Segmentation vs. Personalization: The Benefits of Their Differences

Segmentation vs. Personalization: The Benefits of Their Differences

April 19, 2021 0 Comments
Segmentation vs Personalization: The Benefits of Their Differences

It's challenging for all brands to build meaningful engagement and messaging with their customer base. Achieving that goal involves understanding the differences and similarities between data, personalization, and segmentation.

Up to 93% of internet users indicate that the marketing communications they receive aren't relevant to them, and 90% state that irrelevant messaging is annoying. Consumers would love for brands to understand what's happening in their lives. However, that's a struggle if brands don't understand how segmentation and personalization differ and embrace those differences.

Segmentation vs. Personalization: How They Differ

It isn't uncommon for brands or marketers to use the words personalization, segmentation, and targeting interchangeably. The reality is that each of these strategies differs and hold different meanings. When marketers discuss goals, tactics, and execution, it's essential to ensure everyone speaks the same language.

Segmentation: It's About the Marketer

Segmentation is a principal strategy behind excellent marketing. Some marketers call segmentation targeting. It involves identifying similar groups of potential customers according to relevant information that marketers can use to deliver a mix of strategies to receive exceptional results.

Segmentation typically follows a set of descriptors, including a potential customer base's demographic or psychographic variables. Examples of customer segments include:

  • Behavioral segmentation: Includes data regarding a customer's actions (or inactions), average order value, browsing history, consumption (or spending) habits, feature use, session frequency, and more.
  • Demographic segmentation: This data includes a customer's age, gender, income, marital status, occupation, and more.
  • Geographic segmentation: Includes either local or broad geographic data. Local data includes specific towns or counties. Broad data is about a customer's city, country, or state residencies. 
  • Psychographic segmentation: Here is where marketers gather data about the customer's attitudes, interests, personality traits, values, and more.
  • Technographic segmentation: Marketers gather data about a customer's preferred mobile devices, software, technologies, and more. 

When to Use Segmentation

Marketers should use segmentation during the early stages of a campaign. As marketers gather and apply data, that helps them understand their audience. That way, they can focus messaging around the customer's challenges, needs, and wants.

The data a marketer collects isn't doing them any good if they can't tell a story or create messaging about their customers. Who are the customers? What do they want from the brand's products or services? Can you identify their challenges? Marketers can use the data they collect to create a narrative that effectively communicates marketing strategies to customers and team members.

After marketers have enough data to craft a narrative for each segment within their customer base, they can apply that segmentation to marketing strategies. That allows marketers to create manageable online presences whereby they can craft and personalize content.

Personalization: It's about the Customer

Personalization involves identifying a specific customer within a segment. For example, within the golfing segment, we could have a customer named Jeff. Jeff is a beginner and has had several fun experiences with his closest friends with his beginner golf club set. That could include booking time at a driving range or spending time at golf courses.

Personalization is all about how the brand can solve that individual's pain point or need. That involves understanding the customer's intent and creating personalized experiences around that intent.

  • Is the customer just starting their journey (e.g., shopping) and searching for inspiration?
  • Are they ready to make a decision and want to find the best deal?
  • Does the customer already know what they want and have concerns about the purchase?

When to Use Personalization

A customer's intent can change each time they interact with a brand. Their intent can also change throughout one interaction. So, marketers must understand the customer's needs beyond that of segmentation. Identifying a customer's intent means that marketers are considering various data points using rules-based logic.

  • How did the customer find our site?
  • Which email messages resonate with them?
  • What's their current geographic location?
  • What are they personally searching for, and which pages do they interact with the most?
  • When and how often are they performing these actions?

Personalization should occur each time they interact with a brand, regardless of the content or platform. For example, on a brand's website, that could mean featuring product recommendations according to their needs. If the brand uses a chatbot, that could mean offering better assistance after recognizing the customer account. In a brick-and-mortar store, that could mean using a mobile app to notify customers of a deal or sale.

