If you target everyone, you’ll hit no one says marketing expert Ali Powell, CEO of Commercial Acceleration.
How well do you really know your customer? Do your marketing efforts truly resonate with their needs?
Are you meeting your consumers’ expectations with personalised communications that genuinely reflect their preferences?
With personalisation entrenched in many aspects of our brand interactions, reports suggest that 73 per cent of consumers now not only prefer but expect content, offers, recommendations and service that align with their interests, preferences and behaviours. Driven by the rise of data-driven marketing in industries like e-commerce and entertainment – think the ‘Personalised Playlists’ on Spotify or ‘Today’s Top Picks For You’ on Netflix - personalisation uses insights as to consumers’ characteristics to adapt messaging, products and services accordingly. This relevance makes customers feel valued and understood, leading to greater satisfaction, loyalty, and an improved overall experience.
It is therefore unsurprising that in the arsenal of today’s marketer, the foundations for personalised brand interactions – segmentation and targeting – are key strategies if brands want to deliver messaging, products and services that resonate with their customers.
Segmentation: The key to understanding your customer
“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself” Peter Drucker
Segmentation is the process of dividing a broad customer base into distinct groups of consumers with similar characteristics, needs, or behaviours. This allows businesses to tailor marketing strategies, products, and services to meet the specific preferences of each segment.
Think of a 100-bedroom hotel with 160 guests in-house on any given night. Each of these guests has different expectations for their stay, shaped by their unique needs and preferences.
Business travellers may prioritise a comfortable night’s sleep along with a seamless, speedy check-in and checkout process.
Families may value early mealtimes and budget-friendly in-house activities to keep children entertained
Couples celebrating special occasions may prioritise fine dining and an impressive wine list
The point is that each guest has their own specific desires and expectations and expects these to be recognised in their interactions with the hotel – both in communications and during their stay. A ‘one size fits all’ approach to customer interactions runs the risk of alienating guests, who are each seeking very different in-stay experiences. It’s the role of the marketer to identify key customer segments based on customer behaviours and attributes, and create smaller, more manageable sub-groups based on these shared characteristics. These groups could be categorised by demographics (age, gender, income), psychographics (lifestyle, values), geography, or behaviours.
If done correctly, segmentation is a powerful marketing strategy. According to a study by Bain & Company, 81 per cent of executives found that segmentation was crucial for growing profits. Bain also found that organisations with great market segmentation strategies enjoyed a 10 per cent higher profit than companies whose segmentation wasn’t as effective over a five-year period.
Targeting: Building connection through personalisation
Armed with a comprehensive segmentation strategy and clear insights into customer behaviours and preferences, the next step in building an effective marketing and personalised communications plan is to develop your targeting strategy. Targeting involves building and executing tailored marketing strategies and messaging for each customer segment. The goal is to optimise engagement and response through relevant and personalised communications that resonate with customers’ unique needs.
Unlike mass marketing, which delivers a single message or offer designed for broad appeal, targeted strategies allow for deeper engagement and personalisation. By tailoring messages as closely as possible to individual preferences, targeted strategies ensure marketing efforts are optimised, delivering a number of commercial benefits.
Driving growth with segmentation and targeting
Armed with an understanding of the unique characteristics of each segment, companies can better position and market their product to resonate with target groups making for more focused and cost-effective marketing. For example, understanding the age profile of your customers can determine marketing channels used. If you are speaking to Gen Zs, you may invest more in social media marketing, whereas you may choose to channel marketing funds to offline channels when targeting older customers. This focus ensures marketing funds are channelled in the right direction, reaching the right audience and therefore more likely to generate greater engagement and more positive responses.
Improved customer experience and greater loyalty
In this era of personalisation, customers expect their interactions with brands to be relevant and targeted – they want to feel heard, recognised and not to be treated as ‘one of many’ especially when investing in high-value goods or services. Companies that take time to understand their customers and segment accordingly are able to more effectively cater to their needs with targeted offers and communications therefore generating loyalty and increased customer satisfaction. Satisfied customers are more likely to become repeat buyers and brand advocates.
