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Market Segmentation & Mass Emailing

May 22, 2012

In the last few months, I observe that Email Newsletters from Indian Brands are improving a lot, in terms of design / look and feel / quality of content, etc.

However, these emails are not targeted right/smartly. Most of them (even the biggest brands) still treat this as a pure, high-power Mass Emailing system, with zero brains. They want to mail a couple of million people and hope that even a slim hit rate will give them huge business returns.

This may be true, but the fact is, they don’t seem to understand/appreciate what they are missing. Mass Emailing is much more powerful when combined with smart market segmentation.

For example, let us say I need a rare book on history, which is out of print. The only way I can read it is, by borrowing it from a library or an individual.

Approach 1:

I have 250 people in my Personal EMail Contacts List, one of them may have this book, Why not send a mail to all those and ask? It doesn’t hurt and doesn’t cost a dime.

Approach 2:

Out of these 250 people, only 20 people are interested in reading history books. Let me send a mail to only those 20 people

As far as I am concerned, Approach 2 is much harder than Approach 1, because I need to manually hand-pick those who are history buffs. But when I do that, I am writing only 20 emails instead of 250, and, my chances of success are much higher.

But does it really matter? Emails cost $0. Why invest that extra time in hand-picking 20 people out of 250? Just blast a mail to everyone and see if someone responds.

This is exactly what many brands are doing, even today. Let me illustrate a good example from my own personal experience.

Recently, my bank started sending “Net Banking Basics” kind of educational newsletters. They have wonderful graphics and text for each ABCs of Net banking to customers. Nice initiative.

But guess what, they send this newsletter to all their customers. Including those (like me) who are using Net banking for the last 10+ years.

For me, these emails are frustrating/silly. Why waste my time with “How to login to your net banking” kind of Emails, when I am doing it almost every day? The worst part is, My bank knows I am a regular Net Banking user and still sends me these emails as if they are issuing bit notices on the street, Carelessness? No Value for your customer’s time? Big mistakes!

This is the problem with wrong targeting (or “No Targeting” in this case). Unlike my personal “Rare Book Search”, these “Net Banking Basics” emails should only be going to New Customers, or those who rarely / never use Net Banking. For all others, they are a waste of time.

Not only that, most of the Mass Emailing solutions charge you money, based on the number of Emails you send. From that perspective, Every single mail that my bank sends to me on “Net Banking Basics” is a waste of time, resources, AND money.

Instead, what should they be doing? My suggestion is this:

  • Design 2 newsletters: “ABCs of Net Banking” and “How to do more from your Net Banking?”
  • Create 2 Segments of your customers: Newbies to Net Banking, Advanced Users of Net Banking (How? You have the net banking login particulars, USE IT!)
  • Target Newsletter #1 to Segment 1 and Newsletter #2 to Segment 2

Sounds too simple? Even Silly? Believe me, many brands are not doing even this simple segmentation and are happily sending Mass Emails, which bring a negative customer experience.

Zero Segmentation / Brainless Mass Emailing is not only a bad strategy, but it can also even create bigger problems. Here is another example, again from my Bank’s Newsletters.

One of their recent Newsletters had this Subject line “Use Net Banking and Get a Travel Bag Free”.

Wow, Free gift, I opened the Email immediately and learned that all I need to do is log in to my Net Banking account, Request a statement and that’s it, I get a Travel Bag.

But wait, there is a fine print, This is only applicable to first-time users of Net Banking.

Oops, Tough luck. Bye, Bye Travel Bag.

Now, what goes through my mind?

  • Why send me an offer for which I don’t qualify (Bad Or Zero Segmentation, We already discussed it)
  • You are giving a free travel bag to a newbie logging in to Net Banking for the first time, But no gift to me, who is a regular user of Net Banking, Unfair!

Of course, I understand the motivation behind my bank giving away this gift to attract more and more Net Banking customers, but the point is, they shouldn’t have told this to Regular Net Banking users, which leaves a bad taste in their mouths.

Again, the culprit is Zero Segmentation. If only the bank sent that “Free Travel Bag” offer mail to only those customers who never used Net Banking, I will never know about that offer / feel bad about missing a freebie.

Okay, we covered Bad Segmentation / Zero Segmentation, there is a third category, called “Unfit Segmentation”.

A few days back, I got a newsletter from a supermarket. It was in Kannada, a regional language spoken in the state where I live (Karnataka, India).

I really liked the idea of sending marketing newsletters in regional languages, I don’t remember any other brand doing it.

But, the problem is, My supermarket never asked me whether I could read Kannada. Thousands of people living in Karnataka, can’t read the local language. All those will get zero value from this newsletter.

So, What went wrong? My guess is this:

  • The store has decided to segment customers based on the state they live
  • They designed a newsletter in each state’s regional language and sent it across
  • For example, if you live in Karnataka, you get a Kannada newsletter, If you live  in Tamilnadu, you get a Tamil newsletter, and so on (Nice!)

When compared to my Bank, this is Smart Segmentation. They haven’t mass-mailed something to everyone, proper segmentation is done and each segment got relevant content.

But the problem is, they totally missed the fact that I may be a Tamilian who is living in Karnataka. In that case, this rule will send me a Kannada Newsletter, which I can’t read/use/buy.

So, the segmentation strategy adopted by this supermarket is Good But unfit for their requirement (Newsletters in more than one language). They should have gone for something like this:

  • When people register in your supermarket, ask them “Preferred language of communication”
  • Create your segments based on this information and send newsletter accordingly
  • This means, irrespective of where I live if I prefer “Tamil” as my language of communication, I will get the newsletter in Tamil

To summarize:

  • Zero Segmentation is bad and creates a negative customer experience
  • Depending on your marketing requirements, choose your “customer information” on which segments will be based on. Wrong Segment / Unfit Segment is as bad as Zero Segmentation

Naga Chokkanathan,

Senior Director, CRMIT

Originally Published In: http://nagachokkanathan.wordpress.com/2012/05/22/market-segmentation-mass-emailing/

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