Published on February 9th, 2010 | by Contributing Author1
3 Ways to Segment Your Lists for Better Results
Want the most out of your next email marketing campaign? Then it’s time for your business to take advantage of a few simple list segmentation ideas to ensure you’re making the most out of information you probably already have about your customers.
First, a little information on what list segmentation really is. Fortunately, list segmentation is very straightforward. All it really means is, not all customers are created equal. You know: some transact with you frequently, others not so often and others may have seemed to fallen off the face of the earth! So why not communicate with them differently as well? It makes good business sense and typically drives better results. So at the end of the day, that’s what list segmentation is really all about.
Many Email Service Providers offer a list segmentation tool that enables you to send more targeted email campaigns. But often times we all get overwhelmed by the task of creating meaningful list segments that will drive results. Let’s focus on some simple segments that can get you going in the right direction.
3 Simple Segments
You need to have a starting point so why not with the tried and true RFM method? RFM simply put is how recently a customer has purchased or interacted (R=recency), how often they purchase (F=frequency), and how much the customer spends (M=monetary). RFM can get complicated, but for this post we’ll look at it very simply.
Define Your Buckets
We’ll take a look at a fabricated company called Widgets, Inc., and they normally give a 50% discount in an email campaign to all of their customers across the board. But for a change, they want to segment their list to see how different messaging can have a positive impact on their campaign and bottom line:
So for this test they want to give the normal 50% discount to only the Inactive Customers, a 20% discount to Mid-Tier Customers, and a 10% discount to Top Customers (they do other cool things for Top Customers). This segmentation should tell them if they really need to be giving so much away to everyone, or should they just be using the aggressive discount for the Inactive Customers only. They could wind up keeping a lot more money in their pockets by doing this test.
Small businesses already have a wealth of customer info that can be used to create better-performing email campaigns. Segmenting your lists doesn’t have to be daunting and can really help you understand your customer’s patterns, as well as interact with them in ways that are more relevant and can drive more profits for your business!
I’ve definitely simplified RFM and list segmentation, if you’ve got any results to share, we’d love to hear them!
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