Segmentation vs Personalization: How To Use Both To Grow Conversions

Today’s customer is overwhelmed by more sales messages than any sane human can handle. As a result, marketers now face a wall of indifference they have to somehow get through to get their offer noticed.

You might ask, then how come so many marketing emails in our inboxes seem so boring and detached? The reason is, they are. Too many marketing managers strive to reach too large a section of the market and, of course, lose the person they’re addressing behind the numbers. After all, the bigger the crowd you’re working with at the same time, the less personalized is your content. 

To provide relevant content and attract people to interact, marketers are using segmentation and personalization. So what’s the difference between the two?

Personalization and segmentation seem alike – they both require a deeper knowledge of the person you’re addressing. The difference, however, is in the depth of that knowledge and how it is used.

Despite the unbelievable growth in KPI that these two concepts bring when implemented, a staggering percentage of businesses still segment only by the most basic parameters and have not moved past the definition of marketing personalization as using the lead’s name in their message. 

Market segmentation: definition and methods

Segmentation is a marketing approach that requires breaking down the overall target market into tinier groups of customers, companies, or countries that are noted to have common interests, needs, and preferences.

The purpose of customer segmentation is to get a better view of how a group of similar users behaves and communicates. From this data, you can then create and fulfill a marketing strategy to understand, target, and sell to these segments better. 

There are several approaches in which a marketing specialist can segment their audience. Some of the most basic approaches are:

• Geographic: segmentation by geographic zones such as country, region, state, city, etc.
• Demographic: splitting the target audience according to sex, race, age, occupation, etc. 
• Cultural: splitting the audience according to their education or cultural origin.
• Behavioral: segmenting by the attitude towards something, product/service usage rate, performance, and response.
• Psychographic: segmentation by the user’s activities, interests, and opinions (aka customers’ AIOs).

The type of market segmentation that needs to be used will depend on the overall aim of the marketing strategy. For example, if you plan to send discount coupons for your suntan cream brand, you should be sure that you spread them to the homes in the areas that have beaches.

So a geographic segmentation is an excellent place to start your practice. That said, segmentation can get as complicated as you need it to be, as long as it helps you target and personalize better.

Segmentation complexity

Even within each of your segments, you can break them down additionally by applying “hyper-segmentation.” For example, you divide your section by demographics and you are aiming at the middle-class women with kids under the age of 5. 

Now, at first glance, this seems to be a good market niche, but if you needed to go further and target more specifically, you could divide that segment of middle-class moms with children under 5 into smaller parts based on their psychographics (for example, the section of the website the visit most often, or their item filtering preferences). 

This would enable you to produce a more contextually relevant message that would evoke empathy and lead to better results in terms of engagement and conversion. Extra customer segmentation adds extra power to your message.

Customer segmentation mistakes and precautions

First of all, it’s essential to document each segmentation stage gradually and track all your response rates. If you create sections that are too narrow, you may get carried away and lose any efficiency that comes from segmentation.

It is also necessary to maintain focus on the trends in users’ preferences. Following segment-relevant keywords and expressions as well as topics that are in trend on such platforms as BuzzSumo, Google Trends, and Quora, are great methods to keep a pulse on modern trends. You may discover that as your clients switch their interests, you need to modify your audience segmentation as well.

Third, don’t be so sure you know your target audience perfectly. Review your market niche segments with polls, surveys and measurable questions to assure that you have set up the accurate categories and that the appropriate groups of people are moving into each section within your CRM.

Personalization: data, individualization, and results

Personalized marketing, also known as individualized marketing or one-to-one marketing, is a strategy based on using digital technology and data analysis to produce personalized product offerings and messages to existing clients or prospective leads. 

Personalization starts with a better perception of the people businesses are trying to contact.

While market segmentation targets a group of people with common characteristics, customer experience (CX) personalization is concentrated on an individual user. Progress in technology and data analytics have given the marketing managers tools to deliver their messages more humanely. But personalization isn’t only about technology.

While digital technology is used to accumulate the data and help marketers deliver their personally created messages, personalization starts with a better perception of the people businesses are trying to contact. 

Just because you assemble data and can give a customized interaction, doesn’t mean it’s going to urge the user to engage. To apply CX personalization properly, a detailed user persona that describes the demographics, psychographics and geographics, behavioral inclinations, and cultural attractions must be created. Customer experience personalization is about building a more human relationship using the instruments we have available. You can achieve that is only if you perfectly know your target audience. 

