Recently I came across an online retailer who added me to their email list since I attended an event at one of their stores. Besides being angry that they opted me in without giving the ok, it got me thinking about how most online retailers do not think through the process of email marketing. In their eyes they want to get as many email addresses as possible and blast away. What better way to set yourself up for poor data and reporting.

So why would it be bad to get as many emails as possible, drop them in your email list and send? For the sake of this post lets assume we are a Dog online retail store and we currently have an email list of 1,000 customers who have purchased from us. We have been sending emails to them once a week for a few months now. Open rates are hovering around 12% and click through rates once someone opens them are 4%. Not too bad.

Now we take a list of 250 people we have compiled from various areas (grand opening party you had or list you got from a friend of their contacts) and you drop it in there. So now you have increased your list from 1,000 to 1,250 (25% increase). And you go to email your new list and now you start to see your open rate drops to 8% and CTR goes down to 2%. You may think the email was just not a good one and continue to send weekly emails without thinking for a period of time. During that time your customers rise and you get a few hundred more emails. But as your store grows and you continue to add any email you can get to your list, your revenue from email is not growing at the same rate your list is.

Enter the importance of list segmentation.

If I were to ask you, who would have more value attributed to you: a customer who has a dog and has bought from you, or a random email which you do not know if they have a dog? Obviously the first one makes the most sense. So given this data, why would you treat your marketing the same to both groups.

With email service providers (ESPs) becoming easier and easier to use, why not begin segmenting people by how you acquired their contact info. Some simple segmentations I keep track of for a store would be:

  • New customers from store sales
  • Facebook acquired emails from contests
  • Onsite newsletter signups
  • Any referral site contests (if we run contests on blogs or forums)
  • Emails you get from elsewhere (maybe you do a cross promotion with another company)Once we have our email lists segmented, you can start diving into the data to see which segment provides the highest revenue per email. If you find Facebook contests are driving the highest revenue per email, than you have clearer insight into where you need to expand your efforts until RPE drops. Also, it lets you know if any segment is causing your list quality to drop. If so, you than want to start thinking about sending that segment a separate email message, or not sending to that list anymore.

After you have gotten a good grasp of how to control your list at a high level, you can start to get granular. Some additional areas to test could be:

  • Locational Data – Are you pulling in your customer’s locational data into your list? If not, you may want to. Customers in certain states may have a higher value and even better if you offer free shipping, you could do locational sales to cut down on your shipping expenses.
  • Send Emails at Specific Time of Day – Scheduling down to time of day (send to each person at 9am in their respective time zones for example) and see if this creates a better open rate or CTR.
  • Product Specific Segments – What if you find people who buy dog collars are typically brand new owners and have the highest lifetime value? Maybe you want to add a segment to every customer who buys a dog collar and try sending specific emails to those customers only.

If you do not know your data like the back of your hand, you are at a handicap when running your business. Data will make or break any online retail store. So roll up your sleeves and dive right in.

Sean Dawes is the co-founder of Rocket Dove which is an Ecommerce Consulting company located outside of Philadelphia in Ardmore, PA. Specializing in SEO, PPC, Email, Social and Web analytics they consult for a diversity of online stores ranging from startup to Inc Top 500.

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