For decades, marketers have been segmenting their advertising strategies and messages to appeal to specific customer groups. By dividing their customer bases geographically, demographically, and behaviorally, marketers have been able to ensure the highest possible lead conversion and get the most from their ad spend.
Today, the same marketers are taking segmentation up a few notches in an effort to appeal to a mobile-powered, selfie-oriented world, where customers look to their smartphones and social media for instant gratification. Led by companies such as Pandora, Amazon, and Netflix, today’s one-to-one marketing goes beyond anything we’ve seen before thanks to the copious customer data available for use in executing more strategic targeting.
Narrowing the Market
In a world where people are obsessed with snapping selfies and sharing them with their peers (and strangers) via social media, marketing to the individual consumer makes perfect sense.
“Almost everyone segments to some extent—targeting different customers with different marketing—but typically those segments are big, macro-level segments,” writes Brian Halligan, HubSpot’s co-founder and CEO, in Segments of One: Smarter Targeting for Your Customers. “But Pandora, Netflix, and Amazon take it to another level by creating ‘segments of one’: micro-segments that target each customer uniquely, allowing the companies to convert visitors into long-term, high-value customers at very high rates.”
Following in these companies’ footsteps, direct response marketers are combining contextual data (customer information, purchase history, etc.), analytics (for forecasting future behaviors), and omnichannel marketing tactics (linking disparate sales channels into a single, seamless buying experience) to enable a one-to-one experience.
“Today’s customers create bucketloads of data—more than ever before,” says Experian’s Nicholas Moore, head of marketing, in the company’s marketing and consumer insights blog. “Every time an individual interacts with your brand is an opportunity to collect and record data that will help your communications resonate with them more in the future.
“Likewise, you need to ensure that your pictures of customers are accurate and robust enough by validating [that] the data you have is accurate, and consider enriching [it] with trusted third-party data,” Moore adds, noting that marketing to a segment of one requires personalization that has to happen in real time and must center on accurate segmentation, customer insight, and a dynamic, cross-channel approach.
Accurate segmentation involves layering first-party responsive data over second- and third-party data that includes demographic information (who’s buying?), purchasing habits (what did they buy, and when did they buy it?), and consumer attitudes toward the brand (lifestyle, alignment with personal culture, etc.). When combined, these factors can help marketers effectively harness customer insights and create individualized, personalized targeting strategies. Neglect any of these components, and a one-to-one marketing approach will fall short.
Segmenting the Self
The need for a one-to-one marketing approach can be traced back to the advent of social media. Before that, segmentation was largely based on demographics, with marketers targeting broad groups such as women ages 30 to 40 or consumers in large metropolitan areas. That changed in the late 1990s, when a site called SixDegrees.com emerged as the first recognizable social media site, enabling users to upload profiles and befriend other users. Friendster, MySpace, and LinkedIn followed in the early 2000s, with Photobucket and Flickr becoming the first platforms to facilitate online photo-sharing.
Fast-forward to 2017, and we’re all working in an environment where customization is king. Thanks to the increasing importance of “self”—a movement that may not exactly be positive for our world as a whole, but that’s fodder for another article—the individualized market approach has become a front-and-center mandate for marketers in the B2C and B2B segments.
“Go to Amazon.com right now and note what they are merchandising to you,” Halligan writes. “When I go to Amazon, they are selling me stuff about the Boston Red Sox, the Grateful Dead, and all things marketing. But each person gets a unique set of merchandise: If you just went to Amazon’s home page and they are merchandising that same stuff to you, send me a screenshot, and I’ll invite you to join me at a Sox game—in my second-row seats. (After all, Amazon’s segmenting is so good that it can probably predict who I’d like to go to a game with.)”
Marketers are taking segmentation up a few notches in an effort to appeal to a mobile-powered, selfie-oriented world.
This is just one example of how deep companies can go with one-to-one marketing, and how they’re successfully creating segments of one that target individual customers. In return, these companies are converting visitors into long-term, high-value customers at very high rates. Compare this to the bricks-and-mortar retail sector, where J.C. Penney, Macy’s, Sears, Sports Authority, and Payless are struggling to keep stores open.
The retailers that emerge from this period of uncertainty will be those that adopt their own style of customer personalization. Retailers H&M and Zara, for example, continue to do well because they’ve taken “fast” fashion to new levels by turning over trendy inventory quickly and creating an engaging customer experience. Another good example is TJX Companies, Inc. (Marshalls, T.J. Maxx, and HomeGoods), which continues to attract consumers who want low prices and a “destination” shopping experience.
So, how can marketers emulate these online and offline mavens of personalized, one-to-one marketing? Start by marketing across all channels in a media-agnostic fashion, making sure you have a presence on all channels. Factor all of your available data sources (i.e., purchasing habits, demographics, etc.) into the equation. Make sure the data is recent and updated regularly, since consumer habits and preferences change quickly. Finally, analyze that data and use it to make informed decisions surrounding personalization. Map out the purchase possibilities, look at where and how customers are buying, and embrace the one-to-one approach—because it is not going to go away.