Why the Differences Between Segmentation and Personalization are Beneficial

The type of data brands have about their potential customers dictates the experiences they can offer. That, in turn, impacts whether the brand can improve business outcomes. Let's harken back to the example with Jeff. Which of the following home page experiences is going to resonate with Jeff the most?

  • Experience 1: A picture of a golf course with a call to action to browse sets of golf clubs (segmentation)
  • Experience 2: A picture of a group of golfers on the golf course where one of the individuals is using a beginner's set of golf clubs and a call to action to browse intermediate golf clubs (personalization)

While it could be tempting to choose the first experience, quite frankly because its less work for us as the marketer, the second might appeal to Jeff more because it demonstrates an understanding of Jeff's actual golfing experiences.

This example doesn't mean that segmentation isn't beneficial. That's not the case at all. Marketers can successfully use segmentation and personalization together. However, marketers need to know the differences between these strategies to ensure that the right solutions are part of marketing budgets.

Put Segmentation Before Personalization

A mistake many marketers make is viewing segmentation and personalization as competing marketing strategies. For example, it isn't uncommon for marketers to believe that personalization involves detailed practices that override segmentation's broader strokes. That isn't the case, however. Segmentation tells marketers whether they should market to a customer in the first place. That's why it should come before personalization.

When brands and marketers clearly understand the differences between segmentation and personalization, they can use these strategies wisely to deliver personalized experiences to potential customers.

For example, when companies send out email marketing messages, they can use a customer's first name as the first step toward personalization. However, this strategy doesn't show customers that the brand knows anything about them aside from their first name.

Driving that point home involves creating relevant segments and personalizing the brand's messaging to customers within each of those segments. At that point, brands can indicate that they know their customers, understand them, and care about their interests.

Personalization depends on the customer data, how brands create segments from that information, and using a first-person perspective when personalizing messages.

Why is this Important?

Customers expect personalized experiences when they visit websites. Some might be hesitant or unwilling to provide information to create these personalized experiences. That doesn't change their level of expectations, however. Marketers can get around this challenge by tracking a customer's click patterns in real time. Tracking this information helps brands and marketers determine what matters to this person and, in doing so, create a personalized experience.

When looking at this from an email message perspective, marketers can determine a customer's interest when they react to specific messages. For example, a website might offer a free ebook, guide, or discount code when visitors provide their name and email address. That reaction shows marketers that the person has an interest in that messaging. So, they can tailor future messages and present additional web assets around that interest.

Creating Better Marketing Strategies Using Segmentation and Personalization

Combining segmentation and personalization allows marketers to reach their customer base where they are. Both of these strategies are particularly useful in today's digital and hybrid retail environments. That's because marketers can attract a customer's interest by appealing to them individually. Segmentation allows marketers to create content for specific customer groups, while personalization means looking more in-depth into each customer within a segment individually. There's a time and place for both of these strategies. Combining them maximizes the effectiveness of any brand's marketing strategy.

Want to Learn More About Personalization and Segmentation

Learn more about website personalization and more about what audience insights Sitefinity can provide you based on web behavior for better segmentation. But either way using, one makes levels you up in your marketing game, using both might just make you a marketing maverick.

Learn more

Jennifer McAdams VP of global demand generation and field marketing Progress

Jennifer McAdams

As Vice President of Global Demand Generation and Field Marketing, Jen McAdams counts herself fortunate to work with an amazing team of event, digital, social media, channel, business development and campaign contributors spread across three continents. Together, the team does some amazing things to keep the funnels full. While she’s been in marketing for 25 years, she’s always eager to learn what’s new in emerging martech, and sales and marketing strategies. This Brooklyn native now lives in New Hampshire on a pumpkin farm, and her pride at being a Northeastern alum is rivaled only by Dave Pierce.

You can find her on LinkedIn or @jromcadams on Twitter.

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