Segmentation, Personalisation, Customisation and Targeting (2023)

Even if you’re selling something as essential as water, you have to know where your customers are, lest they might have difficulty finding you. Or you have to know how much they’re willing to pay, or someone else is going to undercut you. The point is that companies have to think about their customers, or they won’t succeed. In the past, this usually meant a lot of testing and fine-tuning. It was an expensive and laborious process. And so many companies went out of business before they ever saw the results they had hoped for. Modern companies have numerous advantages, one of the most significant being eCommerce personalisation. However, if you don’t understand the core tenets of eCommerce – segmentation, personalisation, customisation, and targeting – you’ll never be able to leverage this amazing approach for your company thoroughly.

Contents hide

Understanding the Differences Between Segmentation, Personalisation, Customisation and Targeting

1. Segmentation

What is Customer Segmentation?

Why is Customer Segmentation Important?

Types of Customer Segmentation

(Video) Customer segmentation and personalized targeting

3. Customisation

What is Customisation?

What is the Difference Between Customisation and Personalisation?

4. Targeting

What is Behavioural Targeting?

Why is Behavioural Targeting Important?

(Video) Micro-segmentation Basics And Personalized Marketing During Times Of Change

Segmentation and Customisation Are Not Enough

The Future Belongs to the Companies That Utilise All Four Pillars of eCommerce

Understanding the Differences Between Segmentation, Personalisation, Customisation and Targeting

Who would cross the Bridge of Death must answer me these questions three, ere the other side he see. Of course, we’re just kidding; there’s no Bridge of Death. However, you have to understand the four pillars of eCommerce if you wish to have a successful eCommerce business.

1. Segmentation

What is Customer Segmentation?

Customer segmentation is the principal element in every successful marketing strategy. It’s precisely what the name suggests: You divide your customer base into smaller groups based on common characteristics and relevant information.

Why is Customer Segmentation Important?

With the help of customer segmentation, marketers aim to understand the different needs and desires of like-minded individuals. In other words, customer segmentation is the part where you get to know your customers. This is where you gather the necessary information to target your customers but more on that later. 😉

Types of Customer Segmentation

  • Demographic Segmentation: Customer segmentation based on demographic information, such as age, gender, occupation, etc.
  • Geographical Segmentation: Customer segmentation based on where the customers live, work, go shopping, etc.
  • Psychographic Segmentation: Customer segmentation based on psychological traits, such as beliefs, attitudes, interests, etc.
  • Behavioural Segmentation: Customer segmentation based on the actions taken by customers, such as purchase frequency, click-through rates, browsing habits, last visited items, etc.

2. Personalisation

What is Personalisation?

Personalisation is about identifying a specific customer within one of your customer segments. Here’s the critical bit: Personalisation is implicit. That means personalisation takes place without actively involving the customer in the process. Instead, the website, or its algorithm, collects the data for that one specific customer and then uses it to modify the customer experience.

Amazon is an expert at personalisation: Think of your Amazon home page; it’s personalised for you based on your previous purchases and searches.

What is Hyper-Personalisation?

It turns out that good old simple personalisation is not enough anymore. Are we really surprised, though? We’re bombarded with hundreds of notifications every day, and we can’t remember even five of them. Thus, simple personalisation using only demographic segmentation doesn’t do much anymore.

Hyper-personalisation takes things one step further. Hyper-personalisation uses the individuals’ behavioural data to identify and solve their pain points. This data can include certain details about products, such as names, prices, brands, or categories. In other words, hyper personalisation uses behavioural segmentation.

The goal with hyper-personalisation is to offer the most relevant content to the customers. The logic is simple: If the relevancy increases, so will the conversion rates.

(Video) MAR101 - CH6 - Segmentation, Targeting, & Positioning

3. Customisation

What is Customisation?

Customisation is taking a basic product or service and modifying it to fit a single customer’s unique preferences. Customisation is done by the customer and relies on their conscious input. For example, Nike lets its customers create their own designs via an online platform called NIKEiD.

