How many Customer Segments are Too Many?
October 22nd, 2008 by Doug BrightEarlier this month Tim Parry argued the merits of micro-segmentation in a Multichannel Merchant article called Divide and Conquer. The gist is that the more you can sub-divide your segments, the better you can target your message to each group resulting in higher response rates.
As a company that specializes in segmenting customers for targeted email, we couldn’t agree more.
But where do you draw the line? In theory, creating unique messages for each customer would provide the absolute best response, but who enough time to address that many segments?
The truth is that most retailers only have the manpower to produce creative for 3-5 emails per week. Given that, there may not be much value in segmenting your house file into 1000 microsegments unless you have a solution in place to automate the email content for each segment.
Microsegmentation can be useful, however, if you have a ranking of product affinities for each segment. In that case, you can target a product specific email to any cluster than has that product in its list of affinities. Over time, this technique provides much of the value of targeting each microsegment without the drag of having to produce email creative for each group every week.
For retailers who engage in best practices email marketing automation, microsegmentation is a tremendously powerful way to goose email response. For most retailers, however, just segmenting customers into a handful of groups and personalizing the message is a good start.
Tags: microsegmentation, personalization, segmentation, Targeted Email
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