True personalization is individualization

While marketing specialists have been confusing customer segmentation and personalization for years, nowadays users anticipate personally created and targeted content experiences from brands. But true personalization should also:

• Make content individual for every single user
• Be refreshed in a realtime mode based on personal characteristics
• Be updated all the time, based on user actions and likings

That’s what marketers call “individualization”. Marketing technologies today allow brands to know consumers as separate individuals, as well as their unique choices and responses. Based on the individualized user data, marketing managers can create content experiences that would be relevant for users.

Why personalization is the best way to stand out:

We live in a time when everyone is continually being bombarded with news, commercials and messages. Meanwhile, people born between 1996 and 2010 (Gen Z), have an 8-second attention span, which is 4 seconds shorter than the generation before them. This group currently makes up about a quarter of the U.S. population and is estimated to make up about 40 percent of all consumer markets by 2020. As this group continues to grow up, attacking them with more and more messages is a very ineffective way of convincing them to pick one brand over another. 

No matter your age, being treated as an individual speaks to the heart unlike anything else. All humans are sensitive beings and, deep inside, we are seeking two basic things – security and significance. In other words, we want to be recognized and valued for who we are and we want to feel protected. This can only result from one-on-one connections. 

The job of marketers is to help build these connections, authentically, with the instruments available. That’s why for businesses planning to grow, CX personalization is the best way to go.

The effect of personalization in numbers

The advantages of deep personalization show best in numbers:

• Personalized emails show six times higher performance rates, but 70% of companies fail to use them.
• 36% of customers revealed an interest in buying personalized goods or services, while 48% said they’d be ready to wait longer to obtain it.
• 57% of buyers are ready to share personal info in exchange for personalized proposals or discounts. Likewise, 52% of buyers would share private data in exchange for product suggestions, and 53% would do the same for personalized purchasing experiences. 
• In-house marketing specialists who are personalizing their web customer experiences and who can measure the change see, on average, a 19% improvement in sales.
• Hubspot has analyzed 330,000 CTAs over 6 months and discovered that personalized CTAs brought 202% better conversion than default options.

While personalization isn’t technically innovative – web developers in the 90s were tracing user actions and using it to improve design and content – now it is easier to arrange than ever. The key to efficient personalization is more than just powerful instruments and data analytics. It also demands a skilled marketing expert who understands personalization and user behavior. 

Building a powerful marketing strategy

There’s a strong connection between user data, personalization, and audience segmentation. Applying personalization accurately is much easier when there’s a deep knowledge of the components it is based on. As a rule, marketing consultants first identify and study the most relevant and valuable customer segments and only then apply personalization. A simple three-level pyramid can represent the facilitated info exchange between the three components:

• The Base: Data Collection
  The key to both experiences personalization and target audience segmentation is having reliable consumer information. The richer your user data, the better the perception of your target audience, and the better you can analyze the market and personalize customer experiences based on that information.
• The Mid-level: Market Segmentation
  Once you’ve accumulated enough important information, you can begin data analysis to find significant correlations between groups.
• The Top Level: Personalization
  Real-time, one-to-one personalized customer experience can only be obtained if you have sufficient data, know who your consumer is and understand what your most profitable segments are.

Real-time market segmentation and personalization 

In contrast to real-time customization, when a user takes part in configuring their own customer experience in real-time, audience segmentation and CX personalization don’t always work this way, which is a mistake. For example, some businesses collect customers’ email addresses in exchange for a worthwhile newsletter, which they can regularly use to get a better understanding of their clients’ unique choices.

Now, they know the segments of their target audience and they should be able to personalize much of their marketing strategy, at least as far as future email campaigns are concerned. However, a far more beneficial approach is real-time CX personalization and segmentation. This includes live tracking of the visitors’ activity the very moment they visit your website, so you can start building the customer experience it allows.

This marketing strategy will become more convenient as you start to better recognize how to target the parts of your audience that visits your site

Segmentation and personalization are the key

Market segmentation and CX personalization are the core elements of enhancing your message and communicating with your audience. 

The internet has given equal opportunities in most spheres and now, more than ever before, small and medium-sized companies can effectively grow brand recognition among their clients and prospects. In today’s extremely competitive market, by segmenting the society into smaller parts you can more accurately position your service or product. By applying personalization you can form an emotional relationship with clients, that can later convert your product into a brand.

With the correctly selected strategy and the right instruments in hand, it’s only a matter of time before you achieve the main goals and deliver seamless, individual customer experience. Compose your marketing strategy reasonably and you’ll be able to assist your clients and prospects more efficiently across all your outbound, inbound, and real-time marketing channels.