Segmentation, you hear this word constantly but just getting started can be overwhelming and confusing. Instead of trying to get all fancy segmenting based on what people have purchased and ending up with tiny segments that leave you with missed revenue opportunities, focus on segmenting people based on where they’re at in their journey with you and your business.
Today we’re talking about lifecycle segments that work for any business with any size list. Plus we’re covering what to send them and when!
What You’ll Learn
- The 2 most important factors to consider when segmenting your list
- What conditions to use in your segments to properly group your subscribers
- The type of content you should send each group
- How to work this strategy into your regularly scheduled program
Read the Full Episode Transcript
After working with so many eCommerce entrepreneurs, one of the biggest hangups or mysteries in email marketing is segmentation. It’s a buzzword we hear all the time, but many entrepreneurs don’t really know where to start. And very often you start segmenting too soon when you have a really small list and end up with tiny segments that lead to missed revenue opportunities.
So I want to walk through something called lifecycle segments, or in Klaviyo speak, engagement segments.
I first learned about this strategy on a previous email marketing platform that had them built in. When I moved over to Klaviyo, my goal was to recreate these segments. Unfortunately, the previous platform didn’t have a clear explanation of how subscribers qualified for each of the segments, but Klaviyo has documentation on what they call engagement tiers.
And this is definitely one of those things that once you see it in writing and wrap your head around the strategy behind them you think to yourself DUH, this is how I should be emailing people!
You can check out the documentation here but I wanted to talk you through them, give you some examples of how I’ve used them successfully, and an easy way for you to work them in your regularly scheduled program.
How do you determine different segments?
For these segments we’re going to be focusing on your subscribers’ engagement with your company, like opening and clicking your emails, visiting your website and their purchasing behavior. How often they shop and how much money they spend. On top of that, we’ll use both recency and frequency to determine how engaged they are.
What information do I need to create email segments
Before you can create these segments, you’re going to need some data specific to your business. Specifically, your average order value and the average number of days between orders.
Your AOV is pretty easy to grab from Shopify or Google Analytics. If you’re not sure how often people shop from you, you can export this information from Klaviyo. Just export your entire list from Klaviyo and look for a field that says average days between orders. Make sure you check that box. Once you export it, you can just use Google Sheets or excel to average the column. Most times, this is going to average out somewhere around 90 days depending on your business.
What does recency and frequency mean for your business?
A consumable product will have a much different frequency of purchase than a luxury handbag. If you’re still not sure, start with a baseline of recent engagement as within the last 3 months, frequent engagement 3 times or more, a recent purchase within the last 4 months, and frequent purchasing as 3 times or more.
When I lay out the conditions for these segments, I’m going to use these numbers along with an AOV of $100, but you’ll want to replace those numbers with the numbers that make the most sense for your business.
As I go through, I’m only going to list out the exact conditions for a couple of them so you can wrap your head around the concept, but I want to spend the majority of our time talking about what to do with these segments.
Make sure you check out the documentation so you can sit down and set these up for your business.
High Rollers or VIPs
Your high rollers are your best customers. They shop with you often, have shopped with you recently and they spend a lot of money. Of course, your main goal with this group is to retain them. The good news is, you don’t have to necessarily give them promotions and discounts, but you do want to treat them special.
Using the numbers I mentioned earlier, here are the conditions you would use to build this segment:
- Placed an order at least 3 times in the last 4 months
- Spent more than $300
Remember, we’re using the base of frequency being 3 purchases, recency being within the last 4 months and an AOV of $100.
As another example, let’s say your customers shopped with you every six months on average and your AOV was $80. In that case your conditions would be:
- Placed order at least 3 times in the last 6 months
- Spent more than $240
These are your VIP people. They already shop with you often and spend a lot of money, so your goal is to make them feel valued and special. This can be exclusivity like early access to new product launches, or surprise gifts with purchase.
These are your loyal customers. They also shop often and have done so recently, but they don’t spend as much money as your VIPs. Your ultimate goal with them is to get them to spend more money. The easiest way to do that is by cross-selling complementary products based on their previous purchases and potentially offering them volume-based discounts like a buy more, save more promotion.
To create this segment, you would use the condition:
- Placed an order at least 3 times in the last 4 months
- But spent less than $300 over all time
So here, the only difference from your VIPs is that they’ve spent less money.
There are also segments for Potential High Rollers and Potential Brand Enthusiasts, but you get the gist right?
Nearly Theres are email subscribers who engage with your emails frequently and have done so recently, but they still haven’t made their first purchase. With this group your ultimate goal is to get them to buy, but you don’t necessarily have to discount to do it. Instead you may just need to create a little FOMO. What will they be missing out on if they don’t buy your product?
