Slice 'Em Up!
The usual approach to segmentation in email marketing, says Anna Billstrom, cuts a mailing list into the classic RFM slices: Recency of visits and placed orders, Frequency of visits and purchases, and the total Monetary spend from each customer. But this strategy might not be giving you the full picture. Billstrom prefers to slice her segments more finely, so she can observe activity at each threshold. And she has two suggestions for getting started:
1. Establish a goal. Setting a clear goal helps identify thresholds. For instance, if you set a goal to "push a certain high-ticket item," you might want to ask, "how many low-ticket items do customers buy before going for the pricier ones?" Billstrom says. "This threshold amount is a key boundary for segmentation," she explains.
2. Let the data dictate segments. "Creating a group of revenue buckets divisible by 10 makes nice round numbers," says Billstrom, "but do they really relate to your customer's spending behavior?" Instead, she suggests you start with your analysis of the data, and let it tell you where those thresholds are between each stage.
For example, a bucket might include a group of "High-Spend, Infrequent" Customers. By slicing the data even thinner, you could identify those with, say, the highest opens but the lowest click-thru rates. Then you could target a campaign to lift that segment.
The Po!nt: Don't be afraid to slice up your list. "Segmentation is so key," says Billstrom, "not just because it finds valuable candidates to message, but because you find out so much about your population after the messaging."
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