Customer-Centric Marketing: Segmentation vs. Personalization

No matter how intertwined personalization and segmentation are, they are certainly not one and the same. Sure, they both accomplish the same goals — improving customer experience, increasing AOV per customer, strengthening customer loyalty, driving repeated purchases, and etc. BUT differentiating the way they’re used is key to use them together more effectively.

One other way to think about it is, segmentation answers the question, “Which kinds of people am I selling to?” and personalization answers the question, “How will I sell to this specific person?” Often, you’ll see through the way these two strategies work together, that the whole is greater than the sum of its parts. Let’s get into it.

Instacart’s Segmentation Strategy

In honor of Instacart’s recent IPO success, let’s look at some of their segmentation and personalization methods. Instacart sells to both retailers themselves (on the sell-side) and consumers (on the buy-side), but for the purpose of this article, let’s focus on the buy-side consumers.

Here are their primary customer segments:

• Families: Parents are busy these days - having to take care of a whole family alongside a full time job is no joke. Instacart offers a way for parents to skip out on the tedious task of grocery shopping and save a couple hours of their precious time.
• Seniors and individuals with mobility issues: Commuting and spending the effort to shop for groceries is not easy for everyone. This is especially true of seniors and individuals with physical disabilities.
• Busy professionals: Working a 9-5 job is busy enough, but what about the professionals working even longer hours? Getting back so late leaves little time for extra errands like shopping.
• Urban residents: Individuals living in urban areas often find it easier and more efficient to get things delivered straight to their homes.
• The average individual: And of course, average individuals like myself may simply just enjoy the convenience of having groceries delivered without the hassle.

So by analyzing these different segments, Instacart has a general idea of who to target in their marketing campaigns. Take Instacart’s social media content for instance:

Post A:

Post B:

Post C:

Even at first glance, it’s pretty clear which customer segment each of these posts is targeting. Post A is geared toward your typical busy professional, post B is catered toward the Average Joe, and post C is hoping to appeal to new, overwhelmed parents.

Personalizing the Instacart Experience

But don’t get it mixed up — the above targeted media content is not quite the same as personalization. Personalization stretches beyond broad customer segments and deeper into the individual. The snapshots below are examples of Instacart’s marketing email campaigns.

Note the differences in the promotions being offered. The first email may have been sent to a new time customer who recently made a purchase of around $40 — thus why Instacart is attempting to increase their AOV to $60 this time around. The second email may have been sent to a customer who typically makes purchases of around $30 or so — which explains why Instacart is now encouraging them to increase their order value to over $50 through the promotion. Now that’s personalization.

Recap

Personalization and segmentation are not the same. BUT put them together and you’ll achieve some great results. In fact, establishing a solid segmentation strategy is the first step toward implementing a strong personalization strategy.

Use segmentation to broadly reach which customers you want to target, and use personalization to keep them around.

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