User segmentation is a tried-and-true technique used to understand your user base. No two users are alike, but it’s possible to chop up your user base into similar groups (e.g., cohorts). Doing so allows you to highlight the attributes of customers who have been most successful for you over time. An organization might segment users by language, region of the world, product use, or any other ideas. Product teams can then take these user types to study how different sets of people use products in practice. By designing personalized experiences for each segment, teams will find it easier to build fulfilling products.
Businesses need to know who their target customers are and tailor their products and marketing messages accordingly. Segments allow companies to break down customers with similar characteristics into smaller groups. Assessing the needs of individual segments helps brands fine-tune their product strategies, streamline product development cycles, and create more compelling offerings that lead to customer retention. With the shallow and lofty generalization of your users, you risk directing your product development nowhere in particular. Understanding who the best customers for your products are can help you achieve your business goals. Sure, anyone can use your product, but not everyone should be paying attention to it.
Types of segmentation
There are two types of segmentation: marketing and experience.
- Marketing segmentation: Needless to say, marketing segmentation is focused on creating effective marketing strategies for a product’s target audience. A market segment is a group of people that share some or all of these characteristics:
- They want your product to help them meet their needs.
- They are different from other segments (other segments have different needs).
- They also Influence each other. Since they have a shared set of needs, they can form communities and communicate with each other about their interests. This allows them to share the message with peers who face similar problems.
No one can argue with the power of word-of-mouth. The last property of marketing segments is what makes them so powerful. When it comes to choosing which group to send a campaign to, marketers will find a more effective place to spend their budget by segmenting audiences into users that resonate most with their message. Therefore, to make an impact, marketers should focus on this element.
- Experience segmentation: Experience segmentation is a strategy that focuses on your customer’s journey throughout the process of interacting with your product. This process sees firsthand how each user feels at each step, tracks their interactions, and understands their needs. By identifying that you have different types of users — based on how much experience they have with your product — you can then build them shortcuts to make their interactions more efficient and intuitive. This model categorizes users based on their needs at different levels of expertise, giving each user the most appropriate experience. Companies can, for example, find out what stage experienced users interact with a product and then make it more efficient for them in subsequent stages of interaction with the product.
These are needed to segment data. Users on your platform come from all walks of life, and you need to be able to tell them apart. User segmentation based on the following four data points will help you make sure your teams understand them:
- Demographics are our age, gender, education levels, occupation, or income.
- Geographics are countries, regions, or cities.
- Behaviour is how we use a product — for example, buying behaviours (spending and consumption) or desired benefits.
- Technology means the level of tech-savviness we have.
- Customer data: Information about customers’ relationships with your business, held in a customer relationship management system. That includes the level of plan purchased when their contract will expire when they bought their product, what kind of account owner they are, and how much revenue they generate for your business annually.
- Firmographics: Information about a firm’s size, industry, revenue, kinds of employees, business model, product category it belongs to etc.
The characteristics listed above tell you what information you want to collect about your users. You want to know what kind of people they are, how they use your product, and what they want. The ultimate goal of product design is to make a product that meets the needs of your users. You want to understand your users and create features that serve their needs effectively. To achieve this key goal, it’s vital to conduct research extensively. Understanding the diverse needs of your user persona(e) is especially helpful in integrating user attitudes into your product features.
Segment your customers by culture to gain deep insights into their behaviour
A good way to understand your customers is by classifying them into different cultures. More insight about the given customer base or culture will help you deliver what matters most to that group of people. Cultural segmentation is an extremely effective way for businesses to understand customers of a particular culture. This means communicating with them in ways they will respond well to — using references and models that are relevant only to them.
Okay anyway. How should you implement user segmentation? Here are some instructions to follow:
- Clearly define your segmentation goal: Know what you want. Most important, know your goal. What do you intend to achieve by targeting a specific audience? Perhaps you want to sell a product in which case you would identify members of that audience for potential marketing. The research methods and data that you get must also be in line with what you’re trying to do. It’s better to state what you want to achieve by segmenting, mainly so you can choose the correct tool for reaching your goal. Identify your goal of segmenting upfront to achieve what you want. For example, perhaps the goal is to optimize a sales channel. Then identify the group that needs your product.
- Evaluate user engagements: The ultimate purpose of product design is to make the features people want. Excellent users experience results in showing you the way participants took from start to end, going through your tasks and completing them or abandoning them along the way. Thus, instead of dissecting your whole audience all at once, choose certain groups with a similar persona and create segments. This step will help you make sense of user journeys, so pay attention to the patterns that emerge within them. Ensure that you fully understand your customer and then select users for user journey research based on the qualities of a particular persona. To track user journeys, observe behavioural trends between different types of customers by looking at their activity on your website or app via tools such as Google Analytics dashboard, Open Interaction Analytics, SurveyMonkey, or HotJar. By creating segments from this information, organizations can enhance their understanding of a customer’s goals and the likelihood they will convert.
