Know Your Terms: Personalization vs. Segmentation vs. Customization vs. Targeting

4 min read

Most people implicitly understand that if you want to sell successfully, you have to think about your customers.

Even if you sell something as essential as water, you have to know where your customers are or they might have a hard time finding you.

You have to know how much they’re willing to pay or someone else is going to undercut you.

The list goes on and on, but 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, laborious process and many companies went out of business before they ever saw the results they had hoped for.

Modern companies have numerous advantages, one of the biggest being ecommerce customization. However, if you don’t understand its core tenets – targeting, segmentation, and personalization – you’ll never be able to fully leverage this amazing approach for your company.

Understanding Customization, Segmentation, Personalization, and Targeting  

Before we delve into each of these four pillars individually, let’s begin with basic definitions for each, of which we can then build on in later sections.

Far too many people confuse two, three, or even all four of these terms with one another. Much of this is because they’ve achieved buzzword status in marketing, but, whatever the reason, the consequence is that most have no idea what these words really mean.

Customization

Customization is taking a basic product or service and modifying it so that it fits a single customer’s unique preferences. For example, if you go out and buy a car, you might add extras like a leather interior and GPS. That vehicle has now been customized, which makes it different than the other vehicles on the lot, including those that are otherwise the same make and model.

Customization is taking a basic product or service and modifying it so that it fits a single customer’s unique preferences.

Personalization

Personalization and customization are usually the two that get confused the most. In the end, they both provide the customer with a similar result: a unique product or service based on their individual preferences.

However, personalization is done without explicit input from the customer.

So, again, if you were in the market for a vehicle, you could go to a dealer and tell them the make and model you wanted and then the extras you would like for them to add so that you can drive away in a custom ride that fits you like a glove.

That’s customization. Personalization would be if you showed up at the lot and the dealer was already waiting with the keys to the customized vehicle you want, even though you never sat down and told them about it. Somehow, they simply knew.

Segmentation

Segmentation is a type of marketing strategy that involves taking a target market and breaking it down into smaller groups based on their perceived interests, common needs, and/or priorities.

The idea is that segmentation helps marketers better understand how a group of like-minded consumers act and interact.

Targeting

This insight gives them a huge advantage when it comes time to design and implement a strategy for targeting them.

And that’s all targeting is. It’s coming up with the best possible approach a target market, a segment of the company’s entire market.

With these definitions in mind, let’s now look at some very important distinctions that exist between these four powerful strategies.

Segmentation and Customization Are Not Enough 

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

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

One more time, let’s talk about that car dealership. Most dealerships can afford to take the time to customize vehicles for each customer. If they don’t have the right customized 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 awaiting 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 customization process. Say they’re looking to book a trip through your company. While they will have to provide some information to customize their experience, they’ll probably be more likely to give their business to a competitor that is ready with a personalized experience the moment they show up on their site.

This leads to another important distinction about segmentation, customization, and personalization: they must now happen in real-time.

Real-Time Segmentation and Personalization 

Real-time customization is largely redundant. Any customer that takes part in customizing their own experience is generally going to be doing so in real time.

That said, segmentation and personalization don’t always work this way, which is a huge mistake. For example, some companies ask for visitors’ email addresses in exchange for a helpful newsletter. With this newsletter, they can often get a better sense of their recipients’ unique preferences.

Now, they understand the segments of their market and they should be able to personalize much of their approach, at least as far as future emails are concerned.

A far better approach is real-time segmentation and personalization. This involves immediately monitoring the behavior 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 begin to better understand how to target segments of the larger whole 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 personalization can and in real time.

The Future Belongs to Companies That Utilize All Four

No company will be able to survive for long without leveraging all four of these powerful approaches. As you have now seen, personalization, segmentation, customization, and targeting work best together and in real time.

If you’d like help making the most of these solutions, contact Segmentify today to learn about our unique solutions.

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