customer. Notonthehighstreet.com uses the engagement levels of customers to decide who to send this lapsed customer campaign to. It’s a great way of targeting customers who’ve fallen off the radar. Pros of engagement level segmentation This is a great way of nurturing relationships with customers who have a different level of commitment. For people who open and click a lot you can focus on offers which will increase frequency or value of spend. For those who are less committed you can send more enticing offers to tempt them back. Cons of engagement level segmentation It can be hard to identify the motivations behind a customer’s engagement levels. It could be your brand’s too expensive, they only buy from you at Christmas or their tastes have changed. You might find you have to shift the focus of your re-engagement campaign several times to get a response. Behavioural segmentation This is simply grouping people together according to how they behave. Customers might open your emails but not click, browse but not buy, or put items in their basket and then leave them there. Retailers using behavioural segmentation segment their customers by these actions and send real-time campaigns in response. Debenhams’ retargets visitors with items they’ve recently browsed but not put in their basket. By contacting them earlier they encourage them to come back without having to wait for them to place items in their basket. Pros of behavioural segmentation The biggest plus to segmenting by behaviour is you can retarget customers with email automations in an instant. You can send them a relevant email the moment they browse, click, and leave your site, asking them to come back. And good software providers (like us!) help you along the way with tools that let you do it automatically. Cons of behavioural segmentation If you’re a multi-channel retailer it can be harder (but not impossible) to segment by people’s offline behaviour. But where there’s a will there’s always a way! Retailers are now successfully using shop floor heat maps, iBeacons, and staff observations to capture in-store behavioural data. Transaction amount segmentation You can create segments according to how much people spend with you. Transaction amount segmentation is a nice way to see who your high, medium, and low value customers. This means you can target them with the most appropriately priced products and offers. And once you know what customers spend you can gently encourage them to buy more. We love how Paperchase incentivises customers whose average transaction is below £20 with an offer just above. Pros of transaction amount segmentation It’s a nice way of increasing metrics such as average order value. With a few well thought-out offers you can gently encourage people to buy more in an instant. Cons of transaction amount segmentation By focusing on what people spend, you’re assuming that every customer is always price sensitive. There are lots of other factors that influence the purchase decision! Sales funnel position segmentation This is a great tactic to use if you’re trying to get someone from prospect, to customer in as few steps as possible. Segmenting by where the customer is in the sales process means you can target them with relevant messages to nudge them towards the next step. It might mean sending someone who’s researching a purchase some customer reviews to reassure them. Or it could be suggesting complementary purchases to a person who’s just bought to get them to buy again. Luxury furnishers Amara uses this method to target people who’ve not made a purchase yet with an incentive to place their first order. Pros of sales funnel position segmentation It’s a smart way of continually pushing people towards conversion. It also naturally creates a customer journey which is sympathetic to the customer’s mindset at various stages in the purchase cycle. Cons of sales funnel position segmentation It requires a bit of patience. If customers aren’t ready then you can find yourself stuck offering endless advice and reassurances. It might be that they just need a well-timed promotion to kick-start things! RFM segmentation RFM stands for recency, frequency, and monetary. It is a way of grouping customers together based on their transaction history. RFM segmentation looks at how recently, how frequently, and how much customers buy. It uses these factors to assign a score to each customer which defines how they’ll be treated. The higher the score the more special treatment the customer receives. Wild Poppies does a great job of sending high-scoring customers a campaign which encourages and rewards them for spreading the word! Pros of RFM segmentation RFM is a clear way of moving customers towards more commercial behaviours which result in more sales. Cons of RFM segmentation Retailers using RFM only focus on quantitative information about the customer. This doesn’t always give the marketer context. Some marketers tend to focus on their highest scoring customers and fail to nurture their relationship with lower scoring segments. Takeaway There are a multitude of ways to look at your customers. Each has its plus points, and its drawbacks. Deciding which segmentation methods are best for your brand is best done through testing and learning. With the right software in place you can test, learn, and refine your segmentation strategy. This way you can see which method of segmenting your customer data gives you the best results. To get started with segmentation, you don’t need to spend hours studying and manipulating your customer data. PureIntelligence lets you quickly understand, explore, and navigate ways to segment your customers. It brings your multi-channel data together from a bunch of different sources and displays it in one single customer view. From there you can spot patterns, trends, and build new segments with an easy drag-and-drop interface. And once you’re happy with the results you can send out campaigns automatically to the segments using PureCampaign. This means you can stop fretting about the data and focus on the sales instead. To see how our software makes segmentation simple, book a free demo below.