The Hidden Costs of Bad Email Segmentation


hidden costs of bad email segmentation How targeted are the emails your business sends out to customers and prospects? Have you implemented any kind of segmenting, to ensure your marketing messages are appropriate and relevant to each different kind of customer?

Maybe you haven’t gone down the path of segmentation yet due to the cost and time it will take to implement it. If that’s the case, you might want to reconsider because you’re probably losing money rather than saving it.

When it comes to segmenting your emails for targeted messaging, it’s not only that there’s a benefit to getting it right. There’s a cost to getting it wrong.

The costs of bad email segmentation
Bad segmentation—or a lack of it altogether—costs businesses money in multiple ways. Because we’re referring to money never made, these are the kinds of costs that one cannot itemize on a spreadsheet. Nevertheless, they are real costs, because they result in money left on the table.

  • You lose money when you try a customer’s goodwill. You only have so much goodwill with each customer, and they have little reason to give you the benefit of the doubt. Send them irrelevant messages time and time again, and you’ll wear out your welcome in their inbox, as well as wear away any goodwill they used to feel toward you.
  • You lose money when you lose a customer’s trust. Keep on sending generic, irrelevant batch-and-blast type messages, and you’ll make it crystal clear to your audience that you don’t give a (beep) about getting to know them and their preferences, likes and dislikes. Pretty soon they’re thinking, “I don’t trust you. You don’t know me at all.”
  • You lose money when you fail to engage a customer. Email deliverability suffers because that lack of engagement in the inbox tells ISPs your emails aren’t wanted and they might start to block you from that particular inbox. How many sales can you make when your email isn’t even delivered? Zero.
  • Most of all, you lose money when you fail to send targeted, appropriate offers that are much more likely to result in a sale. Why do abandoned cart emails perform so well? After all, the customer abandoned the shopping cart. They didn’t finish the buy. Yet they will go back and complete the purchase due to a follow-up abandoned cart email. Why? Because they are so specific to that customer.

Remember: Other marketers are already doing this kind of targeted, personalized messaging. That is raising consumer expectations…and they expect it from you too, I suspect.

The power of advanced email segmentation
Let’s compare two scenarios to really mark the difference between not targeted messaging and targeted.

Being without data is akin to the restaurant collecting business cards in a bowl at the cash register. Sorting through those cards only tells you that someone ate at your restaurant. It doesn’t tell you what they ordered or if they typically order wine or even if they are a frequent customer or if they typically come for the crab feed on Friday nights or the brunch on Sundays. Without that kind of information, you’re unable to market to them in a targeted way, like offering a discount on a higher-priced wine, or a guest coupon for Sundays. The only marketing you can do is to say, “Come back to our restaurant,” because all you know is they ate there once—maybe. That’s hardly a personalized message, and it’s one likely to be ignored.

That’s pretty much what a lack of email segmentation limits you to.

On the other hand, imagine you’re the marketing manager for an online wine store using a relational database to track customers’ buying and behavior. For each customer, you could know:

  • How often they buy
  • What they buy, and not just white wine or red, but Viognier or Malbec or Montepulciano
  • Their typical purchase amount
  • If they buy more at the holidays
  • If they buy wine for gifts

With this knowledge, you could use advanced email segmentation to send targeted messaging that arrived around the time they normally order with a special price on the kind of wine they usually order, something that’s in their price range or maybe a little higher. If you know they buy more around the holidays or that they buy wine for gifts, you can create email messages that will be timed appropriately for the December holidays, but then maybe start messaging them with specials around Easter and graduation time too. (Of course, if they don’t respond to those additional holiday emails, stop.)

Which kind of email would you rather get, the “Come back to the restaurant, whoever you are” email, or the “Here’s a targeted offer showing we know what you like, at what price and when” email?

How to do advanced email segmentation
Advanced email segmentation doesn’t start with the segmenting. No, it starts with the data.

Scratch that. It actually starts with an email service provider (ESP) that supports and enables it.

But once your ESP is in place, it’s the data you’ll need. You’ll want not only the data from your email platform, but integration with other data sources too, like web analytics and your CRM system, for the most comprehensive picture of each person.

Next you’ll need a relational database for storing and accessing that data. The relational database was invented to make this kind of customer-centric data possible, because it allows for as many fields as you might need per customer rather than limit you to a set number of fields like a flat data file does. In addition, a relational database can draw from other business systems so you can potentially have not only email data, but also ecommerce and web analytics data to draw from too.

If you want your email marketing to be more profitable, you need to move beyond the basics. You need to know more than Marco is a customer, and you need to be able to track different types of information for each and every name in your database.

Advanced email segmentation is the way to the extreme relevance customers want and expect. Try to get by without it, and you’ll pay a very high price indeed.

Marco Marini
ClickMail Marketing


One thought on “The Hidden Costs of Bad Email Segmentation

  1. Marco,
    Great information. What is your experience with targeted mobile marketing, and do you think that it will drive digital marketing campaigns in 2014?

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