Importance of Micro-segmentation For an Edge Over Competitors

The concept of grouping prospect consumers with similar buying tendencies goes back to 1956 when Wendell Smith, a research scholar, introduced the concept of market segmentation to the marketing literature in his article ‘Product differentiation and market segmentation as alternative marketing strategies.’ In his publication, he prompted businesses to focus on consumer needs rather than business requirements. Most of you would have applied this to your email marketing strategy, if you haven’t, then you are not only decades behind in this competitive market but also losing out on one of the best methods to connect with your consumers.

Micro-segmentation is the process of classifying consumer groups according to their needs, wants, and similar responses to a marketing action. These factors might be affected by other supporting factors like where they live and so on. As various market stimuli can have different effects on individuals in the same subgroup, Micro-segmentation is a marketing strategy that teaches you something new every day.

This blog will give you a detailed insight into how it works, the future of this concept in email marketing, and how you can nail the art of micro-segmentation with a few email examples of brands that have done it right.

Advantages of Micro-segmentation

Email marketing has the boon of two-way communication between consumers and the brand. The most important aspect of micro-segmentation is the collection of data. Only when you have data, you can categorize, predict purchase behavior and leverage relevant emails. The most common methods of data collection are – at the time when the prospect signs up, fills up a form or a survey, polls, and feedback.

Now, let’s look into the advantages of Micro-segmentation:

Streamlines Productivity

When you have enough information to identify, iterate, and implement segmentation, you are all set to deliver a customer satisfied business. Micro-segmentation is nothing but a loop of targeting the right customer and sending them the right emails, at the right time to make them take quicker and positive purchase decisions. This not only gives you the direction to adopt a feasible approach towards email marketing but also helps you formulate a workable strategy to communicate better with your target audience.

Accountability

With micro-segmentation, you can not only recognize smaller and larger consumer groups but also decide how much to invest based on the profitability of each segment. This is necessary as the dynamics of each segment are different and to meet with diversified customer demands, micro-segmentation is your best bet. Sending out the right email to the right audience and at the right time will not only increase the chances of an accelerated purchase but also build a better relationship with the customer.

Better Performance

A marketer’s worst nightmare is when you spend days sweating out on an email strategy, design, copy, and code, only to realize it ended up in the spam box. Not only is this damaging your ISP reputation, but you are also losing customers here. According to a survey conducted by Infosys, 78% of consumers said that if a company had provided more targeted offers they would likely make multiple purchases. Sending relevant emails will give you better CTR, response, and an increased ROI.

The Future of Segmentation in Email Marketing: Micro Targeting and Segmentation

With the increase in automated email campaigns and Artificial intelligence and chatbots taking over customer interaction, the need for a more micro-targeted approach in email marketing is required. Micro-segmentation allows you to identify granular clusters of individuals by layering and over-layering thousands of data points.

Demographics

Micro-segmenting user databases according to their physical identities, like age, gender, education, socio-economic status, profession, income, relationship status, and so on. For example, a mother of two toddlers will have a different response to an email about an offer from Lilliput compared to a teenager.

The Black Tux target audience is very obvious, as they sell tuxedos. Young men, brides, and grooms or men who wear suits for social gatherings, work, etc. can be said as the target audience. This particular email is to prospect grooms, so this email can be sent to men aged between 23-35, unmarried, or women under the same criteria and so on.

Geographic

The proximity of your audience is one of the major aspects you should consider while sending out emails. For example, consider you have an in-store coupon code for a store in Wichita and a customer in Atlanta receives an email regarding the coupon code, goes to the store only to realize it is not applicable in that state. It is going to leave a bad impression of your brand and disappoint the customer. Geographic segmentation can include the location where the consumer resides, their country or region, or city.

This email by Costa is focused on a particular outlet in London. Such geographically bound services will only be relevant for people who have either visited the store or have associated with the brand. Someone in Asia would only be annoyed to see an email that is not relatable to them.

Psychological

Psychological decisions are based on various factors like the education of a person, their social-economic status, lifestyle, values, personality type, belief system, preferences, and so on. You can segment such categories by their previous email responses, purchase history, purchase frequency, etc.

Other than the creative design and the balanced use of white spaces, this email by Good Eggs has diverse products on exhibit. This brand and its products say a lot about its subscribers and vice versa. Someone who can afford an organic lifestyle and someone who fancies organic blueberries and organic spice beef jerky will be the most probable prospect to make a purchase.

Behavioral

Behavioral patterns can be derived from purchase patterns- how much time consumers spend on the website, on the app, how connected are they on your social media other than the email communication, how often do they buy and what triggers their purchase decision, what is their purchase intent, how loyal are they towards the brand, what makes them abandon the cart, and so on.

This email by Saatchi art is a trigger email to a website visit. This email is not an abandoned cart email but offers a discount. The pre-header creates urgency saying the product is at ‘high sell-out risk’ and the CTA is direct and pushes the subscriber towards making a purchase.

How does Micro-segmentation work?

Algorithms

Algorithms work by starting off with a broader segmentation and then narrowing down to the lowest common denominator.

This example will explain in detail how algorithms for jewelry brand crafting an email for mother’s day offers should target their audience;

This micro-segmentation can be done to send an email titled ‘Last-minute gift ideas for your mother’ targeted at daughters who are most likely to make a last-minute purchase.

Customer Journey

Micro-segmentation can be done by recognizing customer activity triggers such as cart abandonment or someone who has previewed your ebook but hasn’t downloaded it. Someone who has saved a reminder but has not availed an offer or someone who has just joined your brand needs to be leveraged by different messages. All of these people need a different follow-up email based on their journey with the brand. Cart abandonment and incomplete purchase would require a nudge whereas a newbie would need a tour of what you as a brand have to offer them.

Analytics

Targeting the right customer who has opened our email and clicked on the CTA but hasn’t made a purchase when directed to the website can give you a micro-segment in which you can retarget them and remind them through a follow-up. Customers who have clicked and opened emails but haven’t converted can be a micro-segment and they can be segmented by the metrics received in an email campaign.

With tools like Litmus analytics, one can track the engagement back to each subscriber and thus create a segment with the most accurate action-oriented lists. It gives you individual email open timestamps, the geolocation the email client used to open the email, and other details on engagement.

Targeting

Micro-segmentation is the foundation for micro-targeting. Just by segmenting the granular patches with all the above-mentioned factors is not going to give you results. Targeting the right audience needs an effort to reach out to the audience and communicate through relevant emails. The design, copy, language, send time and other such factors help in targeting the right spectrum of customers and approaching them with an offer they can’t refuse.

Wrap Up

The main aim of any email marketing strategy is to build up revenue, drive engagement, and retain as many customers as possible. By providing what the audience wants to see in emails, you create a wholesome relationship with prospects. Micro-segmentation will not only enhance your email performance, revenue, and sales but also keep both your customers and your boss happy.