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The Best Ways to Segment Customer Data

In a broad analysis across all segmented email campaigns, MailChimp found that simple segmentation increased email open and click rates by 15 percent. Sarah Goliger of Hubspot found click rates for segmented campaigns to be as high as 50 percent more successful than unsegmented campaigns. While data vary on exactly how effective market segmentation is, there is widespread agreement that segmentation is more effective than blanket marketing.

A prime example of successful market segmentation is Doggyloot’s specialized email campaigns. This canine merchandiser based their campaign on the type of dog that its customers own, sending three unique emails with fitting products for different sizes of dogs - small, medium, and large. From this simple segmentation, Doggyloot’s clickthrough rate increase by 410 percent. In addition to the normal emails, Doggyloot also sent the owners an email on the dog’s birthday with well wishes and special deals. This one email generated an average clickthrough rate 750 percent higher than the teams average.

Market segmentation isn’t only for email marketing or newsletter campaigns. Social media marketing campaigns allow for high levels of specificity and segmentation. Additionally, observations from segmented data can help inform your product development, campaign content decisions, and marketing techniques.

The hard part is figuring out the best segmentations for your product. Traditional demographic segmentations like gender, race, and age are useful but lack the specificity available through alternative forms of segmentation.

Most business intelligence software offers powerful tools for observing market details from social media data as well as company owned and aggregated data sets. The insight provided from these tools can help your company discover new segments and niche markets interested in your product. By knowing which types of segments to look for, you can more effectively determine your target audience for marketing campaigns.

Lifestyle

Lifestyle segmentation involves designating groups of customers based on their interests, hobbies, activities, and other aspects of their lifestyle. Traditionally, many marketers would create lifestyle campaigns with other demographic information, like advertising watersports equipment to people living close to a beach.

With social media analytics, lifestyle segmentation has become even more specific and accessible. Forums such as Facebook include individual sections for users to list their likes, interests, and activities. By utilizing BI tools to aggregate this information, you can find your customer’s common interests to make more informed marketing decisions.

For example, you can use social media to discover which TV shows your customers are currently watching. By analyzing this information to find commonalities, you can make more informed decision on where to place TV advertisements for maximum relevancy.

Apparel retailer Johnny Cupcakes was able to utilize social data on customer interests to drive a 141 percent increase in revenue. By mining data from their social media accounts, Johnny Cupcakes was able to create individual campaigns for men and women interested in baseball for the launch of their new baseball themed t-shirt. Males received an email with a male model wearing the t-shirt, while the female’s email featured a female model. In addition to the 141 percent increase in revenue for this campaign, Johnny Cupcakes increased click-through rates by 42 percent and conversion rates by 123 percent.

Lifestyle segmentation can also be a valuable tool for companies looking to enter a new market. By analyzing your current customer’s interests for commonalities, you can identify lifestyle patterns that can reveal untapped and undiscovered markets.

Purchase History

By analyzing purchase history, you can segment your current and potential customers based on anticipated needs. Purchase history segmentation gives you access to information on what your customers will want and when they typically want it.

For example, if your company sells candles and you notice that a specific demographic of buyers purchase candles within a designated price range every two months, you can begin timing personalized campaigns that anticipate the needs of these customers. This allows you to more accurately target customers by sending an email or mail campaign advertising the typically purchased candles right before the time period of repurchase occurs.

This information can also help you determine how to brand different products. For example, if your company offers three levels of candles - basic, advanced, and premium - you’ll want to market each product with the proper branding to the proper segment. By understanding the purchasing patterns of different segments, you can customize and tailor the brand and products presented in each individual campaign so the information presented to your customers has maximum relevancy.

Time

Time segmentation is a multifaceted form of grouping, depending on your company and industry. For some companies, like online stores, time segmentation might mean grouping buyers based on times of online activity. For example, assuming that your company sells basic, advanced, and premium products online, aggregating data on time of purchase for each product allows you to make determinations on the best times of the day to run marketing campaigns or social media promotions.

Ecommerce retailer BustedTees was able to increase revenue by 8 percent overnight though simply personalizing emails to the recipients time zone and email history. From data analysis, the research team at BustedTees noticed the response rate was higher for individuals who received emails around 10 am. Utilizing this information, they teamed up with a vendor to segment emails by time zone so that every email arrived in a recipient’s inbox at 10 am. Additionally, BustedTees added another level of personalization by using data on individuals past open times to personalize send times for each existing subscriber. Beyond the 8 percent increase in revenue, BustedTees also experience an 11 percent increase in clickthrough rate and a 17 percent increase in total email response rate.

Time segmentation can also be a determinate for length and timing of campaigns. For example, if you are targeting different demographics for different products, having insight into the reaction time from email campaigns, or the time spent on specific web pages, you can make more informed decisions on campaign length and timing. 25-30 year olds might take less time to react to email campaigns, but more time to take action with social media efforts, while the opposite is true of 15-20 year olds. This can lead you to selectively advertise on different mediums, or make changes to the timing and content of campaigns.

For talented marketing teams to create successful campaigns, they have to have insight into the desired market segment. While basic demographics like age, race, and gender can provide the foundation for making informed decisions, having more in-depth market segmentation can provide the strategic advantage needed to separate yourself from the competition.

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