User Segmentation - Targeted Reward Strategy to drive high engagement / stickiness

What is User Segmentation ?

Imagine yourself being in a situation where you are developing a product without knowing about the liking and preferences of the customers? You are clueless as you are unaware of the choice of the customer. A lot of companies face such scenarios frequently and wish they knew their customers better. Without understanding the users, a full-proof market strategy is bound to fail. This is where User segmentation comes into the picture. User segmentation is the process of dividing the users into separate groups based on their common characteristics like age, location, behavior etc. With Segmentation, companies are in a better position to target customers based on their behavior so that each segment can be treated with a more customer-centric approach.?

Need to Segment users

In a typical marketplace, not all users have the same needs. But they all have a few common traits. You can create several subgroups of users who have very similar needs to one another. These subgroups are segments. Before you create segments, below are a few pointers one needs to consider:

● Know your customer: Before you begin, it is very important to know the needs of the customers. Not all users have the same needs. Based on this input, companies can create several subgroups of users who have common needs.

● Prioritize goals: It is important to define your goals and collect data accordingly. One should know what you’re trying to achieve from this exercise. For instance, if your goal is to generate more leads for your business, you would want to brainstorm the important lead data to create meaningful segments.?

● Avoid being too specific: Don't be very specific and rigid when creating segments. If you think you offer the same to two smaller segments, it is better to combine them and focus on the bigger one.

● Optimize for best results: It is important to measure the quality of each and every segment that you create. A quality segment helps to engage users quickly.

● Review your segments regularly: To achieve the best results, it is crucial to analyze the performance of segments from time to time. Talk to team members, monitor user behavior continuously, and improve user segments according to the changing needs of the users.

● Tailored Rewards for specific segments: Reward your most active users regularly for their daily achievements and frequent purchases. Focus on giving exclusive offers that are specific for each segment to keep the customers engaged.

● Market specific product to the specific segment: Always choose specific products for specific segments. Don't be too vague else in no time the potential user will lose their interest in the product.

Useful strategies to segment users?

User segmentation is not a one-day process. It is a continuous task that requires companies to design an efficient marketing plan that will help in segregating customers based on the targeted methodology. General marketing tactics can get you results, but to be more specific about the needs of your customers and to achieve success, customer segmentation is the key.

So, to begin with, companies can segment users based on :

● Demography: Using demographic segmentation, users can be segmented on the basis of their age, gender, marital status, family size, and income.

● Behavioral patterns: Behavioral patterns help to segment users based on the action they take around your website or marketing app. Using this metric, marketers can differentiate between those users who are interested in your business and those who are not.

● Time spent on app: Segmenting users by the time they spend on the website allows teams to learn which features, traits and content are gaining more attention.

● App usage frequency: This metric helps the teams to segment users on the basis of their state of engagement.

● Technographic: Users with different devices and operating systems have different expectations from the app. Companies need to segment users keeping in mind the performance of the app on each device.

● User response: Few users are proactive and willingly take part in all the surveys. Companies need to watch out for users who are ready to give timely feedback and generate leads.

● User ratings & reviews: Before downloading an app, new users always look for reactions and reviews of old users. This in turn also helps the teams understand what potential users need and how they can improve their app.

● Journey drop off: Not all user behaviors are positive. Few abandon their carts or downgrade their plan. It is important to segment such users and understand the events that cause failure.

Process of User Segmentation using a flow chart

● Firstly, you have to start by setting a list of target segments that are essential.

● Next is to narrow down the search and identify the most promising target groups based on age, technology, devices, and demography.

● Identify new users that help you achieve your goal. To accomplish this, designers and product managers generally use Personas. A Persona can also be called a User persona that captures the name, age, demographics, photo and other related information of users.

● Perform digital campaigns for preferred products.

● Find out ways to engage users using research tools.

● Spot converted users: Segment converted users and perform supervised learning.

● Reward power users: Conduct an exhaustive study for power users to keep the users engaged and satisfied.

● Motivate dormant users: Sending personalized emails, special promotion plans and collecting feedback are some of the ways to bring inactive users back. Companies can also use other mediums to attract more users.

● Personalized onboarding for new customers: Make your onboarding process simple and interactive. Minimize the number of steps, create a user friendly interface and provide timely help.

● Refer and earn campaigns: Referrals are one of the best customer acquisition activities practiced by businesses. Companies can actively run a campaign to request satisfied customers to refer friends and family and earn rewards in return.

Customer Segmentation using Data Science?

Customer segmentation is the ideal methodology to find your best customer. Customer segmentation can be achieved by using the concepts of Machine Learning.

Customer Segmentation is one of the most important applications of unsupervised learning. Companies can target potential user base and identify various segments of customers using clustering techniques. An algorithm known as K-means clustering is used for clustering unlabeled dataset.

K-means clustering algorithm is an unsupervised technique that is used to segregate data according to their similarities. Data scientists can identify patterns within this data and group them together as k-clusters.

A/B Testing is performed for each user segment. In an A/B test, you need to create a modified version or a second version of the same page or app screen. Once the modified version is ready, half of your traffic is shown the original version of the page and half are shown the modified version of the page. Once the users use the original and modified version of the page, their engagement is measured and collected in a dashboard. This data is then analyzed through a statistical engine.

In the current digitally connected world, it is evident that more knowledge gives you more power. Power that helps you deep dive into the choices and behaviors of the users. Consequently, customer segmentation is empowering companies to analyze more about their customers which is resulting into a personalized customer experience, better sales and enhanced marketing strategies.