A Marketer’s Quick-Start Guide to Microsegmentation
Julie Graham, senior marketing manager, BlueHornet suggests marketers how they can increase not only the customer engagement but also conversions through microsegmentation
In the past five years, the avalanche of data coming from social media and website analytics has enabled marketers to produce more relevant messages than ever before. Rich with customer information, this data is like a gold mine waiting for the right algorithm to come along and unearth the shimmering but narrow consumer segments most eager to respond.
Marketers have long waited for ways to reach these veins of high potential. Forrester’s Global Email Marketing Customer Reference Online Survey found that 66 percent of email vendors and the enterprise companies that utilize them put precise segmentation capability at the top of their wish lists.
Marketers long for better microsegmentation for two reasons. First, recent research has shown the more relevant email content is to a recipient, the more engagement and conversion it wins. In 2015, the Direct Marketing Association shared that segmented and targeted emails generate 58 percent of all revenue.
While microsegmentation is still new, some companies have gotten amazing results slicing their lists by multiple attributes rather than simple demographics:
- Totes-Isotoner refined its segments by adding a browsing behavior dimension. Content and offers changed based on whether the subscriber had been perusing gloves, umbrellas or boots. The extra effort paid off. Emails sent to these microsegments returned seven times more revenue than standard batch-and-blast emails going to an entire list.
- Using microsegmentation, exclusive shoe manufacturer Allen Edmonds targeted the audiences of specific stores in specific states and cities. Email content and offers changed according to local weather conditions, a tactic that increased opens, click-through rates and sales.
- Using browsing and purchase history microsegmentation, Vistaprint showcased its backlog of pink and yellow sweatshirts to an audience most prone to considering the discount pricing a great deal for a great product. The company was able to recoup costs in an underperforming line while offering great savings to those who prefer the product.
Consumers No Longer Tolerate Irrelevant Content
Companies aren’t gravitating toward microsegmentation just to boost revenues, opens and click-throughs, however. All email marketers remain focused on their ultimate goal: warm, authentic client relationships. Interrupting a consumer’s day with inappropriate products and services elicits annoyance rather than the respect and gratitude the brand intends. Irrelevant emails also prompt unsubscribes.
FirstInsight’s 2016 study of 2,000 consumers echoes common marketing research findings: email marketers must take care to show their subscribers they know them and their needs. When opening their commerce email, 82 percent of study respondents feel misunderstood and even viewed the offers irrelevant 95 percent of the time.
Consider the Vistaprint example above. If the company had sent the offer for the yellow and pink sweatshirts to a large segment, it would have risked turning most recipients off. By taking the time to review purchase behavior, Vistaprint upped the odds that their offer would connect with customers.
5 Steps to Email Microsegmentation
The statistics and explanation above will help the proactive marketer make the microsegmentation case to the C-suite and other members of the marketing team. Use the following steps to begin the process strategically:
- Align your tools. The first step the email marketer must take is leveraging the email service provider (ESP). Hopefully, the ESP is well-versed in the company’s potential for creating microsegments. It should also be up front about which data points it can access and utilize. Not all ESPs have the same tools. Early adopting marketers seem to be the most interested in data points that reveal recency, frequency, browsing behavior, purchase behavior, location (hometown) and even social media involvement. The ESP will work with the company to create and manage these microsegments.
- Win agreement from the C-suite and team members to allot time for mastering the breadth and depth of ESP segmentation capabilities. Many email marketers have had microsegmentation at their fingertips for months or even years, but simply haven’t accessed it yet. Software licensing and management company Flexera’s February 2016 report reveals that 93 percent of companies surveyed waste money on under-used software. Marketers who push the waste angle often get buy-in.
- Microsegment loyal and high-spending customers first. It’s always smart to start with the group with the most potential. What are some common traits shared by customers with the highest average order value (AOV) or frequency? Which product categories do they visit most? Are they highly involved with the brand on social media? Determine some high-level rules to translate customer behavior into clear data points.
- Examine segments through their email and social media behavior. Those who’ve created a segment of loyal customers who like a certain product can fine tune segments further by using social and email data. For instance, do these high frequency. . . gift basket buyers, let’s say . . . only buy when there’s a discount offered? What times of the day are they most active online?
- Use the data from best segments to pursue new prospects. Say an insurance company enters a new market. It starts out sending the same general email to its entire list of 100,000. Quickly, it learns that 95,000 don’t even open the email. But it can gain important information from the 5,000 that do. Marketers can collect data on those 5,000 and find new prospects with those attributes. Conveying to the C-suite that using data to find new prospects can also increase the odds that marketers will win time and budget for a microsegmentation effort.
Microsegmentation Marks an Important Paradigm Shift in Email Marketing
For the past 40 years, email marketers depended on the principle that sending to 100,000 should get sales from 1,000 to 2,000 recipients. Now that the consumer has taken center-stage, mass email return doesn’t come close to those already abysmally low numbers. We’re witnessing the end of an era.
Today’s marketer’s ability to collect consumer data from email, website and social has turned mass emailing on its head. The granular approach of microsegmentation provides the means by which companies connect not only with warmer prospects, but those further down the sales funnel. It also wins marketers better results and sales teams more time devoted to high-quality leads.
The marketer’s holy grail is reaching the right people with the right message at the right time. [See Figure 2.] Microsegmentation (along with personalization, another data dependent tactic) gets us closer to the long-held vision of one-to-one marketing that turns each message into helpful, useful information rather than an aggravating interruption.