Understanding the Power of List Segmentation

Understanding the Power of List Segmentation

If you’ve been studying Marketing and Sales for more than five minutes, you’ll have heard the expression “the money is all in the list”. It happens to be true, but there are a few things worth looking at in more detail because it’s a truth many business owners either fail to understand or fail to understand fully.


What is “the list”?

Your list is simply the prospects, customers and clients who have shown interest in your products or services.

Some of them will obviously have done business with you in the past, and others will have shown interest in buying from you but haven’t taken than step just yet.
Your list does not include people you’ve just bumped into and spoken to in the street or names you’ve bought cold from a broker or have harvested in some other way.
Right away, then we can see something very important: not every person on the list is equal.
A client you’ve had for many years and who has spent tens of thousands of pounds with you is far more important than the fellow who’s just filled in the “Contact Us” form on your website. True, this new contact might prove to be very valuable in the future, but as yet that’s an unknown, whereas you know your existing client is a “buyer” and, statistically, will continue to be so for a long time unless you do something to drive him or her away.
So the first lesson is…

Understanding the Power of Segmentation

Everyone on your list is different. In true 80/20 style you’re going to find that 20% of them are responsible for probably 80% or more of your sales and profits. Those are people you must identify and treat very differently from the rest. Whereas you might send your list as a whole a couple of emails a week, a monthly newsletter through the post, and a card at Christmas, your top 20% deserve to be treated like Royalty.
They should be elevated to being members of a privileged class within your business and be the first ones to receive special offers, opportunities to buy your latest offerings, as well as more than their fair share of free gifts, and thoughtful little extras out of the blue (for example, if you know one of your best clients is a keen fisherman and you see an interesting book in the bookshop, you could and should send a copy with a handwritten note; or you can even just clip out an article in a magazine and send it — little touches like this make a huge difference to your relationship with them and hence to your sales and profits.
Make a policy of doing this for one of your top customers or clients every week or even every day, and you’ll quickly begin to see the results).
But segmentation goes well beyond this. If you look carefully at the commonalities in your list — who they are as individuals, as well as what they do in terms of their buying behaviour — you’re quickly going to be able to split them into groups and focus your marketing messages accordingly.
This is one reason it’s a mistake to cut corners on your autoresponder, because tracking what your readers do in response to your emails is a very quick and effective way to segment your list (for example with a good autoresponder, you can send an email with a link to a video to your list and track who’s clicked on it, and then send them an email even as they’re watching it referencing the video and offering them a relevant product or service).
Even segmenting your list along the simplest of lines — buyers and non-buyers — will make a huge difference to your profits, because an existing customer is around five times as easy to sell to and will usually spend at least twice as much as a non-buyer, meaning blow-for-blow, marketing to existing buyers is around ten times as profitable as it is to non-buyers.

The Power of Other People’s Lists

A common objection I hear from some categories of business owners is their transactions are “one offs”. For example, estate agents often tell me they sell a house, and that’s it — there’s no more business to be done.
But this is not true. First, people move house in the UK on average every six years. You could regularly keep in touch by direct mail with someone for six years for under £150, easily.
Given the fee for selling a house is in the thousands and the constant follow up will go a long way to making sure you’re not commoditised and can likely charge more for your services, keeping your list of previous house-buyers and sellers is a no-brainer (also remember, with every house sale you get TWO new leads: a buyer of your services, plus the person who bought their house from them).
And secondly, there are dozens of businesses synergistic with estate agents, because anyone moving into a new house (and maybe even into a new area) needs a whole load of new products and services.
This isn’t confined to estate agents, either: every business can reach out to other businesses that are also selling to the same people they are selling to and do joint ventures and what we call “endorsed mailings”, where, say, an accountant might email his clients recommending other businesses that sell B2B, such as IT services firms, cleaning companies, lawyers, you name it.


The money really is in the list, but while that’s true it’s not the whole truth, because extracting the money tied up within it often requires some thought and planning.
Simply mailing it indiscriminately with ill-thought-out offers will probably make you some money, but you’ll be leaving the lion’s share of it on the table, unclaimed.

Please share here your thoughts on this article about Chris Cardell, share it on social media and express your views. To learn more about Chris Cardell visit his website or Chris Cardell’s Media Company, Cardell Media Ltd. There is also an interesting video interview with Chris Cardell. His next life changing event is The Sovereignty Summit with Chris and Dan Kennedy on 29th – 30th of September 2015.

Chris Cardell
Chris Cardell is a trusted advisor to business owners across the world on Marketing, Internet Marketing and Entrepreneurial Success. He shows business owners, managers and the self-employed how to win more customers and increase their profits using Advanced Marketing, Advertising and Internet strategies. Chris Cardell Google+ Chris Cardell's Products Chris Cardell
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