Wednesday Marketing Series

What is List Segmentation and why do we need it?

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What is List Segmentation?

List Segmentation is the process of dividing the list of users into sub groups based on certain parameters. It basically involves creating smaller lists from larger lists after applying some criteria. And, this can be done in many ways.

As an example, I have created four segments in the picture above –

  1. People who have children.
  2. Women.
  3. People interested in sports.
  4. Men.

Consider you are a shopping e-commerce website with a mailing list of 1000 users.

What you want to do is – 

  • Send marketing emails to your user base.
  • Send emails to people who might be interested in purchasing that product.
  • Inform them about the best price, discounts or new product launches.
  • Get higher conversion rates for campaigns.
  • Increase sales.
  • Acquire new customers.

What you don’t want to do is – 

  • Target the wrong customer. For example – You don’t want to email about baby products to people who don’t have children or inform men on your list about the new cosmetic range that is being launched.
  • Show irrelevant products to people who might not be interested in buying them.
  • Send marketing emails to people who have already purchased that product.

Why do we need List Segmentation?

List segmentation can act as a powerful tool when it comes to email marketing. The smaller and specific segments can lead to –

  • Increase in effectiveness of campaigns/emails because they are more specific.
  • Better targeting because you reach the right customer.
  • Reduction in user unsubscription rate because now the user only sees products that might interest him to make a purchase.
  • Higher conversion rates. Since, people see what they might be interested in or what might be useful to them, there are chances that they perform an action and maybe even purchase it.

List Segmentation helps you pull out segments of your mailing list with people who are most likely to respond to an offer or a service and then provide them that offer or service. It lets you target the product to the right person. But, segmenting the list can be a tricky process. You don’t want the same user to be present on ten different lists so that he is receiving ten different emails at the end of the day. This will only lead to his frustration which might lead to an unsubscription. Some of the good practices to keep in mind while creating segments are –

  • Make sure the segments are not too small. “Too small” can vary from business to business. It depends on various factors like your total user base and the number of campaigns you want to run. Also, the list size should be worth the time and effort you spend on creating and mailing the campaign.
  • Create segments such that users are not repeated or duplicated in multiple lists.
  • Test segments. In order, to ensure that your campaign performs well, it’s always a good practice to test on a small segment and see the results. This will help to decide which segment performs the best.

Today, inboxes are cluttered with emails from various sources. People don’t have the time to scan through each and every email in their inbox. Lit segmentation will help user’s see what might interest them as it would be specific to them. It is a very powerful way to know and reach your customer and make him see what you want him to see because he wants to see it too!

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