In Part 1 (Why Segmentation?) and Part 2 (Segmentation Strategies), we demonstrated how best practices in segmentation can greatly impact the success and profitability of any marketing campaign. In this article, we'll look at some variables that impact our segmentation strategy. These variables can be assembled to arrive at various combinations to be evaluated and tested.
For example: Demographic variables essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size.
We can take this a step further and segment on lifestyle/value variables. Some consumers want to be seen as similar to others, while a different segment wants to stand apart from the crowd.
Another basis for segmentation is behavioral variables. Some consumers are "brand loyal" i.e. these "regulars" tend to stick with their preferred brands even when a competing one is deeply discounted. Some consumers are "heavy" users while others are "light" users. For example, industry research reinforces that good old 80/20 rule i.e. 80% of the product is consumed by 20% of the consumers.
You can also segment on benefits sought, essentially by-passing demographics in some cases. Some consumers, for example, use toothpaste primarily to promote oral health, while another segment is more interested in whitening teeth.
Using the right combination of these factors can measurably impact your ROI. In a study on email marketing, Marketo found that proper segmentation alone (excluding all other factors – copy, design, etc.) contributed to 23% of email engagement.
Using data from research, identification and careful segmentation could be the most important factor in the success of any marketing campaign. Use it wisely and you may be surprised at your results.
As we mentioned in Part 1 of the Segmentation Strategy, many companies often overlook the value of proper segmentation in planning their e-marketing strategy.
In fact, Marketo found that segmentation for email marketing has the greatest impact on ROI when compared to other tactics like drip marketing and dynamic content.
Today, we'll explore some best practices for segmentation in multi-channel marketing.
Using an undifferentiated strategy, all consumers are treated equal, with no specific efforts to satisfy particular groups. This may work when the product is a commodity where one particular competitor can't really offer much in terms of differentiation.
When you apply a concentrated strategy, a company chooses to appeal to one of several segments while (conciously) leaving others to competitors. For example, an airline deciding to focus on the "price sensitive" customer who is willing to forego meals and assigned seating for a lower price. Southwest is an example of this strategy.
A differentiated strategy, followed by many airlines today, further leverages the data they have collected and offers higher prices to those who are inflexible with their travel plans and find it impractical to stay over a weekend. These passengers, usually business travelers, pay higher fares. The same airline then sells the remaining seats to price-sensitive customers (non-business travelers) who plan and buy in advance and don't mind the weekend stay.
Proper segmentation calls for you to make tough choices. There are many variables that can be used to differentiate consumers in your product/service category. Yet, in practice, it becomes impossibly cumbersome to define and work with more than a few at a time.
This means you need to determine which variables are most valuable in determining different groups of consumers to help you achieve your campaign objectives. Using the right segmentation strategy delivers a big difference to your bottom line.
In the 3rd and final part we will look at some of the variables we can use to segment correctly.
Many companies often overlook the value of proper segmentation in their e-marketing strategy. In general, it holds true that "You can’t be all things to all people," and experience has demonstrated that firms that focus on the needs of one group of consumers – or a single customer – over another tend to be more profitable.
As an added benefit, proper segmentation can help refine your targeting and positioning. It's the antidote to sending more messages
whether it’s direct mail or email marketing.
Marketo found that 23% of email engagement can be attributed to segmentation. Recipients were more likely to interact with emails sent from smaller, segmented email batches than those sent from large, untargeted batches.
We like to refer to it as de-marketing i.e. suppressing audience segments that are not likely to respond through predictive modeling and saving you mighty budget dollars!
In the past, marketers dreamed of the day they could know each customer's needs, wants and desires: the core of true customer segmentation. The first opportunities to segment for marketing began back in 1981 with the airline industry. They used their massive computer systems – amongst the world's largest at the time – and started collecting data on frequent flyers. Some of the best practices we continue to use today have their roots in their work.
Today, there are other forms of segmentation based on benefit (applied in retention marketing), occasion (seasonal marketing), behavior (product marketing based on attitude & response) and location (think local cafes, restaurants, event venues). Companies like Amazon are applying these practices using Big Data (a topic for another day!) to maximize their value proposition.
The keys to segmentation success, can be broken down into three steps.
First, you determine which kinds of customers exist, then second, select which ones you are best off serving and, third implement a segmentation strategy by optimizing your products/services for that segment.
In Part 2, we'll look at the right way to include segmentation in your strategic plans.
