The Beginners Guide to Email Segmentation

59% of B2B marketers say that email marketing is their most effective strategy for generating revenue. While it’s decades old, email has stood the test of time, remaining as one of the great marketing tools.

However, many businesses aren’t using it to its full potential. They send newsletters out to huge lists, thinking that every subscriber is alike. This is a big mistake.

Not every person who subscribes to your newsletter is the same. They’re in different stages of the buying process, have varying lead scores, and unique demographics.

That means if you send out mass emails without personalizing them, you’re missing out on potential revenue. That’s where segmentation steps in. Segmenting your subscribers allows you to tailor every message for an exact audience, boosting conversion rates and email marketing effectiveness.

Today, you’re going to learn the basics of email segmentation to increase the conversion rate of your email marketing campaigns.

What is email segmentation?

Have you ever heard people say that email marketing is dead? It is. But, only if you’re not segmenting. Sending out mass emails to the same people without any personalization is rarely going to yield good results.

List segmentation is taking your email list and breaking it down into smaller chunks. These individuals groups, called segments, are based on behaviours that your business finds important. You can cater to each group specifically, tailoring your message and promotions to their exact needs.

Imagine a digital marketing agency, for example. How they would communicate with a segment that’s already inquired about services would be different than a group of users that just opted in.

This is what it looks like in action:

Next, let’s look at the benefits of email segmenting in depth and how you can begin segmenting your own lists.

Benefits of email segmentation

Segmenting your email list has many benefits, and you can begin today if you have an existing subscriber base. These are some of the many advantages you can look forward to as you break your lists into groups.

A case study by Mailchimp

Mailchimp, the email marketing automation company, did a study on segmentation and its effects on performance. They sampled a total of 2,000 users and 11,000 segmented campaigns.

Across all campaigns, Mailchimp found the following data when marketers used segmentation:

  • A 14.31% increase in open rates
  • Click throughs were 100.95% higher
  • Bounce rates decreased by 4.65%
  • 9.37% less users unsubscribed

This data shows more subscribers will open your emails as they are written for their specific interests. They will also bounce less, and are much more likely to click through and keep subscribed. Sold yet? If not, here’s more reasons to practice segmenting.

It increases your conversion rates

You like making sales, right? Email segmentation will help you achieve this by increasing conversion rates. It’s not uncommon to experience a 760% jump in revenue.

Think about it — by placing more relevant and highly targeted material in front of the right audience, you’re improving the likelihood of them following calls to action, moving along your funnel, and ultimately becoming a paid customer.

Take the company Isotoner as an example. They were able to increase revenue generated from email by a mindblowing 7,000% by segmenting. To achieve this, they created segments based on what products were viewed and then sent them relevant offers. Consider how many more sales you could be making if you started, especially with the holiday season coming.

You retain more subscribers

What’s one of the biggest issues marketers face with building an email list? Churn rate. You can be getting all of the opt ins in the world, but users will eventually unsubscribe at some point. Heck, the average churn rate is 25-30% per year. That means you’re losing a quarter or more of your subscribers without doing anything. When you being segmenting your subscribers, you will keep more of them over time.

Let’s imagine that Bob runs an e-commerce store and has a subscriber list of 10,000 users. He will lose approximately 2,500 per year due to churn, but according to Mailchimp’s 9% finding, he would keep around 250 of them because of segmentation.

It keeps your customers happy

Unpersonalized emails don’t appear genuine or that you took time to send them. 2 in 3 customers will trust your brand more when you deliver custom content that’s tailored to them. In this case, we’re talking newsletters, promotions, and updates sent through email.

Your messages will come off as more personal, and will make customers feel that you are trying to build a sincere relationship with them. This will help you stand out from the crowd of competitors that blast out mass emails.

How to collect data to segment

Now that you’re fired up and ready to reap the benefits of segmenting, you probably have one question, “How the heck do I segment?” There are several approaches you can take, but here are some of the main ways to do so is by optimizing your forms.

I’m sure you have an opt in form of some sorts. Whether it’s in the footer or side of your website or at the checkout. Instead of just asking for a name or email, you can add extra questions to filter it further. Look at this form that a content marketing agency uses to qualify leads.

