Segmentation vs. Individualization

How can CRM marketers better create relevant experiences for their customers?

Matt Engstrom

Product Marketing Director

Time to read7 min read
November 5, 2021

Marketers want to be relevant

CRM marketers are challenged more than ever before to break through a deluge of messages that customers get each day. Put your customer hat on for a minute and think about how many emails you receive from brands in your inbox each morning. How many do you actually read?

On average we receive between 40 and 60 email messages per day. So, how can CRM marketers break through the clutter? The answer is relevancy.

We know for a fact that CRM marketers are aware that:

Relevant experiences are the key to garnering attention and building stronger relationships with customers.

In fact, not being relevant with messaging can actually have adverse effects with about 90% of customers saying messages that aren’t relevant are annoying.

The good news is that CRM marketers are on top of this. We hear from clients over and over that they seek to create relevance within their CRM campaigns. But, marketers are challenged to find the best approach. Most focus building segments and then targeting those groups with similar messaging. But is this truly creating relevancy?

What about the idea of individualization? That is creating a unique and relevant experience tailored to each individual customer. This approach is based on the understanding that every customer is unique. If this is the gold standard for relevance then why aren’t marketers employing this tactic? 

First, let’s break the two approaches down….

Segmentation vs. Individualization

Segmentation is an approach to creating relevance that groups individuals together based on a common attribute or set of attributes. For example, those of a certain demographic break or those who have made a specific purchase recently. 

Individualization is the creation of a relevant experience tailored for an individual customer. It assumes that each customer is unique and that nuanced differences can make a big deal. It’s not just about one attribute or even a few… but understanding each customer holistically so marketers can better message them.

Why is individualization better for creating relevancy? 

The challenge with segmentation is how much can one really assume customers are similar based on just a set of attributes. If you have one or two data points on your customer, you essentially know nothing when you take that in the context of the thousands of potential data points you have on this individual. 

The result is segments are created assuming individuals are more alike than they actually are. The reality is that marketers may increase the likelihood that campaign messaging is relevant, but still have vastly different individuals in the same groups.

The reason this approach is still commonly used by marketers are 1) there are lots of solutions that focus on segmentation and 2) it’s easy to scale targeting based on segmented audiences.

What about individualization? 

Individualization assumes that every customer is inherently unique. And even though they may share many similarities with other customers, those common data points don’t necessarily mean that they have the same purchasing intent.

When you take the whole of your 1st-party data and look at every data point you have on an individual to paint a holistic picture of who they are as a customer, then you can accurately create a relevant experience designed for that individual. 

But, this approach has three major challenges:

  1. Use of data: marketers likely have the data they need to create individual experiences, but lack the capabilities to unlock its power.
  2. Difficulty to scale: creating relevant messaging with offers designed to appeal to each individual is hard to do without the right tech.
  3. Tech hasn’t been developed to deliver individualization: marketers haven’t demanded a better alternative to segmentation, so partners haven’t been incentivized to build beyond segmentation solutions.

How can marketers tap into the power of individualization?

A good place to start is to think about what you are actually selling. It may be impossible to create truly unique journeys for everyone in your database, but it isn’t impossible to ensure that the offers you are promoting to each person are things they actually want to buy.

You have everything you need to do this within your 1st-party data.

This requires a data science approach. Traditionally, data science teams have focused on creating in-house segments because this is possible for a team of humans to scale. But, if you are looking to predict buying intent you need powerful propensity modeling that can predict the likelihood that people will want to buy any specific product.

Data science teams might be able to do this for 1 or 2 offers 1 or 2 times a week, but to ensure that your campaigns are always relevant you would need to be able to do this for a multitude of offers several times a week. 

So, how can you move forward?

That’s where advanced AI comes into play. By using AI, marketers can take a look at all of their 1st-party data. This could be demographics, transactional, online behavior, and more. AI can understand what data points and intersections of data points can be most useful in predicting buying intent.

The signals AI uses to predict intent are things that humans can’t always catch on their own. It’s not just a past purchase or a website visit. There are signals hidden within marketers’ data that they can’t see. These are called implicit signals.

Implicit signals can be an ever more powerful predictor of intent. Only AI can actually understand these signals and scale propensity modeling so that marketers can understand demand for each product down to a specific offer.

By using AI, marketers can rank their database on the likelihood to purchase each product. This can be refreshed frequently so they are always capturing the latest demand and it can be used to build audiences quickly for as many campaigns as marketers need.

Sounds like science fiction? Well… it’s not. The technology already exists. There are partners in the space (like Tinyclues) who understand the limits of segmentation and have created a solution that can help marketers ensure they are staying relevant to each individual customer. It may not be the full custom unique journey for every customer, but by promoting products to each individual that they actually want to buy, marketers can take an individualized approach to their CRM marketing. The former may be science fiction but the latter is something marketers can start doing today.

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