Customer Segmentation Strategies for Better App Marketing

Kseniia Petrina

Customers want to receive interesting offers that meet their tastes, interests, and needs. At the same time, companies want to get high conversion rates and save their budget. The puzzle comes together when a brand effectively uses segmentation to communicate with its audiences. 

In this article, we will look at:

  • what user segmentation is and why it's needed;
  • how to divide customers into target groups;
  • what segmentation approaches and examples exist;
  • whether segmentation is possible without huge, frightening data tables.

What is Customer Segmentation and Why is it Important for Mobile Marketing?

Segmentation is the division of a target audience and current customers into groups according to common traits important for marketing purposes. It helps to find the right approach to different types of customers and offer them the appropriate solutions they need the most.

Let's suppose a restaurant runs a one-day promotional campaign with a big discount on Japanese food. Which users of the food delivery app should you send an advertising message to? People like discounts, so a notification can be sent to the whole audience. But not everyone enjoys oriental cuisine, so for a part of the recipients, the message will be useless.

Perhaps, is it worth informing those users who have ordered such dishes at least once? This segment may include someone who was asked by colleagues or someone who is going to have dinner with grandparents tonight. Therefore, there are still some users for whom the promo will be irrelevant.

What if the company sends the offer to users who browsed the Japanese food pages today but didn't place an order? Such customers are the most ready-to-purchase segment, so the highest conversion rate can be expected in this case.

As seen, client segmentation and its depth produce different results for marketing activity. Dividing the audience into target groups helps brands significantly save on advertising budgets. Moreover, it increases customer loyalty because you seem to guess their desires. Statistically, 91% of consumers say they are more likely to purchase from a brand that provides personalized offers and recommendations.

How to Segment App Users?

For an effective transition from mass marketing to a segmented approach, it is essential to understand the audience and identify the proper criteria for grouping customers.  

Basic approaches involve demographic and geographic segmentation. Usually, this information about the customer is easy to obtain, but sometimes this superficial division into groups is not enough. Then marketers turn to psychographic and behavioral segmentation. These types take into account the user's characteristics and allow you to create the most personalized messages.

How to segment customers
Types of customer segmentation

There are many other approaches to effective customer segmentation, but the general logic is to divide the audience by one of the two types of behavioral and psychographic data:

  • user's personal attributes;
  • user's actions (or inactions).
Audience segment examples
Data types for audience segmentation

As we can see, one person can have a wide range of characteristics, meaning an infinite number of ways to combine them. So how to create the right user groups to achieve your customer segmentation goals?

1. Make your goal clear. "I want to bring back inactive users" is a natural desire of all app creators, but it's a rather vague wish. If you articulate your goal as "I want to reduce customer churn after 7 days of using the app," it will be much easier to find a solution. You should conduct small customer segmentation research to figure out common traits of users who become inactive soon: where they come from, what in-app actions they take, what stage they leave at, and so on.

2. Evaluate the available customer data. After identifying a group by a certain attribute, ask yourself if this segment is useful. How can I engage these users? Or assess the data from the other side: think of a compelling offer, and then analyze whether you have enough information for such a method. For example, you want to offer the user to pick up the goods from the nearest delivery point, but you don't know their location. Revise the customer journey and decide where you can ask them for this information. 

3. Choose appropriate customer segmentation models. Some marketers recommend limiting your target group to three attributes. Others follow The 5 W's method, answering 5 questions that begin with the letter W:

  • who is in the target segment?
  • what do these users want to get?
  • where might they need my product or service?
  • when is the purchase more likely to happen?
  • why should customers choose my product or service?
    As you delve deeper into working with segmentation, you will find many interesting approaches. All you have to do is choose the ones that are best suited for your business. 

4. Be flexible. Instead of static lists, create dynamic groups in which contacts are updated when attributes change. This will ensure that the appropriate message is always delivered to the right segment. Constantly evaluate the results and, if necessary, make changes to the segmentation strategy. A/B testing will help you get better performance.