What is the Difference Between Customisation and Personalisation?

Out of all four pillars of eCommerce, personalisation and customisation are the ones that get confused the most. However, it’s no wonder that this is the case because, in the end, they both provide the customer with a similar result: a unique product or service based on their individual preferences.

The critical difference is that personalisation is implicit, whereas customisation is explicit. Customisation requires direct input from the customer. That is, the customer tells the service provider what they want and exactly how they want it.

If you go to a pub and order a “Martini, shaken, not stirred”, you are asking for customisation. But if you’re a regular at the said pub and when you go there, the bartender gives you your shaken martini without asking anything; this is personalisation.

4. Targeting

What is Behavioural Targeting?

Behavioural targeting is about identifying your target audience based on their behavioural habits, then designing and implementing a strategy to market yourself to the said target audience. The key to a successful targeting strategy is building the correct customer persona. The better you know your target audience, the better your campaign will be. If you haven’t realised it yet, targeting is where you put your customer segmentations to use!

Why is Behavioural Targeting Important?

  • Attract and convert high-quality leads: Initially, what you’re doing with targeting is that you’re identifying a segment in the overall market that you think will be interested in you. And as a result, your marketing efforts will get better results.
  • Increase customer loyalty: Customers are more likely to respond to your marketing efforts if they feel being addressed personally and directly. Consequently, this will help you differentiate your brand. And when customers feel that you are the only one who can help solve their particular problems, they will be more loyal to your brand.

Segmentation and Customisation Are Not Enough

The actual targeting of segments is where customisation and segmentation overlap. If you can break down a more extensive group into smaller ones but never alter your approach, segmentation won’t get you very far. This is why targeting isn’t enough all on its own.

Customisation can’t do the job all by itself, either. That’s because, these days, things are moving too quickly. Your website should attract enough visitors that – for the vast majority of companies, anyway – it simply wouldn’t be realistic to plan on customising the experience for each of them.

Consider a car dealer, for example. Most car dealers can afford to take the time to customise vehicles for each customer. If they don’t have the right customised vehicle in their inventory, they can place a special order as long as the customer is willing to wait. However, what would happen if this process took so long that customers were eventually wrapped around the block waiting for their opportunity to peruse the dealership’s vehicles and potentially make a purchase? More than likely, those customers would find another dealership.

The same thing happens with websites. Some customers will stick around to go through the manual customisation process. For example, say they’re looking to book a trip through your company. While they will have to provide some information to customise their experience, they’ll probably be more likely to give their business to a competitor that is ready with a personalised experience the moment they show up on their site.

This analogy tells us that segmentation, customisation, and personalisation must now happen in real-time.

Real-time Segmentation and Personalisation

Real-time customisation is largely redundant. This is because any customer who takes part in customising their own experience will generally be doing so in real-time. That being said, segmentation and personalisation don’t always work this way, which is a huge mistake.

A far better approach is real-time segmentation and personalisation. This involves immediately monitoring the behaviour of a visitor the moment they visit your company’s site, so you can begin tailoring the experience it offers. This will become easier to do as you start to understand better how to target segments of the larger number of people who visit your site. While targeting is not something you can necessarily do in real-time, you have to do it to ensure segmentation and personalisation can and in real-time.

The Future Belongs to the Companies That Utilise All Four Pillars of eCommerce

No company will be able to survive for long without leveraging all four of these powerful approaches. And as you have now seen, segmentation, personalisation, customisation, and targeting work best together and in real-time.
Schedule a demo with a Segmentify expert to learn more about real-time personalisation and differentiate your company from your competitors!

