How Segmentation Can Boost Your Profits

Segmentation is the key to your company’s success Segmentation allows you to create groups of clients who share a common trait. This allows you to better understand their needs and select appropriate marketing activities. Be warned – well-prepared segmentation is difficult. It should go beyond the templates that fit everyone and create groups based on individual criteria. If you put in the right about time and effort, you can reap huge rewards. Let’s see how others have done it.

SwayChic

SwayChic, an online store offering women’s clothing, challenged itself to increase revenues from existing clients with optimized email campaigns. After preliminary tests, the company divided its clients into segments based on collected behavioral data.

Among many indicators, the company chose two that they believed were essential to carrying out a successful campaign. The first was how the time the message was received influenced client behavior. They created three groups to which messages were sent at 5 AM, 10 AM and 5 PM. This made it possible to discover that in their case campaigns sent in the evenings are usually the most opened.

The second aspect was the shopping story. Here the sample segments consisted of people who in the past have made one purchase, three purchases or have not bought anything for a long time. This allows the company to differentiate a few non-active clients and address them with suitable campaigns to re-engage them.

The effect? The company carried out 12 optimized email campaigns to the appropriate client segments with these results:

• OR Increased by 40%;
• CTR doubled;
• profit from each campaign tripled.

Doggyloot – segmentation has no limits

Doggyloot is an online shop for dog owners. Instead of sending campaigns to human customers, they are addressed to … pets, even sending them birthday greetings. Personalization is based on the dogs’ data, not their owners’. Here registration is useful – you need to ask one simple question – how big is your dog? This short answer allows you to prepare more accurate email campaigns.

It is known that a Rottweiller needs different products than poodles. The offer of a huge bone will not work for a 5-pound dog. This simple procedure allowed an increase in the CTR in the group of owners of big dogs by 410%, compared to the CTR in campaigns dedicated to all dogs. An even better result was achieved by the campaign concerning dogs’ birthday greetings – here CTR increased by 750% and daily sales of products to selected breeds jumped by 16%.

Johnny Cupcakes – quality counts

Johnny Cupcakes – a confectioneries chain and the owner of an online store with T-shirts and accessories, had over 80,000 client email addresses. In their campaigns, each subscriber always got the same message and so it was not a very efficient operation. The owners realized that they needed to make tailored campaigns and so they began to collect information from social media profiles and used to it create customer segments based on common characteristics.

This simple step had these results:

• CTR increased by 42%;
• conversion increased by 123%;
• income from the campaign increased by 141%.

Eventful

Eventful is a service that allows clients to search for and keep track of upcoming events, such as festivals, concerts, films, etc. Here segmentation was based on personalizing emails based on customer interest in a particular artist. They used information collected through cookies. This data was used to create a recommendations system based on demonstrated interests and preferences. In addition, they created a system of event notifications adjusted to visitor interests. These changes had the following results:

• reactivation of unused accounts increased by 400%;
• OR increased by 26%;
• CTR increased by 97%.

Intermix

Intermix – This fashion store for women divided their clients into three segments. They analyzed their past buying behavior, the average value of purchases, email opening rate and clicks on links within them. In this way they created segments:

• VIP – clients spending the most, following the latest trends in fashion;
• Outlet customers – who are motivated to purchase by special sales;
• Customers of certain brands – which are characterized by loyalty to specific brands, but also pay attention to prices.

Using these three segments, they could send relevant messages with the right offers to the right customers. So the VIP group received invitations to exclusive events and meetings with designers, while the other group received a 30% or 15% discount. These actions increased the store’s annual revenue by 15%.

See the results of segmentation for yourself

Analyzing these examples, we can see that proper segmentation is the path of the increased sales. But do not forget that every business is unique and demands its own strategy. This means creating segments that are unique to the needs of a particular industry.

It is important to ask a lot of questions and work in the team. This will help you to choose a small group of data which you should focus on. Remember that the number of segmentation criteria should have up to 5-7 conditions to be successful. Hence, it is important to include only the most important indicators that will draw the most important conclusions. In the process of the selection criteria, and the analysis of very large databases, BI systems that will be equipped with modules for automatic segmentation of clients are invaluable.