Waiting for Wows
This group doesn’t engage with you as often as the Nearly Theres but they did so recently and it pays to strike while the iron is hot. This is the group you may want to give an offer they can’t refuse.
As I mentioned, there are a few other groups that you can target as well but I have found a lot of success just focusing on the above groups. If you’re pressed for time or feel overwhelmed by it all, just get started with these four groups and you can start layering in the others as you get more into the groove.
How do you use segmentation in your email program and what do you send to them?
Now, if you’ve never listened to Episode 44 of the show, that’s where I walk you through my simple process for creating an email marketing calendar. Essentially, I follow the process in that episode and then on a quarterly-ish basis, when I don’t have a ton else to say, I will create content specifically for these specific segments.
Truth be told, I sometimes combine the High Rollers and the Brand Enthusiasts, and combine the Nearly Theres and the Waiting for Wows.
What to send to the Nearly Theres and Waiting for Wows
Remember this group is engaging with your emails, but they still haven’t purchased from you. And we know the first purchase is the hardest one to get, so in this case I will usually include some sort of promotional offer.
But here’s the trick… I write this as an all text email and personalize it as much as possible. I want it to look like I sat down at my desk and wrote it specifically for this person. Start off with something like:
Hey first name. I see that you’ve been hanging around for a while but still haven’t made your first purchase with us. I wanted to check in to see if you had any questions or needed any help.
In the meantime, I’d love to offer you an exclusive discount for your first purchase with us.
Then I’ll use a unique discount code, or one that looks unique and put a time limit on it, like 48-72 hours.
For this email, I will resend the next day to anyone who didn’t open it the first time, and of course send a last chance when the discount is about to expire.
Remember, this email doesn’t have any images in it, so if I want to direct them to a specific product or collection, I’m going to do that with a text link. Just make sure you style your links in a different color and use an underline so the user knows it’s an actual link.
What to send to the High Rollers and the Brand Enthusiasts
Your goal with these groups is to just keep them shopping with you and spending more. Focus on showing them what’s new and complimentary items to what they have purchased in the past.
We discussed potentially offering volume-based discounts to the brand enthusiasts group but we don’t need to do that with the VIP group. If your goal is to discount as little as possible, you can group these people together and not include a discount. But if you’re okay with promotions, or it’s a typical part of your brand, separate these groups so that you can exclude your VIPs from the offer.
Depending on your product assortment, break these groups down even further based on their purchase history. If you have a lot of different customer avatars, start with the natural break between your customers. If you have a smaller product assortment, you don’t necessarily need to bother with this.
For the actual email, I would test a text-based email vs. a typical designed one with images and product blocks. The nice thing about using a text-based email is that it naturally feels more personalized. Like you wrote the message just for them and that can go a really long way.
Let’s say you don’t want to use a discount, write them a message commenting on their previous purchases and tell them you think they’d really enjoy this other product or collection. Like I mentioned, you may need to split this up if you have a really wide assortment of products, but you can totally do that at the collection level vs. the product level.
This can work really well if you time it with a new release that you’re giving them early access or a sneak peek at what’s coming. You can even do this leading up to your big sale times like Black Friday or any other time you’re going to be advertising a sale on your site. Create a separate promo code for them to use 24-48 hours before the sale goes live to the public and only promote it in the email to them. This way they can get first dibs on your limited inventory.
Now when you look at the link, you’re going to see a lot more segments than we covered today. Groups like lapsed versions of your VIP group, people who have purchased from you once but never came back, and even those dead weight subscribers that need to be scrubbed altogether.
So work your way through all of them and then create different content for each. In most cases, a text-based email is going to make the most sense, so embrace that! You don’t always have to create crazy designed pretty emails.
Include a newsletter condition
When you’re creating them in Klaviyo, don’t forget to include the condition that they are on your newsletter list or lists. Remember that Klaviyo pulls in everyone, even if they’re not opted in to receive emails, so it’s up to you to include the condition in your segments.
If you’re doing social advertising and you want to use these segments to target your ads, you can create a second version of the segments that don’t have the newsletter condition included.
Don’t be overwhelmed by the amount of potential segments you can create
When you look at the list of segments, it’s likely you’re going to feel overwhelmed if this is the first time you approached segmenting this way. Just start with the ones I mentioned today because that’s where you will find the biggest bang for your buck.
As you get more comfortable with email in general you can start branching out and including more of the individual segments. AND… if you already have an automated winback flow running, that should cover most your lapsed segments, so you can definitely put them off until you’re ready.
If you don’t already have a winback automation set up, or you’re lacking in your email automations overall, check out episode 3 of the eCommerce Badassery podcast where I walk you through how to get started with these.