The Role of Segmentation in Personalized Email Marketing

Your email inbox is testament to a modern reality: we're overwhelmed with communications from every channel. The inexpensive nature of digital communications makes it easy to inundate consumers with a veritable flood of messaging. From social media to email marketing, there is no shortage of noise.

But what about sorting the signal from the noise?

Modern marketers have a novel solution to the signal-to-noise ratio: personalization. Make the message relevant, timely, and tailored to the individual, and you will cut through the static and stand a chance of making a genuine connection. This is easy to do on an individual level–I bet your emails to friends, colleagues, and family have a high open rate (at least, they should).

However, creating connections at scale is a unique challenge. To meet this challenge, we have a solution in marketing segmentation. The data we collect about our customers is highly valuable and can be used to create personalized campaigns at scale. While individual personalization may be difficult when your email list comprises thousands of subscribers, segmentation offers a way to organize customers into similar categories.

In this post, we're going to look at the role of segmentation in email marketing and how you can add this tool to your toolkit.

What is email marketing segmentation?

Segmentation is the process of organizing your customer database into distinct categories based on data attributes like demographic information or behavioral characteristics. By grouping similar customers together, you can effectively create personalized messaging for smaller subsets of your customer database or email subscriber list.

This is an effective strategy for achieving personalization, which becomes increasingly effective as you divide your segments into smaller and smaller groups. In parallel, it's important to be able to tailor messaging to each subgroup so the challenge is crafting unique and compelling content that resonates with each group. Marketing automation platforms like Marketo allow for this to be done through its dynamic content feature set.

Segmentation can have a significant impact on your email marketing metrics. In fact, some in the industry report that segmented emails can drive upwards of 30 percent more opens and 50 percent more click-throughs than generic email. This is a big deal in an industry looking for any advantage to cut through the deluge of email noise and create meaningful brand engagements.

How do you create marketing segmentations?

How do you create marketing segmentations?

Marketing segmentations start with the available data. Collecting and analyzing customer data helps to reveal trends in the data to enable you to start to group users together. You want to find a sweet spot of segments that are large enough to be representative of a meaningful cohort of customers while also presenting opportunities for unique messaging. Segmentations can be very useful for data analysis ,but when it comes to personalization strategies, you want to ensure each segment can be marketed to in unique ways.

Segmentations that are too broad will fail to offer the full benefits of personalization. For instance, if you're an e-commerce brand, emailing everyone on your list who has purchased shoes in the past 12 months isn't likely to yield exceptional results. However, creating a segment based on users who purchased a particular brand or type of shoe, such as a running shoe vs a trainer, may be a winning strategy.

There are three main types of marketing segmentations:

• Demographic Segmentations
• Behavior Segmentations
• Engagement-Based Segmentations

Let's look at each one more closely as well as some examples.

Demographic Segmentations

A demographic segmentation is one that divides your audience based on observable characteristics like age, gender, income level, role, industry, and geographic location. These values may be collected on form fill or provided to you through third-party data appending tools.

Examples of Demographic Segmentations

Behavior Segmentations

Behavioral segmentation examines customer actions and interactions with your brand, such as purchase history, product interests, web-browsing activity, and cart abandonment. The objective is to provide a view into where the customer is with their journey and to deliver relevant content based on their current stage.

Examples of Behavior Segmentations

Engagement-Based Segmentations

Similar to behavioral segmentations, engagement-based segmentations take a more granular look at how customers interact with your marketing campaigns. It may include metrics like email opens, click-through rates, and engagement frequency, while also accounting for a customer's lifecycle stage.

Examples of Engagement-Based Segmentations

How to build effective marketing segmentations

If personalization is the pathway to providing new and novel ways to create authentic connections with your customers, then segmentations are the data signposts that illuminate your path. In other words, effective marketing segmentations are formed through the thoughtful collection and analysis of customer data.

In this section, let's look at three components of building effective marketing segmentations:

• Data collection and management
• Automation in segmentation
• Avoiding common mistakes

Data collection and management

As a first principle in segmentation, you need good data collection and management processes. There is no shortage of potential data to collect but deciding what's relevant and useful for creating segmentations is the hard part. High-quality data can be collected from your website, customer interactions through your CRM, and through engagement with marketing campaigns.

