Segmentation

I've been doing some research into segmentation lately and testing various lists to see if they send out different creative, subject lines and so forth, to different demographic profiles. In particular, I've been looking at the retail chain lists from Lowe's, Wal-Mart and Kmart to see if any patterns emerge. Intuitively, it makes sense that companies that are spending the time to segment their lists for the purposes of targeting offers to customers have a more sophisticated email marketing strategy than those companies that don't.

So far, only two retailers seem to taking advantage of segmentation in their house list. Let's call them Retailer A and Retailer B and break them both down to see if we can tell what they are doing:

Retailer A seems to break down its segmentation into Geographic regions and levels of interest in products. All of this data is gathered at the time a consumer signs up for the retailer's newsletter. We tested that retailer's list with four different combinations: North/South, Broad Interests/ Narrow Interests (in the South we were only interested in Gardening, in the North, only interested in Home Improvement). Below is a chart of email sends over the past 30 days.

* All Charts copyright 2004 Emerging Interest, email send data supplied by CETS

The thing to look at here is the Blue Line which represents the number of unique profiles the retailer targeted over the last 30 days. Each email represents an email send to one of our demographic profiles. In most cases the retailer sent out emails to its entire list at least in the last 30 days, although we have noticed more segmentation going on in previous months. The exception is June 14, where our Northern/ Broad Interest profile was the only one to receive a special Father's Day promotion, although a different Father's Day promotion went out to the entire list just two days later.

But the chart doesn't tell the whole story, because on June 8 (and also on June 2, which is not represented on this chart), while Retailer A blasted its entire list, it split the run along creative lines. Our Southern/Broad Interest profile and our Northern/Narrow Interest profile received an offer for Spiderman related Videos and DVDs, while our Northern/Broad Interest and Southern/Narrow Interest profiles received an offer for Luggage sets. It was interesting because there did not seem to be a specific target in mind. Perhaps it was simply a split run with no rhyme or reason.

But how are these emails doing in driving traffic? Let's look at another chart:

* All Charts copyright 2004 Emerging Interest , site traffic data supplied by Alexa, email send data supplied by CETS

The red line now represents the email sends and includes not only the retailer's own internal communication, but offers sent through third parties such as CoolSavings. The Blue line represents jumps in site traffic (we started collecting this data on June 16, so that's where the Blue Line starts). As you can see, an email send almost always aligns with a jump in site traffic showing the importance of email in driving traffic to this retailer. (The smaller green and yellow lines represent traffic to various smaller sub-brands).

Retailer B, on the other hand, really plays around with different subject lines, creative, and targets in its strategy. In this case, there is a clear segmentation going on around gender with male and female profiles receiving very different creative and subject lines even when the creative is exactly the same.

For instance, on June 22, both our male and female profiles received the same email creative, with subtle but distinct differences in subject line. Our female profile received the email with the following subject line: "Get Free Shipping on the New Fall Looks Now Online." On the other hand, our male profile received the exact same HTML creative with this subject line: "Free Shipping at America's Favorite Shopping Site," with the emphasis on fashion removed.

On June 16, our female received this subject line: "Save 30-50% on the Best of Summer," while our male received "Shop Online, Save 30-50% on Summer's Best." The emphasis on shopping online seems geared towards store-phobic males while women, who may have a bigger aversion to shopping online do not receive that pitch.

Only our female receives emails for "Introducing Chris Madden Exclusively for (Retailer B), Plus Free Shipping" and a series of "Big Weekend Sale" emails. Only our male receives emails for "Cooks: New Items at Great Prices, Plus Free Shipping"

Here's the retailer's chart with site traffic included (again, red line represents email sends, blue line jumps in traffic):

*All Charts copyright 2004 Emerging Interest , site traffic data supplied by Alexa, email send data supplied by CETS

Judging by the last month's emails, both Company A and Company B seem to be de-emphasizing their segmentation experimentation or giving them a rest for the summer when compared to their work earlier in the spring. Why? Are summer months worse for targeted ads? Is less thought put into creative during these months? Or does it indicate a change in strategy, vendors, personal or agency?

Can you tell that Sherlock Holmes was my favorite reading as a kid?