3 Proven App Customer Segmentation Strategies

Content used

This is one of the easiest ways to segment the audience because often customers themselves make it clear what they are interested in. For example, workout apps traditionally ask at the registration stage what the user's goal is: building muscle mass, losing weight, or keeping fit. News apps ask newcomers what topics they would like to read in their feeds. That's what Pinterest does, offering the client to specify their preferences when creating an account.

Selecting subscription topics in the app - customer segmentation strategie
Selecting subscription topics in the app

Build user groups based on their replies and create text for messages that directly respond to their choice. 

Offering content tailored to the user's interests
Offering content tailored to the user's interests

Another way to find out users' preferences is to track actions in the app. You can vary the level of detail of a segment for a specific campaign. For example, a rock music fan can receive these push notifications with different degrees of personalization:

  • news that a band from their playlist has released a new album;
  • an offer to listen to a selection of songs in their favorite style.
Personalized notification in the music app
Personalized notification in the music app

Life Cycle Stages

Typically, app owners have some set of methods in their customer segmentation project, which helps to keep users engaged:

  • offering a discount or bonus;
  • personal recommendations;
  • the opportunity to interact with other users;
  • presentation of new app features;
  • motivation to reach a goal, etc. 

Let's look at how these approaches can be applied to the customer depending on their lifecycle stage.

Newcomers

One of the very first steps in interacting with new users is onboarding. Tell them about the main features and benefits of your app. 

Introductory tutorial for new users
Introductory tutorial for new users

Further segmentation is related to user activity. If they continue to move through the funnel, the communication should match their journey. If they installed the app and stopped interacting, you can send them motivational messages. Depending on the category of the app, sich notifications can:

  1. Draw attention to a popular feature, which the user hasn't tried yet;
  2. Provide a promo code for the first purchase;
  3. Offer the user to sync his contacts to find friends in the app;
  4. Invite the client to choose interesting topics for subscription;
  5. Inspire to start the journey and achieve the goal;
  6. Challenge to reach a certain score in the game, etc. 

Active users

It's important not to scare off this segment with excessive communication. At the same time, you need to keep in touch with this type of customer to retain their loyalty and increase sales. 

How to communicate with active users?

  1. Ask them for feedback because they to like your product with high probability. Even if the user points out some shortcomings, you'll know what to work on.
  2. Offer to invite your friends. As an incentive, you can provide some bonus for each attracted user.
  3. Send personal recommendations and tips. It can be helpful even for experienced users. You should not only form but also maintain the customers' habit that the app content will always be relevant to them. 
  4. Encourage and thank them. You can praise the user for the activity or prepare a special offer for the anniversary of their joining. 
Incentive in-app message for an active user - what is a customer segment
Incentive in-app message for an active user

Irregularly active and sleeping users

The methods for re-engaging the customer segments are similar. When interacting with such customers, you need to determine:

  • Average periods of inactivity for fickle users and those who are most likely already asleep (who haven't launched the app in a while and haven't returned at the expected time). 
  • The attractiveness of the offers with which you want to engage users. For example, you can first try to get the customer's attention back with content recommendations based on their attributes and actions. If that doesn't work, the next step may be a promo code for a purchase. 

Since users from these segments don't run the app, you have to reach them through push notifications, emails, or SMS. Here are some ideas for win-back messages:

  1. Talk about new app features that have been added during the user's absence. It's important to emphasize not how good your product is and what customer pains it can solve.
  2. Mention the user's goal and previous achievements to motivate them to move forward.
  3. Send product recommendations or content individually tailored to the user.
  4. Engage through social interaction. You can notify that a person on a customer's contact list has registered in the app. Or send a list of bestsellers or other popular content from other users. 
  5. Offer a free test period of paid features, a product discount, or other monetary bonuses. But be careful – if the giveaway is not carefully thought out, it can lead to losses for the business in the long run. 