Smarter allocation of resources
Segmentation allows companies to make smarter and more impactful commercial decisions and better allocate their internal resources. Rather than spreading product development or marketing efforts and budgets thinly across multiple customer segments, companies can focus efforts on high-value customer segments that are likely to generate a higher return on investment.
Product development insights
By taking time to better understand customers and segment accordingly, brands will develop insight into what is important to them and what influences their purchase decisions. This valuable information can help influence product or service development as brands look to solve consumer pain points.
While segmentation and targeting are closely linked and form the foundation of any effective marketing strategy, it’s important to recognise that no product or service can meet the needs of every customer segment. For instance, a budget hotel is unlikely to satisfy the expectations of a luxury traveller. Therefore, a key aspect of any segmentation strategy is to assess your own strengths and weaknesses: what you can offer your customers or guests, and why they choose you. With this understanding, you can better define your place in the market and, armed with these insights, build a segmentation and targeting strategy that aligns with your capabilities and goals.
Segmentation and targeting in action
Within Hospitality
Global hotel chains have successfully employed segmentation strategies as they continue to develop distinct brand portfolios to meet the varying needs of their diverse customer base. For example, within the IHG portfolio, Crowne Plaza caters to business travellers, InterContinental Hotels and Resorts offers a luxury experience for upscale guests, and Holiday Inn Express focuses on budget-friendly, no-frills accommodations.
These segments are then subjected to targeted strategies where data on customer preferences and purchase history forms the basis of tailored marketing communications, offers and products based on these insights. This approach is at the heart of some of the most well-known brand loyalty programmes.
For example, Marriott’s Bonvoy loyalty programme uses segmentation to identify its business travellers who typically need frequent hotel accommodations. Understanding that this customer segment values hassle-free check-in, and premium business facilities, the Marriott Bonvoy program offers mobile check-in, free Wi-Fi, and loyalty points for frequent stays. Marketing is then centred around the promotion of business-friendly amenities, such as meeting rooms and 24/7 business centres. By focusing on the specific needs of this segment, Marriott can attract repeat bookings and foster brand loyalty among professionals who prioritise convenience and efficiency when travelling.
Within Later Living
The later living sector is also using data-driven segmentation to great effect, identifying customer groups, such as outright owners, renters or shared owners who own a percentage of their apartment, and adapting messaging accordingly. At ExtraCare, a provider of retirement villages for the over-55’s, segmentation strategies allow for tailored communications about services based on customer’s areas of interest. ‘By leveraging data, we can analyse resident demographics, lifestyle preferences, and behaviours to create marketing campaigns that meet the distinct needs of each group, ‘ says Nick Hickman, Head of Marketing, ExtraCare. ‘For example, we communicate with outright owners about facilities and the level of service, while shared owners may prioritise affordability and financial predictability and so we adapt the messaging accordingly.
This segmented and targeted approach allows us to communicate about topics such as lifestyle-driven benefits, community-focus, or healthcare-oriented messages, depending on our customer segment. This positioning ensures our messages resonate with our customers’ core expectations, enhancing engagement and conversion by making them feel valued and understood.
A competitive necessity
In today’s fast-paced and consumer-driven world, segmentation and targeting are no longer optional—they are essential pillars of any successful marketing strategy. By taking time to understand your customers’ unique needs, preferences, and behaviours, you can create personalised experiences that resonate deeply and build lasting connections.
Businesses that excel in segmentation and targeting not only enhance customer satisfaction and loyalty but also position themselves for sustained growth and competitive advantage. Whether you’re in hospitality, later living, or any other industry, the ability to deliver tailored communications and services will define your relevance in the marketplace.
The key is to start where you are: assess your strengths, understand your audience, and align your efforts with the segments that matter most to your business. Personalisation isn’t just the future of marketing—it’s the expectation of today’s consumers.
How will your business adapt to this growing demand for personalisation? Now is the time to act.