What makes a strong leader? Our Founder, Nirmal Parikh, discusses his views on taking the lead at the 2013 Inc. Leadership Forum, with the folks at Hiscox USA (@HiscoxSmallBiz).
Hear his thoughts on how qualities like overcoming challenges, learning to trust people and adapting to the market define a great leader and fuel Digital Wavefront.
What traits do you believe define a great leader?
You may have heard references to SoLoMo, or SoLoMoCo – Social, Local, Mobile Commerce. If you get lost in all the So's and Mo's, don't worry.
We'll show you how businesses are combining social & mobile to deliver unique customer-centric shopping experiences.
The Mobile Boom
The ease of access to a mobile lifestyle brings with it the need for retailers to provide consistent shopping experiences across every device, channel and storefront.
The boom in mobile device sales as well as m-commerce over the last few years underscores that need to maintain consistency.
eMarketer found that purchases on mobile devices increased 81% in 2012 to around $25 billion. Mobile is also expected to make up 15% of US ecommerce sales this year. This growth is primarily fueled by the proliferation of a multi-screen world combining PCs, tablets and phones.
The Social Edge
The influence of social in commerce is also on the rise. Several social media sites allow users to factor products into their identity. 70% of online shoppers who use Pinterest are inspired to buy items after seeing them displayed on sharing boards (Bizrate).
This year, the average "value" of a Facebook fan is at $174 according to Syncapse. That is up 28% since 2010. Although there is still speculation as to whether a Facebook "like" can really be translated into cold hard cash, there is no argument that a strong social media presence solidifies a company’s relationship with their customer.
Companies like Fab.com capitalize on that relationship through social commerce initiatives. Fab, an ecommerce site based in Facebook, uses various social media channels to promote products and encourages social sharing. It is expecting $50 million in sales from social media generated customers alone. (InternetRetailer).
Social commerce is expected to reach 30 billion by 2018 (Social Skinny) with Apparel and Electronics as top-grossing categories. Top sites for these sales are Facebook, which makes up 38.8% and Twitter at 20.2% (eMarketer).
Mobile and Social: The Power Couple
Companies are looking at how social and mobile interact as a "power-couple" to define their digital marketing strategies.
This past spring, Lowes used mobile and social to amplify their online presence. The company chose the new social video app Vine to create a "Fix in Six" campaign, offering home-improvement tips in 6-second vines.
It also promoted a "Now It's Time" mobile app through Facebook, which allowed users to sign up for weekly tips. The app delivered personalized home-improvement tips and weather reports which were delivered to the customer’s Twitter, Facebook and email accounts.
As a power couple, and on their own, Mobile and Social are fitting in nicely with the ever changing digital landscape. Finding your voice in social and mobile will allow you to create new interactions with potential customers and enable commerce.
All you have to do is start a conversation!
People want to connect with other people regardless of the company. Here's how you can humanize your brand and use inspiration to tell your company's story.
You've just attended a conference and have a bunch of business cards to sort through. Which business card are you most likely to remember and keep?
One that has a complete list of highly specialized services riddled with technical jargon and a formal introduction to the professional it represents.
The one that has pops of color, an illustration of the person it represents and a short but impactful mission statement?
#1 has a strategy, but #2 has a Story and expresses that story in creative ways.
Now imagine these cards as individuals – which would you rather have a conversation with?
Here at Digital Wavefront, we've come back from a few conferences (Inc. Leadership Forum, DM News Marketing & Technology Summit, NEDMA Annual Conference) motivated to put new ideas to good use. Meeting creative people and experiencing new things has inspired us to round out our own brand.
Find Your First Impression
Great companies, like interesting people, give authentic first impressions. They emit a strong sense of identity and leave their "stamp" on everything they do. Some of the most loved brands like Apple, Coca-Cola, McDonalds and Google excel at reaching consumers on a personal level.
Mission statements are usually a company's most overlooked expression of itself. Corey Eridon from Hubspot wrote an article on ways to avoid writing "fluffy" mission statements.
He suggests reaching audiences in a non-technical and open way by avoiding the use of business jargon. He found it best to express your company’s "reason to exist as a business, beyond just making money."
The Moo Example: Be Real – Even if that Means Being a Robot
Moo.com, a print company based in the UK, does a great job of infusing their communication with a human, conversational tone. Their product quality is excellent. How do we know? Well...they print our business cards, thank you cards et al.
