Segment for increased sales

As America’s inboxes become ever more populated, e-mail marketing professionals have been chattering about the im­portance of sending more relevant e-mails to consumers. For El Cajon, CA-based House of Magnets, an e-commerce firm which sells sports-related promotional products to businesses, segmenting e-mail lists has become a successful technique to target customers more effectively.

The b-to-b marketer was looking to increase its sales of Major League Baseball-themed magnets to real estate agents, a main demographic which uses the company’s products to promote their own services. The com­pany found that geographical e-mail segmentation increased its open and click-through rates by 20%-50%.

“During Major League baseball season, we segment people based on their ZIP codes and assign them to a team in their region,” says Mike Atkinson, internet marketing director at House of Magnets. “Then we send personalized e-mails to them, showing the actual product that fea­tures their team. We found that that increases response quite a bit.”

Slice up e-mails by location

In 2007, House of Magnets sent out several e-mails to 800,000 real estate agents during the base­ball season, from January through April. Three-quarters of the list was sent e-mails segmented by their lo­cation. The e-mails promoted base­ball team-decorated magnets, on which they could place their busi­ness information and send out to residents in their area. Those sent e-mails regarding a local team — San Diego-based real estate agents re­ceiving e-mails for Padres-decorated magnets, for example — were 20%-50% more likely to open, click and buy than those sent a blanket e-mail about the products.

“The more we can show them that we know who their team is, whether within the subject line or within the creative, the better response we get,” Atkinson adds.

House of Magnets’ list is made up of previous customers as well as people who have opted in on its Web site or at a conference but have not purchased. Not surprisingly, returning customers were even more likely to open and make purchases from the e-mails – in fact, 300% more customers engaged with the e-mails than non-customers.

But while customer loyalty will almost always trump sales leads in terms of engagement, e-mail seg­mentation can also offer an effective way to approach list building. “Mar­keters have started working on not only lengthening their lists, but also in widening their lists, which has a great effect on their response rates and ROI,” says Luc Vezina, VP of marketing and product management at Campaigner, the e-mail services firm who handles the House of Magnets account.

Not only does segmenting an e-mail list help increase response rates, but not segmenting can actually have the opposite effect.

“Recently, the trend is that you are still sending broadcast e-mail, then you are seeing your click rates go down, since consumers are getting more savvy about how they deal with e-mail,” Vezina explains.

Often, the issue about segmenta­tion is no longer about whether to segment; it’s about what to segment. In the case of House of Magnets, the company chose to segment by geography because real estate agents who are buying products often send those products to people in their local area — so it makes sense to send New Yorkers Yankee magnets and Boston residents Red Sox magnets.

Atkinson says that a real estate agent typically a ‘farm,’ or a particu­lar area where the agent is trying to get time in front of people.

“When a homeowner wants to sell, they remember that real estate agent because of that baseball magnet that they have,” he points out.

Try triggered e-mail messaging

A customer’s past behavior — past purchases and ways of clicking on a Web site — is another way to slice up an e-mail list, says Vezina.

“If a customer on your site puts something in their cart and then doesn’t buy it, you can trigger an e-mail to try to get them to come back,” he says. “But timeliness is very impor­tant in this case — you need to send them the message at the right time, when they are telling you that they are giving your site the time.”

Creating a program for triggered messaging, or e-mails that are trig­gered based on a customer’s behav­ior when they visit a site, is the best way to segment based on behavior, according to Vezina. These e-mails are segmented down to the individual and then give a marketer more infor­mation about this customer for future mailings.

However, segmentation does not always mean a sure-fire conversion. One of the challenges with the tech­nique is deciding how to segment.

“If you don’t have a good reason to segment, then it is pointless,” Vezina adds. “If you can’t leverage better data, then you shouldn’t do it.”

Vezina went on to recommend test­ing and looking at where different sales come from based on different demographic information, including age, gender and geographic location. For example, House of Magnets found geography to work as a segmented group for the baseball magnets, but segmenting this group by the age of the real estate agent might not be relevant, since profes­sionals of different ages might have the same business goals.

No matter how you choose to segment your list, whether based on demographic or behavioral targeting, relevance is what it’s all about in an increasingly competitive marketplace, Atkinson emphasizes.

“It’s so important to e-mail mar­keting as a whole, the more you can make it relevant to that person the more likely they are to open it,” he says. “So if I have a person in St. Louis, I can say hey, ‘Here is your St. Louis Rams magnet,’ and they are like, ‘Oh, this person must know me.’ There is a little bit more of a relationship there.”

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