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Engagement Segmentation How to successfully integrate engagement segmentation into your email marketing strategy Matthew Kelleher / Tim Roe April 2012

Email and Website Optimisation


Engagement Segmentation

Introduction The concept and practice of online customer engagement enables organisations to respond to fundamental changes in customer behaviour1. Segmenting users based on this activity and integrating it into email marketing can have a huge impact on the success of email campaigns. Engagement segmentation is a new concept in the online marketing world offering marketers a new way to improve email communication. The process identifies all areas of engagement between a consumer and an online brand directly correlating to a sale. This includes all online website behaviour as well as behaviour devised from email interaction. With between 70% and 80% of future sales coming from data segments already engaged with your brand2, using engagement segmentation to drive sales can be extremely effective. Despite this only 37% of companies segment customers based on engagement.3 As well as improvement to sales and conversion, the other major benefit of engagement segmentation is its use as a tool in the battle to achieve good deliverability. Good deliverability is crucial to all email marketers. Sending masses of untargeted mailings to an unsegmented database may give a short term boost to sales, but the medium and long term impact of junk folder placement will seriously damage future revenue and profit. Many of the main ISPs are adopting “Inbox management processes” that use recipient input and engagement to prioritise messages and help manage inboxes. The result is the inbox becomes much less cluttered and only the important emails are a priority. This is good news for the marketer who targets and segments, but not for the “batch and blast” practitioner, who will increasingly see his emails junked.

successfully integrate engagement segmentation into your email marketing strategy, ensuring your emails are the ones that get opened and clicked and not the ones that end up in the junk folder.

Rule 1: Build a reliable database Engagement segmentation is not complex but it is data intensive. Therefore the first critical step to integrating it into an email marketing strategy is to build a reliable database. Data needs to be accurate. This might sound obvious to a database marketer but web analytics databases are generally set up to report on website statistics (hence their name). Although some effort is paid to identify unique people, it’s not the primary concern. True engagement segmentation focuses on the individual customer or prospect, including all interactions with the website, advertising, and email. With engagement segmentation it’s “person analytics” that is extracted which is why it is so valuable.

Rule 2: Keep your data up to date Ensuring your data is constantly kept up to date will help you establish the rules by which you wish to segment and manage engagement. Every time a customer begins to engage with your brand their status needs to be updated immediately to ensure they receive communication commensurate with their status. Remember good deliverability relies on a clean database. Looking after your data will not only ensure engagement segmentation is possible but also improve your sender reputation and email deliverability.

This paper will outline 8 simple rules to help you

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Engagement Segmentation

Rule 3: Implement engagement segmentation through online behaviour Engagement segmentation can be devised from two main areas; online behaviour and email interaction. Online behaviour covers a whole multitude of actions: what a customer viewed on a website, how they entered your website, search terms used to enter a website, search terms used while on your website, previous buying behaviour… the list is endless. It is identifying the most significant actions that provide the real challenge; and this can only be done by analysing accurate data. By using this customer knowledge you can create a personalised email campaign for each individual based on interactions the user has already engaged in. Segmenting customers based on content they have already engaged with is much more likely to encourage future engagement rather than just relying on an untargeted email to provoke interaction.

Rule 4: Implement engagement segmentation based on email interaction Once you know what your users want to receive email marketing communication on you can begin segmenting them further based on how they interact with the emails you send. The most basic segmentation using email interaction is through opens and clicks. As you progress you can draw up ladders of engagement covering a multitude of stages from disengagement right up to very engaged, but the basic concept covers three main segments; engaged, semi-engaged and disengaged.

Segment 1 – Engaged subscribers These users regularly open and click all email communication you send and would have done so recently. They love what you do and want more. Segment 2 – Semi-engaged subscribers These users open emails sometimes but infrequently and would not have opened an email recently. It is also likely they have not visited your website or purchased recently either. Segment 3 – Disengaged subscribers These users have not opened or clicked on an email for sometime. It is likely any email communication sent to them is ending up in spam.

Rule 5: Monitor changes in engagement Keeping track of how often a customer engages with an email is crucial for email marketing best practice. A customer’s engagement with a brand is a completely transient condition and therefore needs to be monitored continually. Customers and prospects are fickle. A customer previously active can suddenly lapse engagement. To deal with this effectively you must be aware of this change and alter the email marketing sent to them accordingly. Automated segment management allows you to ensure the customer is always in the correct segment. This is important; your segments must reflect the latest status for the person. You don’t want to send a reactivation email to someone who has opened your last couple of emails.

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Engagement Segmentation

Rule 6: Don’t ignore the disengaged

Rule 7: Don’t bombard your customers

One of the key uses of engagement segmentation via email interaction is the identication of disengaged subscribers.

