To segment or not to segment, that is the question all marketers ask when considering a new campaign. Is list segmentation worth the extra effort?

Segmentation enables marketers to customize messaging and more effectively address the specific needs of a defined audience. It’s practically an expectation of current technology that messaging is relevant and timely and offers are targeted. List segmentation is one more element of effective marketing management and it can help marketers get closer to understanding their audience.

Segmentation can be done by demographics, spend behavior, or the length of time a customer has been buying from the business. In theory, there are as many ways to segment as there are customers. In practice, segmentation is a science that requires the attention of both marketing and finance. It takes preparation to develop the hypothesis and to justify the segmentation (that’s the cost), but with a higher response and more data on your customer, list segmentation is worth the time and effort.

The Four Steps to Better List Segmentation

First, the business must have enough data to begin targeting.

Review the data from past marketing performance. How were offers or discounts received, and what was the impact on the bottom line? Was there a difference due to the season? Use the data points to build an objective for the next initiative. Ask vendors to provide cost estimates. Remember to incorporate the impact of list segmentation on customer service, sales, and other employees who will be responsible for delivering on the offer. Set reasonable expectations.

Second, unless the business is completely dependent upon a sales team who calls every prospect and customer each month, there must be a large enough list to segment.

With cross-channel marketing, the deployment of discrete messaging uses creative resources. On the back end, the business needs to see results. List size has to be large enough to get the results and offset the cost of list segmentation.

Third, the creative must be different enough to help drive the response.

Write different headlines to capture the attention of each segment and further engage the audience with supporting points in the body copy. Choose images or graphics that support the message. Look at the layout and ensure it is designed to work in the channel(s) the audience is most likely to use.

Fourth, track responses by the segments and examine results for each segment and also compare results across all segments.

The analysis should provide a deeper understanding of the audience responsiveness and the effectiveness of the messaging. This brings the initiative full-cycle, and lays the groundwork for the next campaign.

In the end, work towards getting that higher response rate to offset the up-front effort. Consider these Pros and Cons to when you are beginning your next campaign:

Pros Cons
Ability to customize messaging Costs for different creative
Specific results Small segments can lead to unclear results
Use outcome to craft messages for future
initiatives
Difficult of tracking multiple, small
segments
Focusing the greatest effort on most
profitable segments
Assuming all potentially profitable segments share the same characteristics