- Track all forms of individual behaviour and sentiment: Product teams need data on how every group uses the product differently, so production analytics is super important. Important outcomes from a user segmentation exercise are different user groups or segments, so capturing product usage data reinforces this piece of information.
- Time users spend interacting with your products: In this new era, user’s behaviour tells which products provide high value. When a user spends time using your product, it provides valuable insight into the best elements of your product. To analyse this, product teams should track how users spend time interacting with their products.
- Customer milestones: Milestones are a useful way to identify user engagement and retention patterns. For example, if you have an excellent eCommerce website, it may be easier to cement repeat purchase behaviour with milestones such as fast shipping or superior product support.
- Unhappy paths: Dissatisfied customers threaten your website. Like stumbles and slipped shopping carts, more than one-fourth of people who are unsatisfied with a brand in-store will abandon their browser to find another place to shop. Weed out dissatisfied consumers by identifying the problems that give rise to these issues. Then create a better omnichannel solution for these unhappy paths — which entail severe negative effects on brands, including lost sales, reputational harm, and customer loyalty erosion.
- Tie user segments to business goals: User segmentation is so important that it should always tie back to things that impact the bottom line. Every business has customers with certain questions, behaviours, and incentives. For example: If you are an eCommerce company, you want to identify customer personas who show value for your product based on your long-term sales data. Your business goal is for a user to make a purchase, so you can focus on three segments: those who have bought stuff, those who haven’t bought stuff yet, and those who are frequent repeat buyers.
- Avoid creating narrow segments: Of course, create segments wisely, but multiple small segments turn into a problem. Users are different in how they perceive and experience your design decisions. You need a diversity of data points to hone your design decisions as you discover more about users and optimize performance. Thus, avoid making narrow segments at this time; once you have collected ample segmentation metrics, review the segmentation itself a few months down the road to ensure that your user segments are helpful rather than harmful.
- Based on customer segments, introduce product changes: Different segments need different things. Figure out what they want, and make sure every segment knows that your product is just for them. Develop a roadmap based on all kinds of analysis from the users you talk to or observe. Use this roadmap for building a new and improved product to help us understand your needs. Some insights may be useful for everyone, while other insights can be developed as special features just for one segment.
- Test your design decisions: Consider how changes will affect different user segments. For instance, is a feature that’s perfect for one user niche going to be effective for another? To determine whether or not your design choices are effective with end-users, utilize A/B testing, multivariate testing and eye-tracking research techniques- to understand how users react to new interface designs. While making design decisions, make sure it’s validated.
Psychological aspects of a target audience
The psychological aspect of the target group is based on their habits, interests, and opinions. You need to know who your people are and what they care about. Why should you ask yourself these things? The most effective way to sell anything is to reach the minds of consumers. For a product, service or idea to be successful, it must connect with your target audience’s ambitions, desires and psychological intentions. To better understand your target audience’s tastes or preferences, you must study what types of things they like to do for fun, what images they look to project to others, what brands they gravitate toward. Here are some questions that help: What activities are your target group involved in? Do they want to project a certain image? Which brands do they look up to?
Do your customers love your product? Are they coming back for more? You need to know how customers respond to the products you offer. (Or: Are your users loyal to your products? How do they act? What opinions do they have about them?) To get this information, research data from their actions and consider a few variables:
Free users vs. paid users: Conventional wisdom says that to convert free users into paid ones, we must substantially engage the paid users. Our goal is to attract paying customers, then re-engage paid users and eventually convert free adopters. Free users won’t pay for the service because hints of quality don’t get their attention enough to justify payment and they don’t feel any shame in not paying for anything (because nobody is forcing them). While paid users, on other hand, already paid to use the product, they are likely more committed to using it.
New vs. returning users: There is a difference between new users of a product and returning users. New users explore the product for the first time, whereas recurring users already have an established relationship with it. Now, they are ready to dive more deeply into what the software has to offer. The people who had good experiences with your product return regularly for more.
Designing for multiple users can be tough. When you use the concept of segmentation, it gives you the ability to create different versions of your product, which allows you to accommodate people’s needs. To design for user groups, you can segment your users into distinct groups. This allows you to choose different interaction and navigation patterns for each individual target group. When you are just making tools for your employer, it is easy to assume that everyone will think and behave in the same way: You might like this page. But in reality, your decision would lead some people to think it’s awesome… while others would find nothing interesting about it.