But, they don't bombard us with statements about how excellent their printing systems are. Here's the Moo Promise.
"We've never thought "satisfaction guaranteed' was the most inspiring phrase. We'd like you to be satisfied of course, but we'd prefer it if you were absolutely thrilled with your order."
And THRILLED is what we are with MOO! They live this quality through everything they do: website, packaging and customer service. Even their (automated) emails are super charming and human but narrated by their mascot Little Moo, the company robot.
Be Performance Focused, but People Fluent
Steve Tharler’s (http://www.tharlerdirects.com/) session at the NEDMA conference provided lessons that could apply to many aspects of building your brand. What I found to be most inspiring was his emphasis on taking a break; distracting yourself from what you expect to write and instead focusing on puzzles, images or something to stimulate your mind.
Another great statement Tharler made was, "Your job is to Establish trust, Nurture relationships and Build (a sense of) community."
Team get-togethers, unique outings and diversions are just as important to forming your story and connecting with customers. It is okay to break away from your typical niche of "B2B Networking 101" and attend the random "underwater basket weaving" lecture if it means you'll learn something new. Take your inspirations and weave them into the fabric of your work. It is, after all, the human qualities that build great brands in the first place.
Here at Digital Wavefront, we've been putting these inspirations into practice.
We decided to add a personal touch by creating Digital Wavefront Thank You cards (courtesy of Moo!) that featured pictures taken by our employees. Making clients and others aware of our gratitude is important, but adding a local photo and caption seemed fitting to say "Thanks" from each employees' point of view.
One of our more recent outreach campaign was centered on the idea of personalization. We invested the time to learn more about our recipients and personalized each kit with things like heel cushions, a hot pad, a bottle of sun-screen, pack of themed paper napkins, etc. Plus, each set featured select tips & tricks from our Performance Marketing Flipbook and freebies such as Amazon and Starbucks gift cards to add unique value.
We also tweaked our First Impression from "Technology Solutions for Multi-Channel Marketing" to "Wicked good solutions for multi-Channel marketing!" to make it more human.
Wouldn't you rather start a wicked awesome conversation about marketing with someone who personifies wicked good solutions for marketing?
You're ready to launch your email campaign. Have you considered everything to ensure you will get the best deliverability and response? If you are not sure, read on.
First, assess your target market. Talk to those in your company who know your customers. E.g. What day of the month are your customers more likely to respond? Are they viewing their emails on a computer or their phone? Which months show better response rates? Finance and retail organizations can expect to see lifts that revolve around the holidays and with events such as graduations, marriages, and births.
Now that you know your customers’ sweet spots, design a healthy campaign. We use the word "healthy" because your campaign is a living/breathing thing that needs constant maintenance to remain sound and relevant. If you just set up your campaign once and rinse & repeat — you will be headed for disappointment.
Here's how you can create a healthy email campaign.
1) Maintain good IP reputation
IP reputation is critical to the success of all, and especially B2C, email campaigns. Low IP reputation means emails will never make it to recipient Inboxes. Unknown user and high complaint rate are the top reasons why email is blocked or filtered at many ISPs.
Complaint rate too high?
Complaint rates 0.1% or higher should get attention. High compliant rates will lead to emails being blocked by ISPs. Make sure you start validating emails before each send. Give your prospects a chance to opt-out rather than registering a complaint.
Ton of hard bounces?
Hard bounce rates over 2% should get attention. A high hard bounce shows that the address is invalid or the email recipient’s mail server has blocked your emails. Is your (or your client’s) list permission-based and current? Validate the list prior to sending to counter this.
Consistent sends (no dark periods, no large bulk sends)
Consistent small sends are important for maintaining a good sender score. Avoid large bulk sends that are indicative of unsolicited bulk.
If you are warming up a new IP address, start very small — 150 emails/day. Continue to nudge up send quantity and monitor to make sure you’re staying “under the radar”. This is a marathon, not a sprint. If you run too fast, you will fall down and get hurt.
Target a 90% or better delivery-to-send ratio as that increases your IP reputation. Test subject lines and review your email content. Avoid spam-trigger phrases like "consolidate your debt", "eliminate debt", "pre-approved", or "eliminate bad credit".
2) Improve unique views (opens)
Look at subject line performance. Get a feel for what energizes your audience.
Consider investing in predictive modeling for better targeting. It typically pays for itself within a few months by reducing sends to non-existing and bad email addresses.
