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Segmentation vs Personalisation.
By the Triptease Team
Tuesday, 21st March 2017
 

Last week’s ITB trade fair in Berlin showed us that one thing is on the minds of hoteliers and OTAs alike - data: Talks from the biggest players in the travel game all centred on the opportunities that ‘big data’ can bring to the industry - and in particular, how that big, nebulous cloud of data can actually be used to provide each customer with a perfectly tailored, ‘personalised’ travel experience.

The excitement of this message, though, risks blurring the lines between segmentation and ‘true’ personalisation - with one being a lot more difficult than the other to get right. In an often-bewildering technology marketplace, the distinction is important. With 60% of adults irritated by emails with no relevance to their personal interests, delivering the right message at the right time is crucial for engaging your customers and driving your direct bookings. 

So, what’s the big difference? Put simply, segmentation as a marketing strategy is ‘one-to-many’, while personalisation is completely ‘one-to-one’.

Segmentation is the process of using data to split your market into groups according to the attributes and interests they share - that way, you can target each group with material relevant to those attributes.

Personalisation, on the other hand, employs algorithms to deliver tailored, dynamic content that changes according to the recipient. Good-quality individualisation depends on a 'learning ecosystem' running advanced analytics to deliver appropriate messaging: if customer A does action B, it will send item C. The content sent could be based on any number of things - from purchase history, to their local weather forecast. What sets it apart as ‘personalised’ is that it would only be shown to that person at that time and in that particular way.

Whilst many companies employ segmented marketing strategies without personalisation, it is impossible to provide personalised content without proper segmentation. Whilst the big data hype can often make you feel that you need an entire team of dedicated data scientists just to have a hope against the OTA giants, the most important thing, according to Revinate’s Maarten Plesman, is to choose your battles and do the basic things well.

Look for tools that simplify, rather than over-complicate, your marketing strategy - Shayne Paddock of Travelclick warns against the ‘paralysis by analysis’ of hotels overwhelmed by data. At ITB, it was sometimes easy to forget the biggest part of what hoteliers do - that is, serve guests within the physical space of the hotel. The quest for ever-greater personalisation online should be an extension of, not a replacement for, an attentive, tailored experience for every hotel guest.

Instead of getting caught up in the excitement over data-driven personalisation, then, it’s good to first make sure that you do your segmentation really well. Expedia’s Jan Krasnodebski (who, as we well know, knows a thing or two about pulling in customers) suggests that deep, granular segmentation is 90% of personalisation.

True individualisation comes down to the personal request and the context of that request. It works well when you get it right - the Harvard Business Review suggested in 2015 that personalisation can deliver five to eight times the ROI on marketing spend - but can be anything from mildly irritating to absolutely disastrous when you get it wrong.

As that Harvard Business Review article points out, expecting a machine to generate a perfect personalised experience is ‘a fool’s errand’. While the idea of an automated system might suggest an effortless process, getting personalisation right requires a significant investment of time and resources, as well as a willingness to transform your current marketing function.

A 2016 article from McKinsey & Company points out that although tech has an important role to play, ‘most companies already have plenty of tools … the real challenge is to transform the marketing organisation’s processes and practices to achieve the full potential of personalisation.’ Getting it right means putting the hours in: it typically takes five attempts to refine and validate a personalised trigger message that can then be implemented for all future customers associated with that signal.

With personalised advertising able to reduce acquisition costs, lift revenues, and increase efficiency, it’s an attractive prospect for any hotel. It can’t achieve any of those things, though, unless it’s done well - and doesn’t lose sight of the guest experience in the process. A personal service doesn’t automatically require personalised ads.

Great guest engagement doesn’t have to mean huge investment in new technologies: instead, focus on what your current processes are and make sure you’re getting them absolutely right. Who are the types of people that visit your hotel? If it’s business travellers during the week and loved-up couples at the weekend, consider splitting those groups out in your CRM system and targeting them with two different sets of content in your emails.

Triptease's Direct Booking Platform allows you to customise the messaging on your website so different content appears to different people, an experience you can then extend to the hotel itself when your guests arrive. Business guests could get a free ironing service, and how could a young couple in love say no to complimentary champagne?

You don’t have to know someone’s browsing history to make them feel that their hotel experience has been tailored to them. Harness the data you’ve got and segment, segment, segment - it makes all the difference.

ABOUT THE AUTHOR
All of our blogs are written in-house by the team to give you a mixture of news hot off the press, advice columns for hoteliers, and Triptease business news.

www.triptease.com 

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