How Customer Segmentation and Targeting Can Increase Your Email Open Rates

What exactly are customer segmentation and targeting?
Square
Editorial Team

Marketers throw around terms like customer segmentation and targeting a lot, but what exactly do they mean? And more importantly, how can they help your business?

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What is customer segmentation?

First things first, let’s talk about customer segmentation. It may sound intimidating, but customer segmentation is a way to separate your audience into groups according to categories like gender, age, and similar interests. By dividing your customers into groups, you’re able to send each group an email with products, promotions, or coupons that they might find interesting and are more likely to buy.

Within Square Marketing, you can access filter options including Last Visited, Hasn’t Visited, Card on File, etc.,which allow you to create groups of customers you’d like to target. You can also filter based by location if you have multiple stores and only want to target customers who have purchased from a particular location.

It’s worth noting, there are also smart groups that are automatically updated for your regular customers and those customers that were regular but have become lapsed. You can view and update the definitions of these smart groups by going into your Customer Directory within your Square Dashboard, clicking on All Customers, selecting Regulars or Lapsed, and going to Edit.

Creating buyer personas, which are profiles of your ideal customer, may help you decide how you want to divide up your audience base to send them the most relevant email. When creating buyer personas you may want to consider the following:

  1. The demographics of your customers: Age, gender and income bracket can impact what products your customers may be interested in. For instance, Millennials and baby boomers are unlikely to have similar interests. (You can find more information on customer demographics using third-party or industry data).

  2. Your customers’ hobbies: Maybe some of your customers are bakers and maybe some are gardeners. No matter their hobby, it’s useful to know how to segment your audience.

What is customer targeting?

Once you’ve identified your customer segments, you can clearly target your ideal customers with the products they’re most likely to buy. Customer targeting can help focus your messaging so your email is most appealing to the specific customer segmentation you want to reach.

Think of customer segmentation as putting your customers into like-minded buying groups and customer targeting as the messaging you use specific to each of those groups. By “targeting” your customers with messages that most resonate with them, you’re more likely to get them to take that next step and click-through to buy your product.

Using customer segmentation and targeting in your business

By identifying and segmenting your customers into groups according to the marketing categories you have identified with buyer personas, your email marketing can go further.

Segmentation allows you to focus on groups of customers and target them specifically, rather than trying to target all of your customers in one group. Your email marketing is much more likely to be successful if you’re targeting individual groups who you know are more likely to engage with a certain product as opposed to blindly sending it to your entire list.

Also, if you’re still on the fence about segmentation, consider that “marketers have found a 760 percent increase in email revenue from segmented campaigns,” according to Campaign Monitor.

Sometimes it’s easier to use a specific example than marketing terms. So, let’s say that you own a chocolate shop. You know through your Square Dashboard that you have a group of customers who buy lots of your dark chocolate sea salt caramel (but of course they would –– who doesn’t love dark chocolate with sea salt?).

You could target this audience segment with an email letting them know about a sale you’re having on dark chocolate sea salt caramels. By sending them a sale on a product you know they love, they are more likely to buy the product (did we mention we would buy your dark chocolate sea salt caramels? Because we will). It’s really that simple—and a method you can start using today in Square Marketing.

The Square Editorial Team is dedicated to telling stories of business, for business owners. Our team comes from a variety of backgrounds and share a passion for providing information that helps businesses to start, run, and grow. The team is based in San Francisco, but has collaborators all over the country.