We make use of user segmentation to, well, segment users. Humans are a lot like snowflakes. No two are the same and it is the differences between them that makes them unique. However, segmenting like this isn’t particularly helpful when it comes to a successful marketing campaign. No one has the mental space nor time to create a marketing strategy tailored towards every individual. In this blog, we'll go over 6 different ways to segment users in a practical, marketing-driven approach.
What is user segmentation?
User segmentation is where we look at the audience, our customer base or our pool of users and categorize them into smaller groups, or segments. Take, for example, the user base of Apple products. The company may choose to break this huge group into segments such as age, gender, language preference, product choice, or even specific behaviors that users exhibit when using their products (e.g. users of iTunes on iPhones). As it goes, Apple uses far more complex user segmentation, one of which deals with those who are called Conscious Progressives.
Image source: Flickr, John Beans
By segmenting the overall user base, we’re able to better understand what motivates groups within it. This, in turn, enables us to market to particular groups in a far more personalized way. This, naturally, creates a far more effective marketing strategy that leads to a far better rate of conversions. This works in a similar way to personalizing marketing based on the principles of persuasion first coined by Dr. Robert Cialdini.
Rather than only looking at standard segmentation as above, our recommended approach is to segment based on user activity and your own specific goals. Let's use the freemium model as an example here, where a company offers a free trial on their product with a 30 day limit. The company can choose to segment those who go on to the paid subscription versus those who leave the platform afterwards. These two groups present their own targeted marketing opportunities with different strategies, styles and potential outcomes.
When you’re looking at segments, each and every one of them share 2 things in common. They all have a use case and they communicate with each other. By this we mean 2 things. Their use case means that no matter the segment, they will have some sort of common needs that can be met through your product or service. The communication within the segments themselves is always worth considering when planning a marketing campaign. If you get the right message, within the right segment, then that message will begin to spread naturally as the segment communicates within itself. Long story short, people talk to each other, and naturally friendship groups are likely to fit into similar segments.
Implementing User Segmentation
A great deal of user segmentation comes from data and data analysis. Without collecting data from your consumers, it can be difficult to segment your users in an impactful way. At first, especially for startups, chances are that you’re going to be segmenting based on historical data from other companies, theories that you have based on market research and considerations based on the product or service that you are offering. Segmentation only really works when you have a clear understanding of your data and your product. Guess work will, sadly, only lead to missed opportunities or a poorly performing campaign.
There is a small chain of steps that one can take when looking to segment:
Learn from individual behaviors - Dig into the individual users at random, select a small group and analyze them in detail. Learn what makes them tick, why they are using your product or service and what they’re looking to gain as an outcome.
Group the users - Split these users into groups initially with clearly opposing segments. Starting with binary segmentations makes life simpler, and then you can investigate the more complex psychological segments.
Compare the segments - Once you’ve collected and organized data, perform a comparison between your data sets. Look for similarities and differences, as well as clear patterns. It is possible to find that certain groups will act the same way, regardless of segmentation, whereas others will act completely differently. Repeat this process with different segments to build up a wider picture of your users.
Experiment, record results, adapt - Once you’ve spotted opportunities and patterns, the next step is to implement your findings into your marketing strategy. Experiment with a new campaign and then reflect. If your hypothesis is deemed correct then you can move forward with this campaign again in the future. If it wasn’t, then you can investigate why and adapt accordingly.
6 Types of User Segmentation
Behavioral segmentation, as you would expect, breaks down the user base into segments based on their behaviors. This could be their natural every day behaviors or it could be how they act when using or within a product. Generally speaking, you would look to segment consumers based on their understanding, their feelings, their comments and their reactions towards products and services.
When using behavioral marketing, companies are typically:
- Looking to get a deeper understanding of the needs of their particular customer groups
- Aiming to better personalize their products or services
- Trying to better understand the process a consumer goes through when purchasing (the buyer journey)
- Considering what a consumer could be worth during their lifetime with the brand (Lifetime Value - LTV)
- Growing their marketing knowledge to formulate better strategies for future consumers
There are 4 core advantages to making use of behavioral segmentation when marketing.
First, you are in a far better position to use personalized marketing tactics. By understanding what makes consumers tick, what makes them happy and what their personal pain points are, you're far more likely to deliver a quality, personalized experience.
Second, behavioral segmentation allows you to base your marketing strategy on the historical behavior of your customers. Chances are, through human nature, that these patterns will repeat themselves in the future. Therefore, you’re able to better predict what future consumers will like.
