Growth Hacking
Oct 22, 2021

Personalization vs. Segmentation: How and When to Use Each to Drive Successful Marketing Campaigns

by
Tori Stroup

Image courtesy of Pixabay.

Personalization vs. segmentation -- what do they mean?

It’s a topic debated time and time again, and many people use the terms interchangeably. But, in reality, they are two very different marketing tactics. One is meant to send relevant content to larger audiences, while the other is more targeted to the individual customer.

So how do you know which one to use and when?

That’s precisely what we’re here to discuss. This article will help you understand the difference between personalization and segmentation and how and when to use each one.

Here’s a quick look at the topics we’ll cover:

  • Personalization vs. segmentation -- what is the difference?
  • How and when to use personalization in your marketing campaigns
  • How and when to use segmentation in your marketing campaigns
  • How personalization and segmentation can work together to drive successful marketing campaigns

Personalization vs. Segmentation -- What is the Difference?

Before diving too deep into it, we first need to define the terms personalization and segmentation.

Personalization is the act of tailoring an experience or communication to a specific individual based on data and real-time behaviors.

Segmentation is the idea of identifying subgroups within your larger audience group to deliver more tailored messages to that group of customers.

When it comes down to it, the most significant difference between personalization and segmentation is how you are targeting your audiences -- as an individual or a group with similar interests.

The most significant difference when it comes to segmentation and personalization is how you’re targeting your audiences. Segmentation will consider the larger group’s interests, while personalization will hone in on details specific to each customer. Image courtesy of  XP2 by Dynamic Yield.

Personalization considers one specific customer and tailors content based on their interactions and behaviors with your brand. For example, if you integrate dynamic content into your emails to share relevant products based on items of the customer’s last purchase -- that’s personalization.

On the other hand, segmentation looks at the audience as a group rather than an individual. Think of segmentation as sending an email about a listing of dresses you have one sale. You’re going to send that email to a specific segment -- such as women in their 20s or 30s.

To further understand the differences between these marketing tactics, let’s take a closer look at each and identify when and how to use them.

How and When to Use Personalization in Your Marketing Campaigns

Personalization is no longer something that companies can ignore. Your customers expect that you know who they are and what they’re interested in -- and use that to share only the most relevant content to their needs.

Personalization is a great tool to provide your customers with a better experience and increase your sales and revenue in the process. It’s been shown that customers across the board are much more likely to purchase and recommend brands that they received personalized experiences from. Image courtesy of Bloomreach.

These are just a few personalization statistics that prove just how important personalization is in your marketing efforts:

  • 80% of consumers are more likely to purchase from a brand that provides a personalized experience
  • 66% of consumers expect that brands understand their individual needs
  • 71% of customers are frustrated by impersonal shopping experiences
  • 42% of customers are frustrated by impersonalized content

Almost every one of those statistics is above 50%. You can’t ignore the power of personalization, but you have to understand how and when to use it over segmentation.

How to Use Personalization

You can integrate personalization into your marketing campaigns in various ways, but keep the individual customer’s needs at the forefront no matter how you do it.

The road to personalization is built on data. To truly create personalized experiences within your marketing campaigns, you need to have the appropriate customer data to do this.

This is an excellent example of how a company can use personalization to connect with customers even after they’ve completed their initial purchasing journey. By sending a message to the customer after they’ve arrived home from their trip, Priceline is back in their inbox and provides relevant helpful content. Image courtesy of Business2Community.

This can include information on where they’re at in their purchasing journey, how they browse your website, products they recently purchased, and so much more. With this information, you’ll have the insights you need to build personalization into each message within your campaign.

So you might be asking, what does personalization look like in a marketing campaign? Here are just a few examples of how you can inject personalization into your marketing messages:

  • Share product recommendations that are based on previous purchasing data
  • Send remarketing campaigns for products that a customer browsed but didn’t purchase
  • Integrate dynamic content in your messages to pull relevant articles or topics in
  • Provide relevant articles or products based on where they are in their purchasing journey

With the correct data and marketing tools in place, you can quickly turn mediocre marketing campaigns into huge successes with personalization.

When to Use Personalization

Because personalization is such an essential element in digital marketing, you’re going to want to use it whenever possible -- but that doesn’t mean there aren’t exceptions.

If you’re sending mass messages to your customers about company news or sharing an upcoming sale, you may not need to spend extra time to make these highly personalized. These can be batch emails that are sent to your entire subscriber base or specific segments that would be interested in the content.

These are a few of the ways you can use personalization in your marketing campaigns to improve customer engagement:

  • Social media ads that share products that are similar to ones the customer recently browsed
  • Retargeting advertisements that are targeted to audiences based on a product they left in their cart
  • Emails with product recommendations based on the customer’s interests
  • Post-purchase follow-up messages that share helpful resources about the product the customer recently purchased

Finding ways to use personalization in your marketing campaigns strategically will provide you with more successful campaigns and your customers with the content they strategically want.

