Chairman Underwired
Share this content
Tags:

Is personalisation and segmentation in marketing necessary?

30th Jul 2014
Chairman Underwired
Share this content

Big brands think personalisation is the preserve of the cutting edge, big budget marketers. But no one should forget that all they are doing is replicating the personal service we, as customers, were once used to when we went shopping to our favourite small independent stores. The reality is it’s in reach of every company, whether small or large: SaaS allows us to do it at low cost, while the big vendors charge millions for systems that can’t possibly ever be fully utilised. The investment that is required is in the customer journeys, the content and the behavioural economics that goes behind planning the programme. Only that way can you drive massive, measurable financial returns.

But do customers actually like it?
Most people prefer to be addressed by name – we’re hardwired to respond (that's why you always hear when your name is mentioned on the other side of the room at a party). If you wish to build a relationship between your brand and a customer, then you have to behave as if the brand is an individual, and recognise the individuality of the person you’re trying to relate to. That’s all but impossible if you speak generically or impersonally. That’s not to say that’s how all marketing works: TV, for example, can work brilliantly to create brand resonance when it ignores the personal relationship between brand and consumer altogether.

So we need to segment our customers to personalise our marketing?
The two are entirely distinct. Personalisation recognises the individual, by identity, position in a customer lifecycle, attitudinal trajectory and behaviour (observed and forecast). Personalisation therefore allows truly individualised communications. Segmentation on the other hand is a ‘meta’ discipline, taking broad-brush strokes to datasets filled with people defined by characteristics; these could be behaviour, motivation, demographic profile, propensity etc. In other words, segmentation is about how you describe people and personalisation is about how you talk to people. Although each is different, it is important to consider both to achieve a desirable outcome from your customers.

By segmenting customers, businesses will have a greater chance of achieving success and thus creating a loyal customer. Segmentation is a no-brainer. There are two examples that come straight to mind to illustrate the power of segmentation. The first was a campaign for Virgin Holidays back in the early days of eCRM, this was the first time we ran an email campaign segmented simply by previous purchase behaviour and the (very simple) campaign generated £3million of revenue on the spot.

The second was a campaign for The Sun’s Dream Team Fantasy Football. Previous segmentation had been unproductive. We took a look, decided to approach segmentation from a motivational point of view and decided the two motivations were likely to be ‘passionate about football’ and ‘in it for the money’. This simple insight increased revenue by 93% in 90 days.

Very often, fantastic CRM is about simplicity and insight, not complexity. In our experience, segmenting customers into 6-7 segments will drive 90% of the value creation available, proving that in fact many customers like brands to appeal to them individually: by doing so it will increase the customer’s engagement with the brand, thus creating loyal, valuable customers.

Felix Velarde is CEO at Underwired, the leading CRM consultancy

Tags:

You might also be interested in

Replies (4)

Please login or register to join the discussion.

linkedin
By LinkedIn Group Member
04th Aug 2014 09:46

Comment on this post on the MyCustomer LinkedIn group

accurate, relevant, timely & consistent - all essential. 
need to take consumer intent & context into account and balance that with the needs of the business to obtain the best thing to do next.

Thanks (0)
linkedin
By LinkedIn Group Member
04th Aug 2014 09:47

Comment on this post on the MyCustomer LinkedIn group

Personalisation will avail you little if don't also consideration motivation and - above all - timing.

 

 

Thanks (0)
linkedin
By LinkedIn Group Member
04th Aug 2014 09:48

Comment on this post on the MyCustomer LinkedIn group

good point - even if data and technology allows full personalization on the individual basis, using segmentation is an essential way to structure and analyze communication and subsequent actions. 6-7 segment is a right number to understand and manage process manually, but sometimes you need further "micro" segmentation (usually done automatically) to reveal growth opportunities and increase overall effeciency.

Thanks (0)
linkedin
By LinkedIn Group Member
04th Aug 2014 09:49

Comment on this post on the MyCustomer LinkedIn group

There is no doubt that personalisation works - if you get it right! Get it wrong and social media will very quickly cause you a lot of pain. Unfortunately in todays world the friendly store where the staff remembered your visits and preferences has 'almost gone' but certainly fading fast. Its replaced with online shopping where everyone is seeking to 'capture' information about you so they can start to deal with you as if they know you - wrong. Personalisation has to be RELEVANT, APPPROPRIATE, and TIMELY to even get a look in. Getting to know your customers without having the face-to-face experience is going to be difficult - if I can sign my dog up for something he is spoken to as if he is a human. See the dog in the store and you know he just likes a pat!

Thanks (0)