As they begin collecting emails through this page, consider the amount of segments they could create. These might include:

  • Leads that want a specific service, which they can then send targeted offers for those products.
  • Offers based on budget and whether they are a consultant or agency.
  • Other information they can find through the leads website, such as company size and industry.  

Brainstorm what customer information is most valuable to you and include it as fields on your website forms. This brings us to our next point.

What to segment by

What should you segment your groups by? This is mostly determined by your individual business. It would be different for an e-commerce company than it would be for a SaaS startup, for example. While they have some similarities, both are looking at different KPIs.

However, there are some universal traits to segment by, including the following.

The stage of the buying process

There are three stages — some times more — that the average customer will go through before making a purchase. These consist of:

  1. Identifying a problem
  2. Researching ways to solve it
  3. Deciding on a solution

It creates an excellent opportunity to segment users because of this. How you would target and speak to someone that visited your website for the first time is much different than someone that’s already added it to cart and abandoned checkout.

Lead score

Not every lead is the same quality. Some require very little nurturing before becoming a paying client, and other can take weeks up follow ups. Whether you use a CRM or manually organize data, you can segment your leads based on their lead score.

Software like Hubspot or Salesforce for example having built-in scoring systems you can tweak. You can choose specific behaviours that would increase or decrease a score to determine the leads most likely to convert. From there, you can seperate users based on their quality.

Cart value

You can also segment your lists based on the average cart value if you operate an e-commerce store. Higher cart values could be given priority to recover abandonment with an extra discount code, as an example.

Demographics

Have you found that a specific country or region is responsible for a majority of your sales or leads? If so, you can break down subscriber lists by geographical location to hypertarget the highest converting areas.

You can see this information by enabling e-commerce tracking in Google Analytics. Do this by navigating to the correct property and clicking “Ecommerce settings.”

Enable the ecommerce and ecommerce reporting options. You will then need to add some quick Javascript to your website to send product information to the analytics account. Google Developers has everything you need to know for this step.

When you view the geographical dashboard, there will be three new columns for transaction, revenue, and conversion rate to reference when segmenting.

Segmenting with Mailchimp

Every email marketing automation tool includes a segmenting feature. You’re going to be learning how to segment a list with the free tool Mailchimp.

Create a form to collect emails

You can’t segment a list if you don’t have subscribers! That means you need to create a form to collect emails. To do this, navigate to the dashboard and click “Create A Form.”

Choose a list to connect your form to and don’t rush the design. Use a call to action and make the subscribe button stand out with a contrasting color. This will help up the number of users that fill it out.

Once you’re done, hit the “View Code” button to get the script, which can then be copy and pasted onto your website. Publish it afterwards and it will be live for users to interact with.

Create a segment

So, you have a form and a list to funnel users into. Now it’s time for what you’ve been waiting for. Click “Lists” from the Mailchimp navigation and choose which list you’d like to make segments for. Select the “Segments” option from the “Manage contacts” dropdown menu after this.

Here, create a new segment and choose the preferred filters you’d like. Remember, you can create as many segments for a single list as you want. Feel free to make many different groups, no matter how small the details are.

Send a campaign to these segments

Now that you’ve created a segment, it’s time to send a campaign to these users. Create a campaign from the top navigation, and during the setup process, click the segment dropdown menu. Here you can choose any of the segments you’ve created earlier. Complete the campaign and send it out like any other email. It’s as simple as that!

Wrapping up

Email marketing is a powerful tool and far from dead as some marketers claim. However, you can’t be emailing your entire list the same newsletters or promotions and expect good results. You need to break your lists down into segments.

Segmenting will help increase conversion rates, click through rates of campaigns, and will help you retain more subscribers over time. Perhaps most importantly, it keeps your leads happy as you’re sending personalized messages.

Create segments based on what’s important for your business. This might be average cart value, the stage of the sales funnel, or how many emails one user has opened. Tools like Mailchimp are free and will allow you to collect lists and begin segmenting.

Follow the steps you learned today to segment your lists and see the results for yourself.

2018-12-21T20:18:26+00:00