According to the Direct Marketing Association email marketing offers a roughly $40 return on investment (ROI) for every $1 spent. Compared to the $17 ROI of SEO marketing and the mere $2 ROI of banner ad marketing.

Email is an essential component of any company’s marketing repertoire. It boosts sales, cultivates customer loyalty, and provides a high return on investment. But it is important to remember that not all email campaigns are created equal.

When it comes to crafting effective email campaigns, list segmentation is a powerful tool. Email segmentation refers to the practice of dividing (or “segmenting”) your email database into various small groups.

Segmentation can substantially improve the effectiveness and efficiency of your campaigns.  According to data from the Lyris Annual Email Optimizer Report 39% of marketers who segmented their email list experienced higher open rates, 28% experienced lower unsubscribe rates, and 24% experienced improved deliverability and greater revenue.

Segmentation tailors content

Even if your business only provides one type of service or product, you still probably cater to more than one type of consumer.

For example, an orthopedist may treat college age kids as well as retirees. The reasons the two groups go to the orthopedist are likely quite different and therefore the marketing message to the two groups should be quite different.

When it comes to any kind of marketing blanketing different demographics with the same generic, broad message just isn’t going to work effectively. Segmentation allows for effective email targeting. In other words, you can tailor email content to meet certain client profiles.

The more relevant a consumer finds your content the less likely they are to delete it or send it straight to the spam folder. Segmentation means that your email content will naturally be more engaging.

Meet consumers at different stages in the buying process

Your email database invariably contains contacts at different stages in the buying process. The type of information each consumer needs directly depends on which point they are at.

Someone who has just made contact with your company requires a different form of communication than someone who has been actively doing research for weeks and is now ready to make a purchase.

Effective marketing means that you need to treat clients in different stages of the buying process differently.

According to research conducted by the Internet marketing company Hubspot, segmented emails generate an 8% click-through rate while general emails generate a mere 3% click-through rate. That increase of 5 percentage points is substantial. Higher click-through rates (the number of people who click one or more of the links in your e-mail) ultimately translate into higher sales.