How to effectively segment your customers for email marketing

Most marketers know that email segmentation is something they should be doing to grow their email marketing ROI — as a matter of fact, segmentation can more than septuple your email driven revenue. Even just splitting your list into active and inactive users can improve both your reporting accuracy and deliverability rates. That’s an important first step, but how can email marketers follow through to personalize their campaigns and improve the value of each subscriber?

A Basic Three-Step Workflow for Email Segmentation

If you’re just starting to segment your email lists, or if you’ve begun the process and don’t know where to go next, refer to the following flow for a high-level overview of the objectives of email segmentation:

  1. Segment customers by the specific value they represent to your business, based on your business objective.
  2. Create email marketing campaigns that effectively convert customers from a lower value segment to the next highest value segment.
  3. Track the movement of customers from one segment to the next, aiming to move as many subscribers into the highest value segment in the shortest period of time.

As you move subscribers up the ladder of value, your ultimate endgame is to turn as many as possible into “best customers” — let’s take a look at what a best customer may look like.

The Best Customer Segment

The golden goose of segmentation, best customers are those with the highest RFM (recency, frequency, and monetary value) score. When it comes to email, a best customer may:

  • Subscribe to more than one of your newsletters or digests
  • Open, click, and engage at above average engagement rates
  • Have a paid account or membership
  • Subscribe to your print or digital magazine — or even have more than one subscription
  • Attend more than one of your events
  • Follow and engage with you on social media, frequently signal-boosting your content

How you determine which of your subscribers are best customers (or anywhere else on the ladder) will vary according to your industry and business model — so let’s look at some of the best ways to measure a subscriber’s value to your business, and how to weigh each segment’s score.

8 Ways to Measure Customer Value for Email Segmentation

1. Newsletter Subscription and Engagement

One of the most straightforward ways to measure a subscriber’s value is to look at how they engage with your email program. The value of newsletter subscribers is sometimes direct — for example, if you offer a paid subscription option — and sometimes indirect, as readers click through to your website, where they may purchase a product or service, or drive ad revenue.

When dividing up your segments, look at how many of your newsletters each reader subscribes to, how long they have stayed subscribed to your newsletter, and frequently they engage with your emails. To move newsletter subscribers up to more valuable segments, try sending them an anniversary email offer, or leverage a cross-sell/ up-sell campaign.

2. Social Media Engagement

Another way to measure customer value is to score subscribers based on their engagement with your various social media platforms. Followers contribute value to your business by lifting ad revenue both natively in social and through traffic to your site.

Segment social followers by how recently they’ve followed you and how active they are in engaging with your social account and clicking through to your website. To move them up to the next most valuable segment, invite them to join you on other networks, or even offer them a social influencer discount on your products or services.

3. Mobile App Usage

If your business has a mobile app, you can score subscribers based on whether they download your mobile app, and how frequently they use it. Mobile app users add value to your business by helping to drive ad revenue or, if applicable, by purchasing either your app itself or in-app upgrades.

To move your subscribers up to the next segment of value, send them an invitation to download your app for the first time, to leave a review in the app store, or to purchase the premium version or in-app upgrades, sharing the benefits of microtransactions.

4. Paid Memberships

Does your business offer a premium service for paid members? If so, this is a perfect metric to use when scoring your subscribers, ranking them by the tier of membership they’ve chosen and their customer lifetime value. To entice subscribers to move to the next value segment, send email campaigns designed to encourage them to create paid accounts (clearly articulating the benefits of membership — or offering a limited free trial), upgrade their membership level to the next tier, or take advantage of anniversary offers.

5. Paid Media/ Publishing Subscriptions

If you offer paid subscriptions to either a print or digital media service, you can segment email subscribers by whether they’ve registered for those services, how many they’ve subscribed to, and how engaged they are with your brand. You can measure the value of each subscriber by their customer lifetime value, as well as the cost of membership.

There are plenty of ways to entice paid subscribers — first, by encouraging regular subscribers to create an account and receive the benefits of paid membership. You can also send anniversary and upgrade campaigns to further move your segments up the chain of value.

6. Event Registration

Do you put on a conference or live show every year? If so, you can score subscriber value by whether they attend these events, and how many they register for — measuring value both by cost of attendance and individual customer lifetime value.

Cross-sell up-sell campaigns promoting additional events are one way to entice subscribers to move up to the next segment — or, you can offer an incentive for each subscriber to recruit more people in their network to register.

7. Store Purchases

Whether you’re a retailer, a travel company, or a media company that offers merchandise through an online or brick-and-mortar store, you can score subscribers based on their average order value, customer lifetime value, or RFM.

Target these customers by sending out personalized campaigns based on their favorite products or product categories, or by suggesting additional purchases they may be interested, leveraging incentives where applicable to keep moving them up the chain.

8. Advertisements

If your subscribers have engaged with any of your advertising campaigns, that’s yet another way to score them for email segmentation based on their level of engagement and the lift in ad revenue they drive.

To increase the value of each customer based on advertising, send email campaigns with opt-in CTAs to further drive traffic and ad revenue, and use ad targeting strategies and A/B testing to optimize the revenue driven by each campaign.

Build Your Email Marketing Roadmap

Bookmark this article to reference while tailoring your email segmentation strategy to your particular business niche, and remember that nurturing your subscribers throughout the customer lifestyle is an ongoing, iterative process — to maximize ROI, you must always revisit your analytics, optimize your strategy, and test a variety of tactics to find the most effective approach.

For a more in-depth explanation of email segmentation, watch our on-demand webinar on The Step-By-Step Guide To Building An Email Roadmap — then send a tweet to @WhatCounts with any other email marketing questions you’d like us to answer!

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