Segmentation

Segmentation is the process of breaking down your user base or market into small groups to understand them better and create marketing strategies to engage with them and drive conversions.

Segmentation helps a business identify and choose the most potentially profitable customer groups to focus on. This depends not only on customer needs, behavior and likelihood to pay, but also on which groups the company is best suited to serve given its brand, products and differentiators.

Basic Rules of Segmentation

The biggest problem faced by businesses is understanding where to begin when segmenting their customer base. There are numerous ways to slice the cake - you simply need to find the best way suited to your business needs.

Here are a few guidelines to help you out:

1. Define Your Goals

Before you set out to segment your user base, have a clear idea of your goals - what do you hope to achieve by creating user segments?

Is it - driving new users to make their first purchase? Is it - pushing users to sign up for your product/service? Is it - driving customer retention and repeat purchases? User segmentation should give you focus so that you can develop contextual campaigns which guide a user’s actions toward the desired goal.

2. Create Small Segments

Segments are the guiding force behind your marketing campaigns - so the smaller the segment, the higher the chances that your message will resonate with the audience.

Why?

Because it has been refined to address the needs of that particular segment! So don’t stop at creating broad segments, create mutually exclusive micro-segments which will help you communicate better with your users.

3. Create Practical Segments

While segmenting your user base into micro segments, do keep in mind that the size of the segment is practical enough to engage. Over-segmenting users can sometimes lead to the creation of tiny groups of users based on small data points, which may not give clear insights. It becomes difficult to optimize marketing campaigns targeted at such small segments due to the lack of valuable insight and can also add a significant load to your marketing budget.

1. Create Highly Differentiated Segments

When creating user segments, make sure that users of each segment have discernibly different needs and behavioral patterns. If you are unable to distinguish segments by describing each with three adjectives, then it's highly likely that you have created segments whose needs are pretty much the same. We suggest you scrap them and start again.

Create Segments Based on the Stages of Your User Lifecycle

There are several ways in which you can segment your user base, but the best way is to start with something which impacts your revenues directly - the user lifecycle. Creating segments based on the stages of your user lifecycle can help you push users toward conversion at each step, with relevant communication.

Segment By User Attributes/Properties:

   With a User Property filter, you can group customers based on their properties 
   like City, Total Orders, Last Order At, etc. 

Segment By Performed Activity:

 With the 'Performed Event' filter, you can group customers based on certain 
 activities they might have performed.
 For example, you can segment customers by those who have performed the 'Purchased' 
 activity in the last 60 days.

Segment By Not Performed Activity:

 With the 'Not Performed Event' filter, you can group customers based on 
 certain activities they might not have performed.
 For example, you can segment customers by those who have not performed the 'Purchased' 
 activity in the last 60 days. 

Segment Example - Inactive Loyal Customers

Let's try to create a segment of customers who are loyal, have spent more than 10,000 on your store, and haven't been purchasing anything for the last 3 months.

To create this segment, we will define the following rules:

1. User Attribute Filter: a. 'Total Spent' > 10,000

2. Performed Event Filter: a. Not Performed 'Purchased' in last 3 months.

Create Segment - Inactive Loyal Customers