Unlock New Levels of eCommerce Growth with Segmentify’s Smart Solutions

(Video) Micro-Segmentation for Personalization

Book Demo

Segmentation, Personalisation, Customisation and Targeting (1)

14 day free trial

Segmentation, Personalisation, Customisation and Targeting (2)

Up & running in 5 days

Segmentation, Personalisation, Customisation and Targeting (3)

Results guaranteed

FAQs

What are the 4 types of customer segmentation? ›

Demographic, psychographic, behavioral and geographic segmentation are considered the four main types of market segmentation, but there are also many other strategies you can use, including numerous variations on the four main types.

How do you write segmentation targeting and positioning? ›

To use the model, start by segmenting your market into groups. Next, choose which of these you want to target. Last, identify how you want to position your product, based on the personality and behavior of your target market.
...
STP stands for:
  1. Segment your market.
  2. Target your best consumers.
  3. Position your offering.

What are the 5 elements of market segmentation? ›

Five ways to segment markets include demographic, psychographic, behavioral, geographic, and firmographic segmentation.

What is customer segmentation and give 4 examples? ›

There are four main customer segmentation models that should form the focus of any marketing plan. For example, the four types of segmentation are Demographic, Psychographic Geographic, and Behavioral. These are common examples of how businesses can segment their market by gender, age, lifestyle etc.

What are the 4 steps of market segmentation? ›

The process of market segmentation consists of 5 steps: 1) group potential buyers into segments; 2) group products into categories; 3) develop market-product grid and estimate market sizes; 4) select target markets; and 5) take marketing actions to reach target markets.

What is segmentation strategy? ›

Market segmentation is a marketing strategy in which select groups of consumers are identified so that certain products or product lines can be presented to them in a way that appeals to their interests.

What are the 4 types of marketing? ›

What are the 4Ps of marketing? (Marketing mix explained) The four Ps are product, price, place, and promotion. They are an example of a “marketing mix,” or the combined tools and methodologies used by marketers to achieve their marketing objectives. The 4 Ps were first formally conceptualized in 1960 by E.

What are the 7 market segmentation characteristics? ›

It includes age, gender, family status, occupation, income, race and religion. Marketing to demographics enables you to better resonate with your customers. Geographics: Region, climate and population density are the key areas that affect your customers' needs with this type of segmentation.

How do you develop a segmentation strategy? ›

How to choose a market segmentation strategy
  1. Consider who needs your products. ...
  2. Gather data about your customers. ...
  3. Look for underserved segments. ...
  4. Research audience behaviors. ...
  5. Develop buyer personas. ...
  6. Consider positioning options. ...
  7. Review your profit potential. ...
  8. Study the competition.

What is the importance of segmentation in marketing? ›

Segmentation helps marketers to be more efficient in terms of time, money and other resources. Market segmentation allows companies to learn about their customers. They gain a better understanding of customer's needs and wants and therefore can tailor campaigns to customer segments most likely to purchase products.

How do you create a successful market segmentation? ›

Tips for Effective Segmentation
  1. Your Segments Should Be Distinctively Different. The size of your segments must be worth targeting them. ...
  2. Remember the Goals of Segmentation. ...
  3. Segmentation Isn't Limited to the Marketing Department. ...
  4. Use Data to Monitor Your Success.
5 Mar 2020

How do you identify market segments and targets? ›

Market Segmentation

Identifying the market according to what they need and want. Analyse their usage pattern, likes and dislikes, lifestyle, and demographic. Note the growth potential of your market as well as your competition and the potential risk they may represent to your company.

Who is your target market example? ›

A target customer is an individual that's most likely to buy your product. And it's a subset of the broader target market. For example, if your target market is female athletes between the ages of 13 to 25, a target customer could be female athletes in the specific age range of 13 to 16.

How do you identify customer segments? ›

How to conduct customer segmentation analysis
  1. Identify your customers. ...
  2. Divide customers into groups. ...
  3. Create customer personas. ...
  4. Articulate customer needs. ...
  5. Connect your product to customers' needs. ...
  6. Evaluate and prioritize your best segments. ...
  7. Develop specific marketing strategies. ...
  8. Evaluate the effectiveness of your strategies.
8 Jun 2021

What are three examples of segments? ›

Common characteristics of a market segment include interests, lifestyle, age, gender, etc. Common examples of market segmentation include geographic, demographic, psychographic, and behavioral.