How and When to Use Segmentation in Your Marketing Campaigns

Many companies use segmentation to create more targeted marketing campaigns at scale. Segmentation is another tactic that is reliant on customer data to build subgroups with similar attributes.

You can group your audiences in several different ways, but there are four key types of market segmentation. Those are demographic, psychographic, behavioral, and geographic. These different segment types will provide you with the insights you need to create high-performing audience segments. Image courtesy of Alexa Blog.

There are many different ways that you can segment your customers based on the data you have, including:

  • Demographic segmentation: customer data such as age, gender, income, marital status, and more
  • Geographic segmentation: customer data related to where they are located geographically
  • Behavioral segmentation: customer data such as customer actions, average order value, browsing behavior, and more
  • Psychographic segmentation: customer data such as attitudes, interests, personality traits, and more

Once you have defined subgroups, you can develop campaign content that will resonate with whatever makes that group similar.

How to Use Segmentation

After identifying your segments and customers within each segment, you can use this insight to create campaigns that resonate with that audience group.

While segmentation may not be quite as targeted as personalization, it’s still a great way to provide your customers with content that interests them. On top of that, it will give you higher conversion rates than non-segmented campaigns.

By segmenting your marketing campaigns, you can drastically increase conversion rates. Some companies have even seen conversion rate increases as high as 200%. That’s a drastic increase from blanketed, mass emails that may be underperforming. Image courtesy of Tasil.

There are a variety of different ways to use segmentation. It can vary based on the goals of your company and the ways you choose to segment your audiences.

Here are a few examples of how you can implement segmentation into your marketing mix:

  • Group audiences based on their readiness to purchase and send them an email with an extra discount to entice them to buy the items they’ve been eyeing
  • Group audiences based on their hobbies and create advertising campaigns that speak to how your products can help them enjoy that hobby even more
  • Group audiences by demographics such as occupation to send targeted campaigns based on the types of products they’d be most interested in
  • Group audiences based on the type of business they run and create campaigns that share insights into how they can improve with your help

Companies that only use segmentation can still create relevant experiences for their companies. They’ll just be targeted towards a more extensive group rather than one individual customer.

When to Use Segmentation

As mentioned, one of the main reasons to use segmentation in your marketing campaigns is to provide a more relevant, customized experience for a larger audience at scale.

This means you should use segmentation to share relevant content with similar audiences, like upcoming events for anyone in a specific region or a mass email promoting your sale on men’s clothing. These are examples of campaigns that will resonate with a particular segment based on their geographical location or previous purchasing behaviors -- but that doesn’t need to have personalization integrated into them necessarily.

On the other hand, for many companies, segmentation comes down to the technology stack they have. Suppose you’re using a marketing tool that doesn’t allow you to integrate personalization tokens or pull in dynamic content easily. In that case, segmentation may be the best option to provide your customers with a relevant experience.

While most marketing tools are starting to catch up with the personalization times, there are still some that simply cannot provide businesses with the ability to personalize campaigns. If this sounds like your business, then segmentation is an excellent opportunity to move towards a more personalized experience.

How Personalization and Segmentation Can Work Together to Drive Successful Marketing Campaigns

As you can see, there are a lot of similarities that come with personalization and segmentation. You can even say that segmentation is a building block to building a highly personalized experience.

Think about it this way: these two marketing tactics start with one core element, customer data. From there, you can begin to identify trends and patterns within that data. With that insight, you can start to build audience segments -- eventually using that data to drive dynamic, personalized content.

So, in reality, if you’re already using personalization, you’re likely using segmentation. But, if you’re using segmentation, you may not be using personalization quite yet. By using just one of these marketing tools, you’re only tapping into half the possibilities.

Using these two different tactics allows you to build highly targeted campaigns that will resonate with your audiences and result in more successful marketing campaigns. You’ll see higher engagement and an increase in revenue simply by putting your customer data to work and continuing to add another layer to your building blocks.

The key to success is keeping your customer data up to date and making sure you continue to monitor changes in customer behaviors. If you can do this, you’ll continue to see success with your personalization and segmentation.

Personalization, Segmentation, or Both: Which Strategy is Best for You?  

The difference between personalization and segmentation will be continuously debated. But when it comes down to it, it’s all about who you’re targeting -- a larger audience group or the individual customer?

Understanding the difference between these two marketing tactics will allow you to build more successful campaigns and provide your audiences with the most relevant content possible.

So what do you think? Is personalization, segmentation, or a mix of both the right marketing strategy for your business?

While we know you can’t always do it all, finding the right mix is a great way to communicate with your audiences at scale and integrate personalized elements when possible.

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