3) Improve click-through rates
Make sure your email’s structure is well-organized. It should be easy for the recipient to quickly grasp at the offer and know how to respond.
Consider improvements to email structure, messaging and design. Perform version testing to see if your response mechanism is creating roadblocks. Consider a compelling offer to grab prospects’ attention.
4) Performance – Are we meeting the goal metrics for conversions?
The most commonly spoken questions regarding performance are: "How much volume do we need to send to get the desired conversion rate?" or "Is the view rate good? Is the click-through rate good compared to others in our industry?" — These are strategically the wrong questions to ask.
Wondering how much spaghetti you need to throw at the wall to get some to stick is not the right approach. Build predictive models to ensure you are targeting the an audience who is most likely to respond.
Attribution is every marketing department’s statistical albatross. You might not be seeing click-throughs but you might be getting more store traffic or increasing the awareness of your product or service. Marketing budgets often split into several distinct channels that are pit against each other to justify their existence. Instead, these channels should be allowed to work in concert and harmony to build the overall sales of the organization.
"Email marketing budgets are often based only on online sales. This is a mistake because email produces four times as many sales offline as they do online."
Source: e-Dialog, Inc.
When it comes to marketing, don't play the numbers game of simply increasing volume to increase response. There are lots of companies out there who can push the "send" button on an email campaign. But, if you're looking for insights and intelligent recommendations to improve your response rates and ROI, ask us how we can help you. Work smarter, not harder.
Understanding how people really interact with their devices will help you provide a tailored and more streamlined experience for your customers.
At the NEDMA annual conference a few weeks ago, Google agency strategists Mike Hawkins, Anthony Phalen and Connor Green presented some interesting material pushing past why multi-screen usage is an important turning point for marketers and shedding light on how people use their devices. This was especially interesting because it presents new possibilities for advertisers and marketers who want their content and brand to move across devices with their consumers.
For example, we understand that many people use tablets or smartphones in addition to watching television. By understanding that behavior, it would make sense to create television ads that respond to multiscreen behavior and encourage interactivity with a related app, website or social media.
So, how do we choose devices?
Google found that people choose devices based on context. The amount of time they have to spend, the consumer’s purpose for using that device, location and state of mind determine your choice of device.
Laptops and PCs are primarily used for productivity and to keep us informed. This accounts for 24% of our daily media interactions. They are usually focused and prepared to spend a good amount of time researching.
Smartphones "keep us connected" on the go. Consumers use their phones for immediate information over short periods of time. Much of this is when they are out and about but a surprising 60% of smartphone use occurs within the home.
Tablets are more of a downtime device. Consumers use tablets to stay entertained when they have an "unbounded sense of time." Only 9% of our daily screen interactions are on tablets. Tablets are also an overwhelmingly home-centric device – accounting for 79% use.
Second Screen Success
Second screen interaction through apps is a great way to capitalize on simultaneous use. If done well, these apps work with the users' natural behaviors and simplify the multi-tasking process.
Shazam is an example of a second-screen app. It is a song identification app that allows people to tag, purchase and share music and media that is playing around them. Shazam has done a great job of adapting to various consumer needs, time constraints and choice of device.
Who is Your Multi-Screen User?
If people choose devices based on context, then it is important to consider what context your campaign fits into. Will your app be appropriate on a mobile device for someone who doesn’t have much time? Is your mobile site approachable to the customer chilling with a tablet who has time to be entertained? What could you be doing to move across devices with the multi –screen user?
Thinking in terms of Context – how much time your customer has, where your customer is and what their state of mind is will help you map out the best way to reach those individuals.
Multi-screen means campaigns are no longer limited to a single platform. We can now work alongside the consumer's experience, choosing platforms that offer the most natural fit.
A simple direct mail campaign can sometimes have as strong of an impact as the loudest, most impeccably articulated digital campaign.
Why? Because, as consumers, we experience some of the best websites, digital content and emails on a daily basis. Having that perfect website, social presence and a focus on website usability is important and increasingly "expected", but, are no longer a differentiator.
A well orchestrated direct mail campaign is an effective marketing tool and can cut through online chatter while complementing the digital programs you have in place. In their 2012 Channel Preference Survey, ExactTarget found that 65% of consumers who received direct mail either made a purchase or engaged in other calls to action.
Direct mail is an old method of reaching out, but it isn't outdated. How can you use it in new ways?
Use Data (big or small) to Personalize Your Work.