How do you write a segmentation analysis? ›

The Steps of Segmentation Analysis
  1. Goal setting – Decide on the objectives of your segmentation and what end goals they should realize. ...
  2. Identify segments – Decide on the type of research you'll perform. ...
  3. Develop a strategy – Choose your target segment and identify implications from the research validation process.

What are the 6 steps in segmenting a market? ›

These six steps will help you define market segments from scratch or re-draw existing segments with greater clarity.
  1. Spot Identifying Characteristics. How are your customers differentiated? ...
  2. Decide What Matters Most. ...
  3. Analyze Your Database. ...
  4. Research Prospects. ...
  5. Prioritize High-Value Segments. ...
  6. Tailor Your Approach.
31 Jan 2017

What are bases of segmentation? ›

There are three main types of segmentation bases. Each works well with different businesses and industries, so it's essential to consider your options before deciding on the best for your needs. The three main types of market segmentation are demographic, psychographic, and behavioral.

What is a customer segmentation strategy? ›

Customer segmentation is the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits.

What is segmentation decision? ›

Increasing clarity of customer needs and wants

Choosing a segmentation strategy is a scoping decision that helps focus early efforts of a business on the customer opportunities most likely to generate success. An effective segmentation will: Provide a source of advantage against larger competitors.

What are the 5 marketing strategy? ›

What are the 5 P's of Marketing? The 5 P's of Marketing – Product, Price, Promotion, Place, and People – are key marketing elements used to position a business strategically.

What are the 5 marketing concepts? ›

The five main marketing concepts are production, product, selling, marketing, and societal. Companies utilize these five concepts in regards to the product, price, distribution, and promotion of their business.

What are 5 examples of marketing? ›

  • Get on the Phone and Cold Call. Whether they call current customers or members of the general public, companies often simply call people up on the phone and offer them services. ...
  • Send a Punchy Newsletter. ...
  • Search Engine Marketing. ...
  • Meeting Customers at Trade Shows. ...
  • Product Placement in Entertainment.

What are the key segments? ›

There are four key types of market segmentation that you should be aware of, which include demographic, geographic, psychographic, and behavioral segmentations. It's important to understand what these four segmentations are if you want your company to garner lasting success.

How do you segment a product? ›

Steps in Market Segmentation
  1. Identify the target market. The first and foremost step is to identify the target market. ...
  2. Identify expectations of Target Audience. ...
  3. Create Subgroups. ...
  4. Review the needs of the target audience. ...
  5. Name your market Segment. ...
  6. Marketing Strategies. ...
  7. Review the behavior. ...
  8. Size of the Target Market.

What is the most used segmentation variable used in consumer marketing? ›

Demographic segmentation is the most often used approach because we can count the number of individuals within a segment who have similar characteristics such as gender, age, educational background, marital status, occupation, and income.

What is main customer segments? ›

Customer segmentation is the process by which you divide your customers into segments up based on common characteristics – such as demographics or behaviors, so you can market to those customers more effectively. These customer segmentation groups can also be used to begin discussions of building a marketing persona.

What is a customer segment example? ›

Examples of segmentation by demographic include: Age, gender, income, education, and marital status.

