The key to direct mail effectiveness is sending the right offer to right person at the right time. Segmentation is the process of dividing your customers or potential customers into groups, or segments, based on their characteristics. The segments that you create or identify are going to be made up of consumers with similar interests, characteristics, or behaviors and therefore, should respond similarly.
There are four basics ways to segment:
- Psychographics (personality traits, beliefs, values, attitudes, or interests)
- Behaviors (buying patterns)
The benefit to segmenting these ways is to give a company the ability to reach a group of customers with specific needs and wants with relevant offers and content. Relevance really does matter when getting people to respond to your marketing.
Once you understand the behavior or a particular segment, you can decide how improve upon your results. You can do this using RFM principles (recency, frequency, and monetary). For example, you might have a segment comprised of low value, very infrequent purchasers who might be very low margins and maybe even negative margin. You may also decide not to utilize more expensive touches to a segment like this. On the other hand, let’s say you have a group that’s high margin, but infrequent. You might set a goal to improve their frequency and construct offers to accomplish that. Segments can also be defined by things like what kind of products they buy or demographic characteristics. Once you how a segment of people behaves, you can set goals on how to reach that segment.
Data and insights on each segment can be used to help you decide what will drive variables such as messaging, content, offers, and channel selection. Don’t worry about getting too granular with segmentation right out of the gate. Studies have shown that going from static messaging to even two to three segments can create significant lift. If you try tackle too much at once, it can get really confusing. If you are looking to dive into more segments and have a data analysis done by experts to create content matrices for you, our sales team can walk you through that process and we can help you implement complex direct marketing campaigns with variables for each of your segments.