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Personalization vs. segmentation: What's the difference?

Personalization and segmentation both bring different benefits to marketing teams and use different types of customers data. Find out the main differences between the two terms.

As competition increases between brands for customers' attention, organizations seek more ways to offer unique, personalized experiences for their audiences.

In fact, audiences increasingly expect to have more human-to-human relationships with brands, and marketing teams can help implement these strategies. Two buzzwords that marketing teams use as they develop targeted communication strategies are personalization and segmentation. Too often, marketers use the terms interchangeably, but they should understand the distinctions between them and how to best use them to execute a tailored CX.

Explore what each term means for marketers and their target customers, as well as the differences between them to consider for one-to-one communications and campaigns.

What is segmentation?

Segmentation is all about the marketer, ensuring that internal marketing teams understand the best groupings of the audience they want to target.

To put segmentation into practice, marketers must identify similar groups of potential or existing customers according to their collected data, which they can use to create a mix of strategies or messages. If marketers divide their databases into different audiences, they can develop a broader understanding of specific buyer preferences or tendencies.

After marketing teams collect enough data and establish a narrative for their segments, they can better create a personalization content strategy.

Different types of segmentations include the following:

  • Behavioral segmentation. This segments people based on their interactions with the brand, browsing behavior, average order value, page visits, session frequency and more.
  • Demographic segmentation. This segment reflects data about prospects, including age, gender, income, occupation and marital status, among others.
  • Geographic segmentation. If marketing teams know a user's location, they can send timelier messages and understand geographic preferences and trends among customers.

These segments act as distinct lists in the marketing database that teams can use to enroll people on certain email campaigns or deliver different messaging based on the list or segment rules.

Additionally, segmentation can help develop a personalization strategy, but segmentation does not equal personalization when it comes to delivering unique messages. Even if people share demographic data, they may not have interests in the same products or services.

Marketing teams can use segmentation early in campaign development stages. As they collect more data about an audience, they develop a better understanding about that segment and can focus messaging on their specific challenges, needs and wants. After marketing teams collect enough data and establish a narrative for their segments, they can better create a personalization content strategy.

What is personalization?

Personalization puts the customer first, enabling marketing teams to create relevant content toward a specific customer within a segment. Organizations have historically struggled to scale the transition from segmentation into personalization, but with more tools in the marketing toolbox, marketers can better understand more individualized data about people in their segments.

Individualized data can include the following:

  • past purchases customers made;
  • how many different purchases they made;
  • how often they view a specific page;
  • how they interact with a brand across channels; and
  • content they interact with.

Personalization also explores how an organization can solve customers' pain points and meet their needs. Marketers use segmentation to share awareness-based content to that audience and use personalization to offer more consideration and decision-making content to people depending on where they are in the customer journey.

Marketers can use personalization in every interaction they have with a user. If they use data about an individual, marketers can place specific promotions on the website or recommend certain products in remarketing or email campaigns. They can also use demographic information, like a user's name or company, to make personalized, dynamic content, but marketers should ensure the content is relevant to the users.

A chart comparing three differences of personalization and segmentation
Understanding personalization vs. segmentation strategies can help marketing teams better reach customers and prospects.

3 differences between personalization and segmentation

Many marketers refer to personalization and segmentation interchangeably, but they serve different purposes within marketing strategies. Below, explore the main three differences between them.

1. How marketers manage the strategies

One key difference between personalization and segmentation is how marketing teams manage and act upon them. Marketers control segmentation, as they create parameters that group an audience into a segment based on similarities.

On the other hand, a set of rules or machine learning manage personalization. Additionally, organizations can adopt personalization tools to help identify uniqueness in individuals within a segment. It takes the data further and displays dynamic content or personalized recommendations.

2. Granularity of data and its use

Segmentation makes marketing messaging more relevant because people within a broader segment have similarities, thus making certain campaigns with broader messaging a good fit. Personalization extends beyond segmentation into individual data points and preferences.

Marketers that want to customize a message to an individual rather than a group of individuals must collect more granular data and use personalization rules and tools to deliver those messages.

3. The personalization maturity curve

Segmentation is an early step to develop a more personalized audience experience. Some marketing teams only have the capabilities to collect broader information, group audiences into segments and deliver more one-size-fits-all messaging to that segment.

Over time, with more data collection, the adoption of personalization technologies and more rule definitions about what unique messages to deliver, personalization can follow segmentation. Marketers need segmentation to enable proper personalization, but it takes time to scale to that level of granularity and technology to support those rules.

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