Once you know who your engaged customers are and what information they have previously engaged with, don’t be tempted to bombard them with information.

The best way to deal with disengagement is to implement a re-engagement or “Win Back” programme. However, if re-engagement doesn’t work the best solution is to can the users that have already canned you. Examples of re-engagement programmes • Special offer or promotion to entice the user back • Acknowledge disengagement and provide opportunity for the user to opt out

Offering the opportunity for users to opt out or proactively removing inactive data can seem a scary prospect for email marketers. However, truly disengaged customers supply little if any value for business. Continually mailing the disengaged will result in a damaged reputation from ISPs and ultimately effect deliverability. Before removing disengaged users it is usually worth flagging their details to a call centre to check you have the best email address for the customer or find out if the customer would prefer to be contacted in a different way. Integrating marketing activity in this way provides an opportunity to re-engage customers before their details are completely removed from your database.

According to a survey released in 2011, 49% of people who unsubscribe from permission based emails said the reason was emails coming too frequently4. Engagement segmentation is about nurturing your active customers and prompting them to buy based on how they have previously interacted with your brand. Sending masses of emails to even a highly engaged customer can be off putting and result in users becoming less engaged.

Rule 8: Test your campaigns By splitting each engagement segment you can test campaigns on their effectiveness. Some cross sell or hard sell campaigns may be tempting to many marketers, but they can be detrimental to customer engagement. However, detrimental or not, this can only be established through proper testing based on split cells.

Conclusion Engagement segmentation is a new concept in the online marketing world. Engagement itself has been how marketers have measured success for years, but now the rules are changing.

Disengaged users can be toxic. Someone not interacting with email communication over a long period of time is highly unlikely to suddenly convert. Continuing to email disengaged users, without any other form of communication to ensure interest, is potentially very damaging to sender reputation.

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Engagement Segmentation

• How many users visit your site?..has become…How many times has a user visited your site and how recently? • How many users sign up for your newsletter?..has become…Who are the users who sign up for your newsletter? • How many users open your email?..has become…Which users click your emails and when? • How many users click on your email?..has become…How many emails has each user clicked in their lifetime? Are they still clicking now? • How many users purchase online?..has become...Who are my online purchasers? How much do they buy? When did they last buy? All of the above questions regard forms of engagement, but until now the answers have been used purely to measure the success of campaigns and website design. Now however, with information regarding engagement focusing on the value of the individual customer, it can be used to improve marketing communication as well as measure it. The key to understanding engagement is to accept it is a transient state. When someone has visited your website, made a purchase or signed up for an email they are successfully engaged. Now the customer needs to be nurtured to ensure they continue to spend money with your brand. As a marketer it is up to you to keep them on this path and not batter the poor recipient into a state of disengagement by sending them unwanted, irrelevant emails; and the best way to do this is through engagement segmentation.

Customer engagement directly correlates with sales and the only way to achieve continual and successful engagement is through engagement segmentation. References 1 Wikipedia, the free online encyclopedia, cited http://en.wikipedia.org/wiki/Customer_ engagement 2 RedEye Client Research, December 2009 - 2011 3 Econsultancy/RedEye Conversion Rate Optimization Report, 2011, available from http://econsultancy.com/uk/reports/conversion rate-optimization-report 4 EmailStatCentre.com, sourced from http://emailstatcenter.com/Frequency.html

If you would like to know more about engagement segmentation please contact RedEye on 0845 094 1114.

To view our case studies please click here.

Successful engagement segmentation lies in data management and analysis. Marketers need accurate data to effectively analyse and integrate website behaviour and email interaction, and improve future communication. The results of such activity will improve sender reputation, deliverability, customer relations and ultimately sales and conversion.

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Case studies

Envirofone

Previously Envirofone had struggled with poor deliverability and disappointing email engagement. Using engagement segmentation RedEye helped Envirofone cleanse its email database and implement a strategic email programme based on engagement. The following results were achieved: • Email communication trade value increased by 426%. • The volume of contacts who could be safely targeted without the risk of damaging sender reputation increased by 150% with deliverability remaining consistent at 99%. • The percent of clicks from unique opens more than doubled. • 53% of Envirofone’s trade value is now generated by customers that engage with email.

Budget

In 2010 RedEye helped Budget implement a highly targeted behavioural email programme. In 2011 the company integrated an engagement segmentation strategy to optimise the campaigns. The following results were achieved: • The behavioural email campaigns incorporating engagement segmentation doubled Budget’s average conversion rate. • The average unique open rate increased by 57.8%. • The number of total bookings generated from email increased by 50%. • Revenue from email increased by 53%. • The campaign achieved a 782% ROI.

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