Summary Personalization and Segmentation

This is the difference between personalization and segmentation — and why it matters

In this article from Business Insider, Sailthru explains that personalization is sometimes seen as a business strategy, as a tactic, and even as a simple popular word in marketing. However, many marketers confuse this term with segmentation. That is why, Sailthru decided to run a survey gathering 146 marketers in the publishing, retail, and commercial area, to better understand their thoughts on personalization. Results demonstrated that 75% of marketers believed that segmenting an audience would be enough for personalization.

In order to have a clear understanding about both terms, segmentation on the one side, means categorizing customers in relation to recognizable features such as gender (for example having sections of men, women, and kids along with categories of sizes). Personalization on the other side, means the development of experiences on a specific individual (such as when a stylist knows and understands your preferences, as well as your budget range).

According to Sailthru, what is possible with legacy technology are database structures and integration limitations, both which show why some marketers think of personalization as a more elegant form of segmentation. Nevertheless, what the article interestingly notes is that segmentation will not increase a brand’s customer lifetime value, nor lead to a productive and supported growth. Instead, sophisticated strategies are the ones that will have a bigger impact on revenue and retention, by giving personalized recommendations, omnichannel optimization, and, predictive personalization (Investopedia and JustFab are just some examples).

All in all, what customers expect is personalization in terms of receiving a good content, interesting messages, and experiences that fit their interests. They only want brands that know them individually, and not just their demographics and gender.