Segmentation is great for driving LTV, repeat purchases, and list engagement. It helps create a personalized journey for your shoppers by keeping your emails relevant and contextual.
However, there’s a new buzzword in town: hypersegmentation. One of those things us marketers invented to sound clever and sophisticated. Don’t get me wrong–if you have an audience that’s large enough, then go granular into segmentation, by all means.
But, I see a lot of smaller brands with fewer than 20,000 subscribers falling to this trap. They don’t weigh the cost of resources and time against the potential ROI. This leads to a lot of inefficient (yet effective) campaigns that don’t lead to good overall results.
If you’re a smaller brand, you’re better off keeping your segments broad and reaching the maximum number of people with your emails. Now, I don’t mean you blast your emails to your entire subscriber base but be measured with how you segment them.
Here are a few segments you need to have if you have relatively fewer subscribers:
Definition: Shoppers who have just bought once from your brand.
Most D2C brands don’t see a profit on the first purchase. Acquisition costs have gone up so much in the last few years that brands don’t see a high enough margin to have first purchase profitability (FPP).
The ones that scale profitably are the ones with effective ways to drive second and third purchases and increase the CLTV. Email and SMS are amazing channels to do that (I might be biased, though).
You can drill down further into this segment by identifying active and about to churn one-timers and send appropriate campaigns that drive the second purchase.
Active new subscribers
Definition: Shoppers who have just subscribed (< 7 days) but haven’t made a purchase.
The first few days when someone signs up to your lists is a crucial window that determines if someone’s going to be a long-time customer. Most customers make their first purchase within 48 hours of signing up and the likelihood of a purchase goes down by the day.
Ideally, they’d be on your Welcome sequence. While not a great segment for email campaigns (you should be excluding them from your regular email campaigns), this is one of those segments you need to keep a close eye on. Monitor and test the content you’re sending, how many days does it take to make a purchase, the sending frequency, and your offer.
Definition: Shoppers who have made over X orders or spent over $X
How you define loyalty is up to you but the general rule of thumb is that anyone who has made more than 3 orders or spent over 3X your Average LTV.
These are the folks you wanna give special attention to. You wanna make them feel special with exclusive perks, early access to product drops and sales.
Analyze this group of customers to find what source they came from, what products they first bought, and look for other underlying patterns. Then try and model that behavior for your other customers.
30-day engaged subscribers
Definition: Shoppers who have opened at least 3 emails in the last 30 days
If you’re sending more frequently, say daily, then 30-day engaged segments will let you know who enjoys reading your emails. If you send weekly or bi-weekly, then 60- or 90-day segments might be a better time frame to gauge engagement.
If you’re just starting out, send only to these folks until you consistently hit 25%+ open rates.
I might be contradicting myself a little bit here; remember, when I said you need to try and reach the maximum number of people. But, deliverability is a balancing act. You can’t be sending to everyone all the time.
You need to know when to open your emails to the larger group. Flash sales, product drops, and the like get a lot of engagement naturally. But, your regular emails–just keep it to your engaged segments.
Definition: Shoppers (1+ orders) who have not bought in X days
The time frame you define this segment depends on your average buying window. If you’re in the supplements space, it could be 60 days while if you’re in the fashion space, it could be 120-180 days.
As the cliche goes, it’s cheaper to retain a customer than to acquire a new one. So, it’s key to identify people who’re about to churn. You need to re-engage with them and make them stay longer with your brand.
Showcase new products, reiterate why they chose your brand in the first place, and incentivize them with discounts to make a purchase. Delight them at every chance you get.
Definition: Shoppers (1+ orders) who have lapsed your buying window
No matter how hard you try, there will always be people who lose interest in your brand every month. You should keep this number lower than 2%.
You can set up win-back campaigns to re-engage them or sunset flows to get qualitative feedback and see what made them lose interest in your brand. Dig deeper into churned loyals or churned high-value customers to see if there are any recurring patterns. And, then make improvements based on the insights gained.
There are a lot of things smaller brands can learn from larger players but hyper-segmentation isn’t one. There are certain risks to it and when done at the wrong time, you risk losing out on a lot of revenue.
Once you’ve grown a bit and you have resources to experiment, you can get experimentative with being granular in your segmentation. Until then, a simple segmentation strategy with the segments I list here is more than enough to create a personalized experience without spreading yourself too thin.
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