User Segmentation: Do’s and Dont’s

Have you ever been to a school function? There will be a bunch of kids dancing, some will be into sports, and others doing a mime show or playing their favorite instruments.

Imagine how it would be like if you expect everyone to do ballet or play cricket? The kids will go crazy, right? This is how your users will feel when you put all of them in one bucket. And that's why User segmentation plays an important role in building and maintaining a successful product.

In this article, we’ll dive deep into what you should do and shouldn’t when it comes to user segmentation. 

User segmentation as the name suggests is the process of grouping users into different segments based on their behavior and interests. Just like Michael LeBoeuf said, a satisfied customer is the best business strategy of all time. User segmentation helps you understand your users better and design a more satisfying user experience. 

Without user segmentation, you are just praying and spraying that your users will like the product. However, user segmentation paves a way for you to learn better about your user needs, their behaviors and build products that adds value to them. 

Everything a user requires from a product is that it solves their pain points in the easiest and most efficient way. Likewise, all you need for your business are loyal customers. When you understand your users better, you’d be able to tailor personalized experiences, which is obviously a win-win for both of you. 

Just like the example, we discussed in the beginning, How asking a kid interested in dance to play cricket will disappoint them, forcing something on your user that’s built keeping in mind someone else will disappoint them. Not just disappoint them, but will fail your product.

While segmenting users based on a variety of factors such as age and interests is one way to go about it, segmenting users based on the end goal you want them to achieve inside your product is a great way. If the goal for users is to reach the checkout page, you can segment users based on who has reached the page, and who has not. Similarly, if you want the users to make a purchase, the users will be segmented based on that.

You will not treat all the segments the same. So, make sure you go back time and again to each segment and understand what is working and what is not. If you see a particular pattern/change is bringing in more impact, then deploy the changes across the segments. But for you to be able to do that effectively, you need to consistently experiment and measure. We’ll talk about this in detail in the next section.

How do you know whether something is working or not? You can’t manage what you don’t track, and here’s where numbers come into play. Analyze the different user segments to see how each segment affects the key metrics. Engagement, Customer Lifetime Value (CLV), Conversions, and Churn rate are some of the key metrics that’ll help you do that. 

You can choose to segment your users under different categories such as based on demographic data, behavioral data, psychographic, and technographic data. While these are conventional ways of segmenting your users, you don’t want to miss out on taking into account the other important data such as whether it’s a paid user or on a free trial, the product usage say how often they use the product, are they dropping off without completing the specific action, etc., So, make sure to evaluate the necessary product data before designing the user segments.

User segmentation is not a one-size-fits-all. What works for someone else might not work for you. So avoid the pre-defined user segments and design user segments after researching your target audience. 

While user segmentation is significant to build a sticky product, you need to ensure all the functions inside the organization understand the different user segments and why behind those. This way, Marketing, Sales, and Customer success can customize their efforts in order to provide a better experience for the users at all touchpoints. 

Never ever ignore an idea just because it doesn’t fit into the pre-defined segments. There are always ways to optimize your idea by either conducting a user survey, fine-tuning the messaging, and much more. Pre-defined segments are just to give you an idea and not to restrict you from experimenting with new things. Be it the segmentation model, or the strategy, use it as an inspiration and do your part of research about the user needs, and the market well before kick-starting with your user segmentation efforts. 

Be it improving your customer experience or identifying new opportunities for your product, User Segmentation is crucial in deciding the success of your product.

So, make sure you work out the end goals before segmenting your users into specific groups. For the best outcomes, follow the same messaging across your marketing, sales, and customer success efforts.