The secret to effective marketing is no secret: it’s getting the right message to the right person at the right time. Which, of course, is easier said than done. The key to executing on a hyper-targeted, highly relevant, and effective marketing strategy lies in segmentation. Figuring out how to slice up your marketing universe into groups of people who are motivated by the same things sets you up to optimize the return on every communication with your customers — and to do it at scale.
In other words, when you’re doing email segmentation well, the sum of the parts will be greater than the whole.
Adopting a segmentation strategy not only ensures you’re approaching your high value customers with personalized, relevant messaging, it also increases the deliverability of all your email through higher open rates and lower unsubscribes.
This segmentation study analyzes Klaviyo customer data to demonstrate the effectiveness of email targeting and define top performing segments. It is focused in three main areas:
1. The power of segmentation
2. The breadth of segmentation options
3. Segmentation in popular verticals
We analyzed over 2.5 billion emails – 2,619,441,297 to be exact – sent by US-based Klaviyo customers between October 1 and December 31, 2017. These segmented and unsegmented email campaigns were reviewed to determine performance against four metrics:
• Unique open rates – the average number of recipients who opened the email. In other words, the communication captured their interest;
• Unique click-through rates (CTR) – average number of recipients who clicked on a link in the email. These recipients were engaged enough to take an action;
• Revenue per recipient (RPR) – the average amount of money spent by email recipient. This conversion metric is the important business value indicator;
• Unsubscribe rate – the average number of clicks on the unsubscribe link in the email. These non-retained subscribers represent a loss of potential revenue.
The key business measure here is revenue per recipient (RPR). Focusing only on total email revenue often leads to poor email marketing practices like batch and blast. These practices may result in short-term revenue gains, but low open rates and the damage to sender reputation/deliverability, in addition to high unsubscribe rates, have long-term negative consequences.
We assume that when lists are highly segmented to a small portion of the overall base, those campaigns are being sent to engaged subscribers. In some instances, we have pulled unengaged subscriber data into our results. For example, win-back and re-engagement campaigns are a best practice for keeping healthy lists, but the performance of these segments will be much lower than campaigns sent to engaged segments. Some of these segments have been included in the overall results.