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List Segmentation: Why It's Important and How to Do It

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In this article, you'll learn...

  • Why list segmentation can be pivotal to your email marketing campaigns
  • Eight factors to consider when segmenting customers

Put simply, list segmentation targets your communications and increases the relevancy of your messages—resulting in higher open and click-through rates, enhanced customer loyalty, and increased sales. In email marketing, the more relevant your campaign is, the better the response and the greater the conversions.

The advantages of segmentation are obvious, and if it's done correctly you can avoid opt-outs and being labeled a spammer. It also goes a long way toward improving your email deliverability and online reputation. Marketers who send relevant email campaigns enjoy lower opt-out rates than those who send the same email to everyone on their list.

Of course, segmenting your precious lists can be an unnerving task, especially if you have never attempted it before. Below are some of the most effective methods of segmentation, but don't panic—you don't need to try them all at once. Just start with the information you have, and work your way from there.

Your segmentation can be based on any combination of the following criteria:

  • Prospective Customers vs. Current Customers. This is an important segmentation. What you will avoid is having a customer receive an email as if he or she were a prospect, offering better deals than the ones customers were offered. It's a bad move, and the customer won't trust that he or she is unique in your eyes.
  • Demographics (ZIP/postal code, gender, age, occupation). If your subscriber lives in New York, why are you sending her specials about flights between Texas and Alaska? Or if your subscriber is a 25-year-old woman, why are you sending her emails for specials on "Fashions for Mature Women"? You get the idea. Take note of demographics, and your relevant emails will give your subscriber the impression that you are listening (which you are) and will help garner the results you seek.
  • Behavioral Data. Open and click-through rates, latest or last visit—that type of information can help you target who is more responsive to your emails. The subscribers who open your emails all the time or regularly can perhaps be tested with receiving more frequent emails.
  • Recent Subscribers. Recent could be 3-6 months, or it could be since the last campaign you sent a month ago. Either way, the "newbies" should be separated and paid special attention to; don't be so quick to finish the "courting period." You could offer more deals or discounts on your products or services, thereby giving them the feeling that you haven't just "loved them and left them."
  • Inactive Subscribers. Any subscriber who hasn't opened or clicked on your email over an extended period of time can be deemed "inactive." Instead of writing them off as a lost cause, put them into a separate group and send them a targeted reactivation campaign in the near future.
  • Preference Surveys /Interest-Based Preferences. Don't be scared to ask for information you don't have, such as new interests and updated email addresses. Tell customers that it will help you send more relevant emails, and remind them that you will maintain their privacy at all cost.
  • Major Clients. Anyone who spends more than $1,000 at a given time, while others spend less than $100, should always get special attention. Offer platinum status, free shipping, or gifts with their next purchase—anything that makes your customers think you appreciate their loyalty, which you do, of course.
  • Purchasing Habits. Another great way to segment is by identifying what type of product your customers bought, how much they spent, and which store they bought from. Your next email might read, "This week, 25% discount on all clothing/baby goods/garden equipment over $50 at our Portland branch."

Once you have segmented your lists (no matter how extensively), it's vital to keep the categories up to date. Schedule a regular date to review your segments, annually or bi-annually (at least). Look at what campaigns each customer is opening and consider re-categorizing them, if necessary. But before you re-categorize them, ask them—in an email—what they are interested in, and let them choose their own categories.


Although segmenting your lists can be tedious, it's an absolute must. Once you segment, you can expect immediate, positive responses from your customers.


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Georgia Christian is the editor for online email marketing service Mail Blaze. Follow Mail Blaze on Twitter or contact Georgia via georgia@mailblaze.co.za.

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Comments

  • by Sage Wed Feb 16, 2011 via web

    I'm always amazed that so few take advantage of this sound advice so sorely needed in business development.

  • by Andy Wed Feb 16, 2011 via web

    Good post. I'm guessing most companies that are this fresh to email marketing probably don't have much of a list to begin with. If that's the case, you have a great opportunity to collect all this data at the time you collect the email addresses. Without making the sign-up too cumbersome, the more info you can collect, the better. Collect birthday, age, gender, interests, etc. and even if you don't have an immediate plan to use the data but think it will be useful in the future, when you do decide to roll out a birthday discount for example, you've already got a good deal of data to begin with. It's much worse to have to send an email out later asking people for additional info when you could have gotten it up front.

  • by Deborah Wed Feb 16, 2011 via web

    Also, segmented by where you met them -- for companies using events and tradeshows to meet clients. That way you can make offers based on your original connection, which will be meaningful.

  • by Dhana@Loyaltics Wed Feb 16, 2011 via web

    Segmentation is important. It does take time. Particularly SMEs don't have the necessary wherewithals to do an accurate segmentation and not to forget updating the list. Its the trade off between the effort vs perceived value. However, all companies can always start small and 'test' their segments.

  • by Georgia Christian Thu Feb 17, 2011 via web

    Thanks @sage, @andy, @Deborah, @Dhana for the positive feedback and also for the additional points on segmentation - all very relevant indeed.

  • by Andy Wed Jan 18, 2012 via web

    Very useful article.. I have just graduated and I am working for a SME's in Italy, things are pretty different in terms of innovation over here. I wanted some advice on softwares that would help me segment my extensive contact lists .. anyone?

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