By looking at behavioral segments, you’re also able to prioritize your efforts. That means that you’re able to identify those segments that are going to be worth the greatest value to your company. If there’s a behavior that leads to a higher level of conversion or purchase, you’re better able to target them going forward.
Finally, you’re able to gauge and monitor performance. Through segmentation monitoring you’re able to be sure that performance within the business is continuing as you would expect it to.
6 Ways to Segment by Behavior
- Purchasing behavior - how consumers act during the purchase process
- Product benefits - what are consumers looking to get from a product, how much value do they place on a specific benefit
- Buying journey stage - similar to purchasing behavior, but rather than how they act, look at the stage they are in the process (e.g. acquisition, activation, retention)
- Usage - how consumers use the product or service
- Events and timing - are there particular occasions, events or times that consumers interact with or purchase products
- Customer loyalty - segment based on returning customers, regular repeat purchases, one off purchases etc
In psychographic segmentation we consider the psychological elements of a user. This means we examine their character, their values, goals, lifestyle, habits, choices and interests. This style of segmentation allows us to better understand why someone purchases something.
What is it that motivates that purchase?
- Personalities - There are multiple ways to discern a person’s personality using personality tests such as Myers Briggs or similar. Generally speaking, we look at personality traits such as introversion and extroversion and gauge how our product would better appear to one of the others.
- Lifestyle - Segmentation based on the ways that people live their lives. This might be that some consumers prefer urban, city based lifestyles whereas others find rural living more appealing.
- Interests - Segmenting consumers based on their interests, hobbies and how they spend their leisure time. This can also take into consideration their work habits.
- Attitudes and Beliefs - There are certainly different marketing strategies for those who are interested in certain political allegiances versus those who are on the other side. While this isn’t a straightforward segment (as there are myriad other factors), it can be helpful nonetheless.
- Values - How people feel about their personal values and what those values are. The environment, for example, is a very hot topic with many people declaring this as something they value and that extends to the brands they work with.
Demographic segmentation is best applied when solely based on data. Here we segment based on user's demographic segmentations. Typically used for big data and government statistics, this type of user segmentation can include age, gender, work, education, housing etc.
Geographic segmentation divides users by where they're originally from or where they currently live. We can narrow down these segments depending on how granular you’d like to be. Sometimes it is useful to segment by as large as country, while other times it might even be down to city district or zip code.
This segmentation is focused on events, times of year and personal occasions that relate to the consumer. These might seem highly personal and therefore hard to segment, but we can apply broader brushstrokes and segments based on the need for a product or service during a particular time period.
Occasional segmentation is particularly useful when selling seasonal products. There are 3 core occasional segmentation categories:
- Universal Occasions - These are events or occasions that happen regardless of the person or consumer involved. These include natural events such as summer and winter. Depending on the culture, these universal events can be attributed to mass religious festivals or holidays. In Europe, Christmas is celebrated across almost every country. Across the Indian subcontinent, Diwali is a major festival. Brands can use these universal events to plan their marketing campaigns and tap into the general atmosphere of the event.
- Regular Personal Occasions - These are the regular, predictable events that happen in a person’s life. This would include annual events like birthdays and anniversaries. Marketing companies can use these opportunities to create hyper-personalized marketing campaigns, such as a free meal for your birthday or a special anniversary discount.
- Rare Personal Occasions - These are incredibly important events that tend to happen once only in a person’s life. They could be the birth of a child, a wedding or a honeymoon. There are whole businesses that rely on targeting this segment of the market.
Consumer groups can be broken down into segments based on their cultural leanings. Cultures are unusual in that they are more difficult to rigidly define. They could be huge groups of people (such as those who identify themselves as American) or they could be subsects of society, groups such as Tech Bros or Hipsters. A large consideration in segmenting by culture is that many of those who might fit into these cultural groups may not self-identify as such. Be careful when using this segmentation in campaigns, as cultural identity can be a touchy subject for many.
User segmentation can be an incredibly powerful tool when used correctly. Everyone likes the feeling that they’re receiving a personalized service and with user segmentation that is exactly what you have the opportunity to provide to them. You’re able to analyze, understand, and deliver for groups and individuals on a far more granular level than if you were to launch a blanket, catch all marketing campaign. Remember to ask yourself, and your business, who are you working with, what do they want from us, what issues do they have and how will our product or service solve this for them?
- Implement segmentation based on data and then evaluate campaigns afterwards
- Make use of different segmentation strategies based on your products, your goals and your users
- Ensure that your segmentation aligns with your business objectives and goals, otherwise you’re segmenting for segmentation’s sake.