For more than a decade, the marketin
g industry has been espousing the benefits of 1to1 marketing: increased response rates and revenue, reduced churn, greater customer loyalty, etc. By now, it should be a no-brainer why brands should embrace 1to1 marketing. The more pressing question is how?
There have been significant technological advances in the past decade that have not only made 1to1 marketing feasible but have democratized it beyond sophisticated Fortune 500 companies like Amazon.com. If there’s a will and a way, then what’s still standing between brands and 1to1 marketing? A holdout from traditional campaign management processes: segmentation.
Traditional Segmentation Hits a Wall
Segmentation models classify individuals—with unique interests, needs, and behaviors—into homogenous groups. Thus, when targeting decisions are made at the segment level, each individual doesn’t necessarily receive the most relevant offer. Compounding the issue is the fact that segments are often channel specific and built using a static, incomplete snapshot of customer data that’s months old.
While segmentation models were historically sufficient for individual, offline channels, they’ve been rendered obsolete by new communication paradigms. Customers today communicate with brands using a wide array of channels and devices, often simultaneously. Moreover, seeking contextually-specific information when they need it, they’re relying on inbound channels more than ever before. To top it off, digital channels like the web and social media produce a torrent of instant data while shrinking execution times to the millisecond.
As Forrester Research puts it, “Legacy segmentation models are no longer relevant to the way customers interact with brands — especially as the number of customer touchpoints exponentially increases, creating a non-linear view of the customer.”1
Beyond Segments: 3 Key Requirements for Zero-Segment Marketing
In order to drive greater customer engagement, marketers must discard traditional segments and create an environment where offer targeting is defined by each individual, independent of channel. There are three key requirements to achieve what we call Zero-Segment Marketing:
- Single Customer View – Brands need a real-time, cross-channel view of their customers that encompasses all relevant data, including socio-demographics, expressed interests and preferences, online behavior, promotion and response history, transactions, etc.
- Central Offer Catalog & Decision Engine – Marketing offers must be separate from channels, housed within a central repository that serves all interaction points. Marketers should be able to assign business rules and decision criteria to each offer that apply to all relevant channels.
- Cross-Channel Execution – During each touch point—whether an outbound message or inbound interaction—the decision engine makes a split-second recommendation, delivering the best offer for that particular individual at that particular time.
Whereas traditional segments are one-to-few (at best), Zero-Segment Marketing is truly 1-to-1 and customer-centric. Thus, it’s the key to increasing engagement and response rates in today’s dynamic, omni-channel world.
1 Forrester Research, “Segmentation: New Approaches To An Old Problem,” by Srividya Sridharan with Suresh Vittal, Allison Smith