Is personalisation and segmentation in marketing necessary?

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.

Is Social Media more so a function of e-Marketing or CRM?

(Reposted from the awesome Quora)

Depends on the goal, and who is spending the money.

CRM is (should be) about understanding where the customer is on their journey through life, with some appreciation of the trajectory they are on (in terms of behaviour, demography and attitudes, possibly defined momentarily by where they came from and how they are currently influenced); in turn this allows marketers to decide what to say next to influence their behaviours and attitudes to develop additional value.

With that approach, social media is or could be (ideally you should test several channels to see which one delivers the behaviour change most effectively) one possible channel to deliver that 'next message' in the intertwined customer journey and brand journey.

Looking at it like that it becomes straightforward to set KPIs and measure results. This in turn makes briefing experts and suppliers very easy – they no longer have to be particularly creative, nor do they have to compete for budgets against other channels, because their role is tightly defined and they have to recognise they are just one of many touchpoint executors with (sets of) defined goals.

The other way of doing it is to try and box some stuff into 'e-marketing'. If you're not yet at the stage of evolution as a business or as a marketer that you are able to think in strategic terms then social becomes tactical and is all about the creativity of the idea in creating competitive advantage for the supplier in increasing its share of the budget of the various other e-marketing activities.

I really hope the first approach is the one your firm is aiming for ;)