Personalisation always outperforms segmenting

Personalisation always outperforms segmenting

Personalisation always outperforms segmenting. Performance marketers today face a conundrum. On the one hand, you’re tasked with creating marketing campaigns that appeal to wide—and sometimes very different—groups of prospects. On the other, those campaigns and efforts must deliver results.

Why is it a conundrum? Because a single strategy, no matter how refined and researched, cannot optimally appeal to all of your visitors. Let us make a distinction here, segmenting by its very definition means lumping people together, a segment. Personalisation is unique to the individual, so beware anyone who tells you otherwise as they have a hidden agenda.

Performance marketers long since turned to A/B testing to identify the single best solution for all visitors. While A/B testing has helped marketers better quantify the impact of their ideas, trying to find the single “one size fits all” solution to show all of your visitors leaves money on the table and wastes time and effort.

Let’s explore an example to illustrate this. Say you are responsible for optimising the conversion rate of a website and the current messaging that performs best (which we’ll call the baseline) converts 3% of your visitors. You decide you want to see if different messages can perform better, so you create two new test variations. In this example, you have three different, equally sized audience segments visiting your site: existing customers, prospective customers and competitors’ customers.

Conversion Rates for 3 Different Variations to 3 Audience Segments (with equal traffic)

Audience SegmentsA: Existing Customers3%2%1%
B: Prospective Customers2%4%1%
C: Competitors’ Customers1%3%5%
Average conversion rate2.0%3.0%2.3%

Pick one to show to all: 3% conversion rate overall

Personalise to each segment: 4% conversion rate overall (33% lift)

If you could only show a single variation to every site visitor, you would select Variation 1 because it delivers the best overall conversion rate across all customers (3%). However, if you could personalise the experience for each group and show each group the variation that performs best for them, you would show Baseline to existing customers (3%), Variation 1 to prospective customers (4%) and Variation 2 to competitors’ customers (5%). This personalised approach would result in a 4% conversion rate from the same ideas and the same group of visitors — a 33% improvement in performance.

Personalisation always outperforms “one size fits all” approaches.

While rules based personalisation is better than a “one size fits all” approach, you are required to set up static rules to deliver specific experiences to predefined segments of your audience. Predictive personalisation uses machine learning to present the best experiences to each individual visitor to your site.

Additionally, both A/B testing and rules based personalisation optimize for a point in time, irrespective of how your visitors’ behaviour changes or how your marketing efforts change in the future. Predictive personalisation automatically adjusts to changes in visitor behaviour over time, shifting traffic to your best performing experiences.

There are three advantages predictive personalization offers marketers over A/B testing:

– Faster Results: Predictive personalisation begins optimizing without waiting weeks or months for statistical significance, unlike A/B testing. Predictive personalisation also allows you to test more experiences and variations at the same time than A/B testing so you can see results across more ideas sooner.

– Better Results: Personalization outperforms “one size fits all” approaches by serving the best performing experiences to each user. Additionally, as visitor behaviour changes over time, predictive personalisation adjusts accordingly to deliver the best performing experience. A/B testing, on the other hand, picks a winner once and does not adjust again.

– Less Work: A/B testing requires your ongoing attention, monitoring experiments, deciding when to call winners, and managing potentially large matrices of separate test cells. Predictive personalisation automates experiment management and execution, freeing marketers to spend more of their time understanding prospects and developing new ideas to drive conversion.

Personalised product selection software, using predictive analytics technologies like SwiftERM, identify consumer’s future behaviour, then rank every SKU by greatest likelihood of “that individual consumer” will purchase from all the SKUs you have listed, in order of greatest likely buying propensity.

In other words, the ones they love best. CLV soars and RoR is all but eliminated. It out performs segmenting many-fold. But the art to it isn’t choosing one over the other, the seasoned marketer runs them both in tandem, to achieve maximum effect, the effect a 26x higher overall return, that’s huge!

Any performance marketer who has a frustratingly long backlog of ideas to test and wants to see results quickly should be investigating predictive personalisation. A/B Testing, gave us a way to understand the best single experience for all visitors at one moment in time, and predictive personalisation now gives us a way to deliver the best experiences for each and every visitor as visitor behaviour changes.

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