Make your work feel relevant to the user. Go beyond just personalizing their name. Tweak the content, offer and design to connect with the user.
If you plan on following up, acknowledge the initial message and build upon it. For example, if you know someone responded to a newsletter on bee-keeping you can add that knowledge to the content and design of your follow-up direct mail. E.g. "We would like to invite you to an upcoming honey-farming event in your community."
Take Advantage of Tangibility.
One awesomely simple point one of our Performance Marketing Experts made was to incorporate interactive elements, different textures and new design ideas to add a sense of discovery to the experience. "If it looks good, feels nice and screams for interaction, I am more likely to open it", says Nimisha Asthagiri.
Blend Across Channels.
If direct mail offers the first touch, digital channels drive long-tail interaction. Choose the appropriate channels to further engage your prospects. E.g. You can add QR Codes to direct mail and drive them to a personalized landing page, your website, video portal or your Facebook fan page for further interactivity.
There is really no limit to what you can do with direct mail. Invest some time to make it stand out through creativity & interactivity. Your direct mail campaign may not reach prospects through new technology, but it will definitely be different.
Come, meet Our Direct Mail Superheroes
We utilized the ideas featured above in a recent direct mail campaign that featured elements of fun, interactivity and personalization.
Our Founder, Nirmal Parikh, came up with the idea of using an Avengers inspired activity set to bring out the inner Marketing Superhero in our prospects. The package included a superhero cutout and markers, themed tattoos, a personalized letter and a copy of the Avengers comic book. The actual "gift" from us was about them, and encouraged fun. The idea was to help prospects envision themselves as this superhero character.
Yes, marketing is a serious business – but really what creative marketer wouldn't be tempted by the opportunity to color a superhero that represents them?
We blended across channels by creating a landing page with an invitation to connect via social networks. These were the next steps in the communication process. So, we offered them additional information on our call to action while restating the promotions and encouraging social engagement.
The Marketing Superheroes effort was simple in its delivery.
Sure the landing page added an online element, but its main entrée was paper, markers and a business card placed in a package. Yet, we all agreed that it was a unique way to reach people. The kit has been very well accepted and we've (until now) received a 47 percent response rate and a few (well-deserved!) praises from prospects who loved our approach, creativity and effort!
So, don't rule direct mail out just yet. Give your customers the opportunity to have a simply "them" moment to be creative, open a personalized "gift" and think of themselves as a Superhero. After all, it does take a superhero to handle the marketing demands of today's world! And, wer'e here to help.
It's the Ads on their smart phones that people dislike. It's the tiny message that you can't seem to quite read, let alone digest and respond to the call-to-action. Which car company was that? Who cares?
Let's face it. Those tiny ads just aren't working. Very few people click on them, some even accidentally, and surveys show that 4 out of 5 dislike them. According to a recent study done by Azullo, an Ad solution company, only 21% of people even remember seeing an Ad on their phone in the last six months. And, of those who did remember, only 14% said it made them want to buy what was displayed. That said, mobile accounts for 10% of people's time spent on media and that percentage is only going to grow because mobile devices are always-available, instantly-on. There's no login screen, no lengthy boot cycles, or taking your computer out of your briefcase. Smart marketers know this but are still struggling to figure out how best to use this channel for their brands.
In the view of Sunil Gupta, Professor of Business at Harvard Business School, among others, the future of mobile is in Apps not Ads. Observe how people use their smart phones. A lot of time on these devices is spent on calling, emailing, texting and browsing and yes also on apps for games and entertainment, social networks, utilities, discovery and brands. Games and entertainment and social networks account for 73% of the time spent on one's phone. That doesn't leave much air-time for other categories which includes brands.
So the key is to create Apps that stand out just the way an Ad has to stand out on television or radio. The list of ways to do this revolves around strategies that deliver convenience, unique value, social value, offer and entertainment. And that is where the holy grail for your brand is i.e. to create the right combination of these strategies into an App that fits the product category and delivers the brand's value proposition. Brands like Nike (Nike+ Running, Nike+ FuelBand, Nike+ Basketball, etc.) and Coke (Coke Drink, Coca-Cola Freestyle) are already doing it but the list is small and non-existent in many product categories.
At the end of the day it's about relevant content presented in an engaging manner that smart phone users go back to again and again.
So, what will you bet on? Apps or Ads? Give us your feedback here or join the conversation on our Facebook page.