Segmentation vs Personalisation: The Difference and the Benefits of Each Published August 28, 2018 Segmentation and personalisation – marketers often get them confused. But they’re not marketing buzzwords that can be used interchangeably. They’re two very different marketing strategies. We take at look at what segmentation and personalisation are, describe how they differ and explain the benefits of each. What is segmentation? Segmentation is about groups. It’s about the marketer breaking down their target audience into smaller clusters of people. These groups or segments are made up of people who share similar characteristics. Here are just a few examples of the types of characteristics you could use to segment your market: Demographics – age, gender, occupation or income. Sales funnel stages – awareness, evaluation, purchase, loyalty. Personas – aspects of people’s characters or circumstances that can be used to create realistic representations of key audiences. If you want some more inspiration just take a look at our Ultimate Guide to eCommerce Segmentation. What are the benefits of segmentation? Simply put segmentation lets you target your market in smaller, bite-sized chunks. By doing this you can target each segment separately with marketing that’s tailored to appeal to that particular group. And you can use the characteristics they have in common to create a relevant messages and targeting strategies. What is personalisation? Personalisation is about the individual. It doesn’t matter what segment they belong to because you’re tailoring the message just to them. Unlike segmentation it’s about data that’s individually identifiable – things like their name or purchase history. It’s all used to create an experience that’s completely unique to the individual. Here are some examples of the types of personalisation you could use: Their name or date of birth Their purchase history Which products they have browsed recently If you’d like to know more take a look at our Essential Guide to Personalised Marketing. What are the benefits of personalisation? Personalisation enables you to deliver marketing messages that are only relevant to the individual. It’s often designed to look like a one-off personal conversation between a customer and brand. The ability to deliver unique messages improves the effectiveness of your marketing. Pretty much every marketing metric can benefit from personalisation: conversion rates, website bounce rates, average order values, cost per acquisition, and customer lifetime value. Additionally, personalisation works in real-time. While you might have rules in place to move people from one segment to the next, (e.g. moving from the ‘awareness’ to ‘evaluation’ sales stage), personalisation reacts to the now. A website powered by personalisation would react and change in real-time based on the real-time browsing behaviour of a visitor. How are segmentation and personalisation different? It basically comes down to granularity. Segmentation makes your marketing more relevant because you can target segments of people who share similarities. But within those segments you can personalise your message to the individual. There’s also a big difference between how segmentation and personalisation are managed. Segmentation is controlled by the marketer – they’re the person who decides which customers fall into which groups. Segmentation can also require more heavy lifting by the marketer – they need to get to grips with who their customers are. Personalisation is controlled by rules and machine-learning. The individual actions or information is used to automatically generate content that relevant only to them. This includes things like displaying dynamic content in emails, merging names in messages or including personalised recommendations on a website. What does segmentation and personalisation look like in action? It’s all very well theorising about personalisation and segmentation but what do they look like in practical terms? Well if you’re still confused remember this example: Using segmentation a fashion retailer might segment their database by gender and then again by product preferences (outerwear, shoes, smart casual, accessories, etc). Each segment would then receive a targeted email campaign promoting relevant products. With personalisation, they would be able to send a single campaign and let the content be decided by the individual’s product preference. Each person would potentially receive a completely unique email with relevant product recommendations. Why you need both segmentation and personalisation Some marketers try and skip segmentation or personalisation, choosing to opt for one over the other. But if you want to supercharge your marketing you’ve got to use both together. It’s good to start with segmentation mainly because segmenting your market will give you more clarity on the different types of people you’re targeting. It’s also a great place to start as you can use your segmentation strategy throughout your marketing channels from paid search and email to offline media. But you shouldn’t stop with segmentation. The way marketers group different customers together to target them is still too broad to gain maximum appeal. Just because the customers are similar doesn’t necessarily mean they want and need the same things. If you want to pump up your conversion and engagement rates you’re going to have to explore personalisation. Takeaway If you’re getting segmentation and personalisation mixed up then you’re missing a trick. By using them together you can maximise the appeal of your marketing and see the benefits of both. The great news is we can help you integrate the two strategies into your campaigns. Our Single Customer View platform, PureIntelligence, lets you spot similarities between customers and easily create highly-targeted segments. While our personalisation platform, PureTargeting, uses machine-learning to turn the data you hold on each individual into real-time personalised website experiences. They both make personalisation and segmentation easily accessible to anyone regardless of experience, resource of budget. It means the marketer can sit back and benefit from the best of both worlds!