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Innovating email - Part 2: deploy dynamic micro-segmentation

Email enables retailers to contact thousands of customers quickly on a regular basis. Coupled with an increasing amount of behavioural data generated by customers, email becomes a channel that allows retailers to deliver personalised content. Dynamic micro-segmentation of customers allows for the retailer to deliver one-to-one communications at scale like never before. So what is dynamic micro-segmentation and how can it be deployed by small and medium-sized retailers.

What is dynamic micro-segmentation?

Companies will usually have some kind of customer segmentation. It's either loosely defined in the heads of those who run the business and their Marketing teams. Or it's formally committed to paper and communicated throughout the organisation. Some companies have several segmentations. Such segmentations typically have anywhere between 3 to 8 (macro) customer segments (e.g. young families or men in their forties) and are static i.e. they don't change over time. Each segment has an average profile which contextualises that segment e.g. higher than average income, active on social media channels, use iPhones. Micro-segments are the segments that exist within each of the macro segments, which when put together create 'the average'. For example you might have a micro-segment of young families, on lower than average income, that aren't particularly active on social media and who use Samsung phones. The point being: be cautious of averages! Dynamic micro-segments are simply micro-segments that can grow and shrink dynamically over time and which can be created on the fly based on a defined set of criteria. This allows a retailer to take into account how individual customers' circumstances change.

Deploying a dynamic micro-segmentation approach within email marketing allows retailers to communicate personally and relevantly. Think of the shopkeeper of yesteryear, who would know all his or her customers really well and cater to their individual needs. Although not exactly the same, using dynamic micro-segmentation looks to offer online shoppers a similar experience.

Dynamic micro-segmentation technology

When it comes to targeting customers via dynamic micro-segmentation, needs to ensure it has the right technology in place to enable this kind of flexible targeting. For example, a retailer might want to invite a specific group of customers to an event. The retailer would need to identify customers who are profitable to the company over a long period of time (high predicted Customer Lifetime Value), live in a certain catchment area and who have bought into relevant categories of product. In order to do this it would need to have the right kind of data, predictive insight and simple data mining technology to pull out this group of customers.

How is dynamic micro-segmentation used in email marketing campaigns?

Once you have the right data and technology in place, micro-segmentation can be deployed for both ad-hoc and automated email marketing campaigns. Retail marketers should be aware that automated campaigns can be limited due the number of campaign templates a marketer wishes to set up, matched with the amount of micro-segment data an email service provider can hold. For example, MailChimp has a limit of five segmentation conditions per campaign. Those who use the MailChimp API are limited to ten segment conditions.

And don't forget, micro-segmentation tracking allows companies to see the short- and medium-term impact that marketing in this way has on a certain group of people. Did more of them convert? Have they started increasingly their average order value? Have they started shopping more frequently? Are they repeat buying at a greater extent? Having access to such information can help a retailer see the benefits that using dynamic micro-segmentation can bring.

Clients have seen an increase in email revenue by over 60 percent, simply by following the micro-segmentation approach. This alone shows how companies and online marketers who target customers with relevant email marketing that appeals to them can really bear fruit when it comes to conversions and customer engagement.