How do you start a customer segmentation? ›

How to conduct customer segmentation analysis
  1. Identify your customers. ...
  2. Divide customers into groups. ...
  3. Create customer personas. ...
  4. Articulate customer needs. ...
  5. Connect your product to customers' needs. ...
  6. Evaluate and prioritize your best segments. ...
  7. Develop specific marketing strategies. ...
  8. Evaluate the effectiveness of your strategies.
8 Jun 2021

Which is the best way to segment customers? ›

5 ways to segment customers
  1. Demographics. Divide your customers into demographic groups. ...
  2. Behavior. Sort different types of behavior into groups. ...
  3. Benefit groups. This segment considers the ways in which a product is beneficial to the customer. ...
  4. Social Data. ...
  5. Value.
18 Mar 2015

Why is it important to segment your customers? ›

Customer segmentation is one of the most important marketing tools at your disposal, because it can help a business to better understand its target audience. This is because it groups customers based on common characteristics. These groups can be used to build an overview of customers.

What is segmentation strategy? ›

Market segmentation is a marketing strategy in which select groups of consumers are identified so that certain products or product lines can be presented to them in a way that appeals to their interests.

Who is your most important customer? ›

The most important customers (listeners, audience members and followers) are not the ones you gain, but the ones you keep. It's all very well to measure how many people have signed up or walked through the door, quite another to understand who is really listening and what they care about.

Who is your target market example? ›

A target customer is an individual that's most likely to buy your product. And it's a subset of the broader target market. For example, if your target market is female athletes between the ages of 13 to 25, a target customer could be female athletes in the specific age range of 13 to 16.

How do I identify my target market? ›

How to identify your target market
  1. Analyze your offerings. Ask yourself what problems your products and services solve, and, in turn, to whom they appeal. ...
  2. Conduct market research. ...
  3. Create customer profiles and market segments. ...
  4. Assess the competition.
30 Apr 2019

How do you identify market segments? ›

Market Segmentation

Identifying the market according to what they need and want. Analyse their usage pattern, likes and dislikes, lifestyle, and demographic. Note the growth potential of your market as well as your competition and the potential risk they may represent to your company.

What are three examples of segments? ›

Common characteristics of a market segment include interests, lifestyle, age, gender, etc. Common examples of market segmentation include geographic, demographic, psychographic, and behavioral.

How do you write a segmentation report? ›

The Steps of Segmentation Analysis
  1. Goal setting – Decide on the objectives of your segmentation and what end goals they should realize. ...
  2. Identify segments – Decide on the type of research you'll perform. ...
  3. Develop a strategy – Choose your target segment and identify implications from the research validation process.

How do you segment a product example? ›

Demographic segmentation looks at single variables that make your customers who they are on a societal level and then groups them together.
  1. Gender. For example, A&F segment by gender with the same jeans campaign for both women and men. ...
  2. Age. ...
  3. Religion. ...
  4. Occupation. ...
  5. Marital status. ...
  6. Birthdays. ...
  7. Location.
16 Mar 2020

Videos

1. Segmentation & Personalization: The Keys To Future-Proofing Your Store’s Growth
(Segments)
2. PostFunnel Insider: Weekly Hack - From Basic Segmentation to Personalization
(Optimove)
3. Segmentation & Target Markets.
(Basics of Marketing)
4. How to Achieve Personalization at Scale with Machine Learning
(Dr. Raj Ramesh)
5. Personalization Strategy: Segmentation, Tags & Email Marketing Automation [Examples]
(Pirsonal)
6. How to Surprise & Delight Your Hotel's Top Traveler Segments
(Cendyn)
Top Articles
Latest Posts
Article information

Author: Tish Haag

Last Updated: 11/21/2022

Views: 5576

Rating: 4.7 / 5 (47 voted)

Reviews: 86% of readers found this page helpful

Author information

Name: Tish Haag

Birthday: 1999-11-18

Address: 30256 Tara Expressway, Kutchburgh, VT 92892-0078

Phone: +4215847628708

Job: Internal Consulting Engineer

Hobby: Roller skating, Roller skating, Kayaking, Flying, Graffiti, Ghost hunting, scrapbook

Introduction: My name is Tish Haag, I am a excited, delightful, curious, beautiful, agreeable, enchanting, fancy person who loves writing and wants to share my knowledge and understanding with you.