Some modern approaches to the challenges of customer data collection include using a CDP (Customer Data Platform). CDPs act as a unified, single-source of truth for customer data, integrating with your marketing automation platform, CRM, and other systems to provide a holistic, cross-platform view of your customer. CDPs can help with data collection and management, as well as keeping your entire organization in sync on customer segmentations.

Another common practice is leveraging both first-party and third-party data to create rich customer profiles. First-party data is information you collect directly from your customers, for example, by collecting data from website interactions or from engagement with marketing campaigns. Third-party data can be used to append data to customer profiles and comes from outside sources, such as data enrichment platforms. While third-party data may be less reliable than first-party data, it can still help to enhance your knowledge of the customer without having to directly engage with the customer through surveys or forms.

Automation in segmentation

Automation tools are an indispensable part of the modern marketing process. They not only enable the collection of data from your websites and email marketing activities but also automate segmentation workflows. For instance, in Marketo you can set up Segmentations based on data from customer profiles which will automatically enroll qualified contacts into relevant segments.

Marketing automation platforms like Adobe Marketo Engage and Pardot also allow you to automate customer-facing activities like nurture campaigns. Features like Dynamic Content enable you to use segmentation to create personalized content at scale. You can also set up workflow logic to progress contacts through the customer lifecycle based on data points and their current segmentations. In this way, automation can be a key tool in your segmentation toolkit.

Avoiding common mistakes

In our earnestness to implement segmentation, we can commit some common mistakes. Here are a few to be mindful of:

• Over-Segmentation: It may be tempting to create numerous segments to cover all types of use-cases, but too many segmentations can lead to complexity. Your objective is to create unique segments that allow for improved data analysis or personalization campaigns.
• Using outdated data: Your customer preferences and behaviors will change over time, which is a good reminder to regularly audit segmentations to ensure your approach uses up-to-date information.
• Segment overlap: In creating segments, you might find that customers fall into multiple categories. This increases the possibility of sending conflicting messages to the same individual because of their membership in different segmentations.
• Neglecting to test: A segmentation is only as good as the results it produces. Develop and maintain a process of continuous testing with A/B testing to optimize messaging, offers, and approach to different segmentations.

The Role of Dynamic Content in Segmented Email Campaigns

Segmentation is the building block of marketing personalization. Each data point represents an opportunity for customized, tailored messaging to your customers. Once you've done the work of organizing your audience into distinct segmentations, you can tackle the challenge of scaling your personalization strategies. This is where dynamic content plays a critical role.

Dynamic content allows marketers to customize sections of an email or landing page based on the customer's segment. This modular approach allows marketers to design assets with pockets of content in the email or landing page that are highly customized. Modular design is popular because it allows you to create an overall design and layout that can be optimized and tested; however, individual components or modules can then be tweaked or adjusted accordingly.

For example, an e-commerce brand might have an email template where the product recommendation block changes based on the customer's purchase history. This approach allows your design team to create emails that work for your entire mailing list but weave in segmentation and personalization where the data allows for it. Many platforms that support dynamic content allow for a default "fall back" option when no relevant segment is found.

No-Code Tools for Creating Dynamic Content

One of the challenges in creating dynamic content to customize messaging for segmented audiences is the actual design and development process. No-code campaign creation tools like Knak are flipping the script; now non-technical marketers can create emails and landing pages that leverage dynamic content without needing to know a line of code.

Features like drag-and-drop functionality allow marketers to create emails just as they would assemble a Lego kit. Take individual blocks (modules) and arrange them in your design to create the overall layout. Then, leverage Knak's dynamic content features including advanced scripting capabilities like using Velocity script to create beautiful emails. The best part is that you can create reusable content blocks that can be used in other emails, which is especially powerful when combined with A/B testing to refine and optimize your design.

Effective Segmentation for Optimized Email Campaigns

The saturation of our email inboxes is complete; both consumers and marketers crave more personalized, relevant messaging. Personalization is held up as the gold standard for modern marketing communication but underpinning this fantastic new capability is segmentation. By carefully categorizing your audience into relevant groups, you can create personalized content at scale.

The tools and techniques outlined in the post are designed to provide a roadmap for you to move beyond generic email blasts to a more thoughtful, customer-centric approach. Your approach to segmentation runs in parallel with your creative marketing and data collection processes. A successful segmentation strategy should blend the art and science of modern marketing to help you not only cut through noisy inboxes but to earn the right to speak directly to your audience. The results, we believe, will be better metrics, improved engagement, and quality brand connections with your customers.