Where Did Personalization Come From?
A long time ago, when the science fiction of Stanisław Lem was still a fantasy and not a reality, and a computer with far less processing power than our smartwatches was the size of a room, the hotel industry pioneered the idea of service personalization. To build customer loyalty and encourage frequent visits, the hotel reception desk would record individual guest preferences to provide a service tailored to their needs during their next stay. A great example of this can be seen in the movie Home Alone 2: Lost in New York, where the protagonist lists his expectations and preferences, which the receptionist quickly notes down. This was the birth of the „segment-of-one,” a method largely handled over the phone back then.
The next step involved linking the customer database with the telephone system so that the customer’s name would appear on the phone display when they called the hotel to book their next visit. The hotel staff would greet the caller by name and offer a room with the exact features the customer had previously requested. This created a sense of closeness, turning the conversion into a mere formality.
As database and telecommunications technologies advanced, the ability to collect, integrate, and present customer data in real time became increasingly crucial to success in telephone sales. In the movie The Wolf of Wall Street, many of the brilliant sales pitches made over the phone were based on knowledge about the client, their weaknesses, and their experiences.
The driving force behind the development of segment-of-one marketing was the consumer’s desire to feel unique, to stand out from the crowd, and to own products or services tailored specifically to them—thus, personalization became omnipresent. The combination of technological capabilities and market trends turned into one of the biggest drivers of martech development in the realm of big data. It makes sense since the fuel for SO1 (segment-of-one) is knowledge about consumer behavior and preferences, powered by tools like marketing automation. To make this machine work, you also need the right path to follow: a communication strategy. This is the critical element because only a strategy can show how to utilize the system effectively.
What is Segment-of-One?
Segment-of-one refers to the ongoing pursuit of building hypothetical customer segments of just one person (given the current state of technology). It’s the art of targeting marketing activities with such precision that, using all available characteristics and conditions, the system can automatically create and deliver unique content for each unique consumer. The goal is not to minimize the size of a segment but to use as much data as possible to define a specific segment with unique business-value traits.
In practice, this involves creating numerous small segments, each tied to a product or product group that best addresses their needs. The trigger for a purchase doesn’t always have to be the product or its utility; it could also be factors like the purchasing process, financial services, delivery options, or added value, such as an extended warranty.
Imagine we have information about customers who purchase home appliances from our store with extended warranties, and we also have a segment of users who have shown interest in buying televisions in recent weeks. On the business side, we receive a promotion for TV model X, which comes with an extended warranty through the end of the month. By overlapping the preferences of these two different customer groups and finding their common ground, we create a segment with a higher probability of purchase than other customers.
Essential Conditions for Implementing SO1 Tactics
Knowledge Information about the customer and their behavior is the foundation for building segments. The more precise and multi-dimensional this knowledge is, the better we can meet their needs (and build new segments). It’s essential to remember that time is also a customer parameter—our needs change depending on the day of the week, season, or our personal schedules, so it’s worth trying to catch the customer at the right moment in their Customer Journey.
Knowledge is only useful if it’s appropriately aggregated and easily accessible within the brand’s advertising ecosystem, allowing smooth data flow from databases to communication systems. At the configuration level, it’s also crucial to ensure data quality by applying unique tags, registering events, and linking all data-generating sources. For instance, keywords from a chat with a customer service representative can enrich a customer’s database profile.
Tools The choice of tools should be preceded by developing the technical specification for the brand’s environment. Attention must be paid to integrations between systems, available plugins, and deployed supplements like chat services, call-page functionality, CRMs, and CMSs. It’s also important to match the tool’s functionality to business needs. If our customer knowledge is limited to a few parameters and communication scenarios are standard for most e-commerce businesses, it’s worth using solutions with predefined tactics. We need to ensure that the tool we choose can consolidate data from various sources, offer analysis, and enable segment execution for communication. Taking time to gather business requirements accurately will help better assess the ROI of the implementation and avoid disappointment when preparing advertising tactics.
Communication Strategy Even the best knowledge and reliable tools (if they existed) cannot replace creative ideas and content. Once the target group has been selected and the tools are in place, the next step is to ensure what is communicated and how it is delivered to the customer. Communication must align with the characteristics of the segment we’ve identified—this includes the subject matter, timing, product, and availability. Sometimes automation lacks parameters like availability—a product may be sold out, but customers keep receiving communications about it.
Conclusion
Focusing on these three areas allows brands to build countless precise segments that help reduce marketing costs while fostering customer loyalty. After all, who doesn’t appreciate receiving an email with a product feed tailored just for them and a dedicated discount?
Segment-of-one marketing for businesses involves the continuous monitoring of individual customer behaviors, recording them, automating data analysis, and matching product information to these behaviors. The more accurately the system predicts purchasing preferences, the more effective sales become. This approach benefits both businesses and consumers alike. Consumers receive fewer messages, but those they do get are more relevant to their needs. Meanwhile, businesses are seen as knowing their customers’ needs, delivering truly valuable content, and achieving higher marketing effectiveness.
Given the upcoming regulations regarding third-party data and the growing trend toward product personalization, building a proprietary customer base with flexible segmentation capabilities should be a top priority for the e-commerce industry in Europe.
O AUTORZE
Łukasz Heine
CRO / Chief Relationship Officer
Wierzę w ludzi, ich entuzjazm i kreatywność uzbrojoną w nowe technologie, których synergia buduje przewagi konkurencyjne. Rynek należy do organizacji autentycznych, które nie boją się pokazać, jakie są w środku, stawiając potrzeby ludzi na pierwszym miejscu i dając przestrzeń na bycie nie tylko dobrym pracownikiem, ale przede wszystkim dobrym człowiekiem.
