When marketing initiatives succeed or fail, the outcome is determined by how relevant your message is to the customer.
In email marketing, relevance is achieved by segmenting your subscribers and customers to deliver email content that creates context for recipients.
Contextual experiences increase engagement, conversion and the profitability of your email campaigns.
Relevance → Context → Action → Retention
Blasting your opt-in list with promotions that aren’t relevant to them is the opposite of this philosophy. We’ve all gotten those retail email newsletters with offers for stuff we have no interest in buying. Here’s one I got recently:
At Rejoiner, we preach against this practice and have daily conversations about segmentation with our clients. Since there are thousands, if not hundreds of thousands of possible strategies for segmenting an eCommerce list; clients ask us for the most important segments that retailers should be using to power their email marketing efforts.
Depending on the vertical industry that the client does business in, our answer will include segmentation parameters that break down into some combination of the following four categories:
The eCommerce Email Segmentation Matrix
Age, Gender, Geography, Date of Birth
Item Names, SKUs, Item Category, Price, Order Size, Item Quantity, Subscription vs. One-time, First Purchase Date, Last Purchase Date, Total Spend, AOV
Page views, Add-to-cart, Add-to-wishlist, Refer a friend, Purchase Frequency, Purchase Latency, Opens, Clicks, Forwards, RFM Score, Suppression
Device, Browser Preference, Email Client
By combining these segmentation parameters, you can build a complete picture of a customer’s relationship with your business, what stage of the customer lifecycle they’re in, and deliver email communications when customers are most likely to be receptive to your message.
Here are six foundational eCommerce segments that power the highest performing lifecycle email campaigns for our clients (and how we set them up inside our software):
Low Value Customers
Example: Order Value < $25
We use low value filtering to segment customers making very small purchases. This is important for browse and cart abandonment programs where incentives are being used. Suppressing offers / coupon codes for abandoned carts that don’t meet specific value thresholds prevents a situation where margin is lost on a very small order.
High Value Customers
Example: Order Value > $200 or Specific SKU
‘High value’ customers can be represented by the total order value of a cart they abandoned, or the fact that they were browsing in a high value product category. The definition is largely dependent on your specific business case and what stage of the funnel you’re targeting. A B2C retailer may want to send a high value customer a more aggressive offer to drive conversion from an cart abandonment campaign. A B2B company may need to connect a customer from their high value segment with the right sales rep in the right territory. The definition of a high value customer can vary widely depending on your industry, business model, and sales process.
First Time Customers
Example: Purchase Count = 1
First time customers are an important audience for your business because of their ‘recency’. Recency is the idea that the more recently a customer has purchased from you, the more likely they are to purchase again. Think about that for a second. The most likely group of customers to make a second purchase are the ones that just made their first. Capitalize on this opportunity by triggering a welcome series for your first time customers that reinforces their initial purchase decision. Tell them why they should continue doing business with you and emphasize your unique selling proposition. This is your opportunity to not only drive a second purchase but also to impart those brand warm and fuzzies onto your new customers and tell your story. First time customers are the most likely candidates to be receptive to your message.
Example: Purchase Count > 5 OR Spend > $1000
VIPs are the customers that drive your business over the long term. We’ve all heard the 80/20 rule. 80% of your profits are generated by 20% of your customers. In B2C eCommerce, that ratio can be even more dramatic for some companies. Define the characteristics of what makes a VIP for your company. Is it number of purchases? Total spend? Average order value? Define those business rules and set up a VIP campaign that is designed to thank your best customers for their business, automatically. Here’s an example: For a customer that has spent over $200 on two different occasions, this retailer sends a loyalty email thanking the customer for their business and encourages the customer to make their third:
Example: Cart Item “contains” 30 Day Supply
Replenishable products are those that have an average useful life or are consumed over a period of time by your customers. Segmenting these customers creates an opportunity for time-induced reorder campaigns like this one from 1-800 CONTACTS. If you sell consumable products, try segmenting customers based on what you believe is the typical consumption period for a given product and trigger a campaign at the end of that consumption cycle. You may find that customers just need a gentle push to drive that reorder and that means more automated revenue generation for your company.
Example: Last Purchase = 140 Days
Next to cart abandoners, customers exhibiting signs of defection are the most valuable segment to pay attention to. These are customers who have purchased from you in the past, but haven’t been back to your site in an abnormally long period of time to complete another purchase. “Abnormally long period of time” is a key part of the discussion here. In order to know what is abnormal, you also must know what is “normal”. More on this shortly.
These customers aren’t buying for a reason — maybe they had a bad customer service experience or they’ve fallen in love with one of your competitors. Don’t worry too much – you usually have an opportunity to save this customer. Set up your segmentation rules to recognize when a customer is exhibiting signs of defection and trigger your marketing at the moment of maximum impact. This is commonly called a win back campaign.
Now, how do you identify the perfect moment to deliver a win back email? We use an approach that measures the average time it takes a customer to move from purchase 1 to 2, 2 to 3, 3 to 4, etc. By mapping these periods of purchase latency, we can estimate the average reorder period for a given purchase frequency. You can get really sophisticated and do this type of analysis within product categories or even for specific SKUs.
Here’s an example of a product specific win back campaign: For a customer who buys a Swiffer, what is the average amount of time it takes them to come back and buy their first refill for the cleaning solution? Using our purchase latency analysis tool, we can determine that the majority of customers in the Swiffer segment made this purchase before 100. For any customer who hasn’t purchased their re-fill by Day 100, on Day 101 your win back campaign would trigger to for customers exhibiting abnormal purchase latency.
See what we did there?
We built a campaign that will trigger at the moment of maximum impact and won’t waste your precious marketing dollars on customers before they need to be marketed to.
What you should do now
If your company would like to understand the revenue potential of sending email campaigns using the segments mentioned in this post, we suggest you request a free ROI report here.
If you have any comments or questions about this post, contact us here.