A deep dive into the numbers around email segmentation
In our ecommerce industry benchmark report published earlier this year, Diana shared her findings from analyzing a thousand companies and the results from over a billion emails.
One of the key takeaways: email segmentation is vital.
While conducting her research, Diana found that larger companies were sending to far more segments than their counterparts.
But why is that? Do companies who send more in-depth segments see a spike in email performance? Are the smaller companies sending to different segments than the larger companies?
All great questions. To answer those, I dove into our data to uncover everything about what’s what. Everything you need to know about email segmentation relevant to the size of your store based on annual sales — from overall performance to the most popular segments.
To kick it off, let’s take a look at the segments of stores generating under $100K in annual revenue.
Revenue under 100K
Just because you’re on the smaller side doesn’t mean you should be slacking when segmenting. Segmentation should be a large part of your email marketing strategy.
According to our data, companies making less than 100K in annual revenue have 7.82 segments set up in their Klaviyo account. They’re seeing a 19% open rate and revenue per recipient (RPR) of $0.07.
After looking at the top twenty accounts under 100K (highest performing based on revenue per recipient), I noticed they were all sending to two segments:
1. Active subscribers: Has opened email in last 30 days
An active customer is someone who is on your newsletter list and has been engaging with your emails. A common segment I saw in stores generating less than 100K annually was subscribers who have opened an email in the last 30 days. These are the recipients who might be close to purchasing for the first time.
2. Inactive subscribers: Has not opened email in last 90 days
Another popular segment was those who have not open in the last 90 days, commonly referred to as inactive subscribers. That doesn’t necessarily mean these subscribers are lost causes. According to Return Path, 12% inactive subscribers will open your campaign. To better your chances, provide a dollar-based discount. Dollar-based discounts are twice as likely to get your inactive subscriber to read than percentage-based discounts (Return Path).
For those who haven’t engaged for a while, consider sending them a win-back campaign. To learn more about win-back segments, check out these 4 ways to segment your win-back series.
Revenue between $100-$1M
Companies that generate between $100K-$1M have an average of 10.29 segments with an open rate of 17.86% and RPR of $0.32. Although their open rates are a little lower than companies making less than 100K, you’ll notice that they’re making more revenue per email sent.
19 out of the top 20 accounts segmented based on their subscribers’ number of purchases, allowing them to target based on the frequency at which their subscribers buy. Two popular segments included:
1. Repeat purchasers – Subscribers with 2+ purchases
40% of an ecommerce store’s revenue is created by 8% of its customers — this 8% is made up of your repeat customers. These customers are some of your best customers. They’re more likely to shop again, they’re easier to sell, and they typically spend more on each purchase. Don’t believe me? Check out this great piece by Smile.io for 5 Reasons Repeat Customers are Profitable.
2. One-time purchasers – Subscribers with 1 purchase
Turning a one-time customer into a repeat customer isn’t an easy task — but it is worth it. According to study from Sumall, the likelihood of a customer returning increases with every purchase. It goes a little something like this:
- After 1 purchase: 27% chance of returning
- After 2 purchases: 45% chance of returning
- After 3 purchases: 54% chance of returning
There are many of reasons why they wouldn’t purchase a second time. It could be that it took too long to deliver, they weren’t happy with a product, or they just forget about your brand; which is why it’s extremely important to treat these customers differently than the rest. Try mixing in a promotion to nudge them towards another purchase.
Revenue between $1M – 10M
I quickly began to notice that the larger the store, the more segments they had set up in their account. Companies that are making between $1M – 10M annually are averaging 16.16 segments per account. They see similar open rates as other company sizes (17%) but a much more significant RPR ($0.48). I think we’re starting to see a trend here.
But which segments are they sending to yield that increase in revenue? 17 of the top 20 accounts sent to segments based on the value of the shopping cart. The two most popular were:
1. Subscribers with total spend UNDER X dollars
Knowing how much your customers spend on each purchase will give you an idea of their spending habits and what their average order value is. Segmenting based on this information will help you promote products that are in their price range.
For example, if a subscriber has never purchased anything over $50, send them an email with all your most popular products under $50.
2. Subscribers with total spend over X dollars
These are the subscribers that spend the most money – in other words, your VIP customers. Identifying your VIP customers and treating them differently is a key component of customers retention. To learn why and how to identify your VIP customers, click here.
Revenue over $10M +
Now we have our biggest customers — stores that make bring in $10M+ annually. And if history repeated itself, then I’d venture to say they’re segmenting a lot. According to our data, businesses at this size have an average of 52.2 segments in their account. Again, their open rate doesn’t change much (16%), but they see an increase in RPR ($0.61).
These accounts are sending to all the segments I mentioned above — but taking it one step further. They’re segmenting based on what their subscribers are viewing and what they’re adding to their cart.
1. Browse abandonment: Has browsed X product
In a recent study, we found that automated browse abandonment emails saw an average open rate of 52% and RRP of over a $1. These larger customers are taking it one step further and segmenting their browsers by products they’ve viewed, the number of times they’ve viewed them, among other things. Check out these 5 audiences you should target with your browse abandonment emails to learn more.
2. Cart abandonment: Has abandoned X product
Another triggered email that Klaviyo offers out of the box, our abandoned cart email is proven to work. Check out our new abandoned cart benchmark report to see where your company stacks up.
Building strategically tailored segments is a huge part of email targeting. Sending to more finely targeted groups is a winning strategy for many reasons. When you send more relevant messages, you’re typically supplying content that the recipients are more interested in. For example, if you put a product line on sale, you can send promotional emails to people who have indicated an interest in that product line in the past.
So stop thinking in terms of total email list size — and start thinking in terms of smart ways to divide that list into targeted segments. The more you know about your shoppers’ behavior on your site and with your previous emails, the more precisely you can segment your list and follow up with highly relevant content.
To learn more about segmentation, check out our definitive guide to email marketing segmentation.