To increase the chances of conversions, use deep links and send the customer to a specific page of the app, not the home screen. This way, their attention won't be scattered and they will be able to focus on the target action.

Notification options for engaging a sleeping audience
Notification options for engaging a sleeping audience

Purchase power

According to the Pareto principle, 20% of customers generate about 80% of the profits. So it's better to understand which groups of users to focus on.

The most obvious way to select valuable customers is to identify those who spend the most money. However, within that group, additional segmentation may be necessary. For example, two users have spent the same amount on airline tickets in the past six months. But one chooses business class and flies from time to time while the other buys cheaper tickets and travels more often. Such details should be taken into account when preparing personalized offers.

Follow these tips to build proper communication with different customer segments by purchasing power. 

  1. To make your offers the most relevant, consider not only the total amount of expenses but also the average receipt, frequency, and age of purchases. You can make up the right target groups with RFM analysis. 
  2. Give VIP customers more privileges with exclusive content, early access to features or products, personalized offers, etc.  
  3. Send messages about new sales to those who always hunt for discounts. 
  4. Retain the loyalty of active users, even if they don't spend a lot of money. This segment can work like word of mouth and bring you new customers. You can periodically pamper this audience with special price offers.
Special offers and discounts as a method of user retention
Special offers and discounts as a method of user retention

How to make the customer segmentation process easier with Reteno?

Describing examples of target segments, we went from simple methods to more complex ones. However, this doesn’t mean that you have to immerse yourself in monotonous work with complex tables, where it's necessary to compile correlations between users and their attributes. One handy multifunctional tool can be enough to work effectively with groups of customers. So, how is audience segmentation of mobile apps used in practice?

Look at how the Reteno customer segmentation software can simplify the work process for precise targeting. 

Dynamic segments

This easy-to-use powerful tool allows you to set flexible conditions for creating a group. You can include and exclude different parameters based on:

- user activity;

- behavioral events and any other custom attributes.

Customer segmentation tool
Creating a dynamic segment

Creating workflows

Workflows give you the ability to distribute marketing campaigns in different environments. You can segment customers based on their attributes, membership in a specific group, event parameters, etc. 

Adjustment takes place in the block builder where it is possible to create message chains with the logic of various complexity. 

Creating workflows

Multilanguage

Multilingual marketing campaigns are a must-have for businesses with an international audience. Messages in different languages may even be needed to communicate with users from the same country.  

Is it possible to be a polyglot and avoid confusion with multiple groups, message versions, and campaign reports in an account? Yes, it is. With multilanguage in Reteno, you can set up the appropriate notification that will be sent automatically according to the user's language attribute.

Multilingual message - client segmentation
Multilingual message

RFM analysis

This customer segmentation analysis seems complicated and accessible only to advanced marketers. However, contact statistics allow you to track user behavior in campaigns and purchases and then export the right contacts to specific groups.

RFM customer segmentation analysis in Reteno
RFM analysis in Reteno

The functionality of our platform also can help you prevent valuable customers from leaving. For example, the system will automatically send a motivational message to a user if he moves from an active segment to a less active one.

Subscription Categories

Cover users' interests by creating subscription categories in your account. This tool for customer segmentation helps to form target groups to send different types of content, such as

  • topical news;
  • discounts and promotions;
  • products of a particular category or brand, etc.  

You can manually add contacts to these customer groups or configure the system so that clients are automatically included depending on their preferences and actions in the app.

Customer segmentation examples
Thematic categories of subscriptions by user interests

Frequency strategy

In an effort to create the most relevant content for different target segments, it is possible to accumulate a lot of groups and types of messages. You can organize your campaigns on our platform using the frequency strategy. 

This feature allows you to configure sending specific categories of messages to the right customers. For example, you want to notify active users about promotions every 3 days and persuade them to read a blog digest once a week. You are also going to re-engage sleeping customers with one promotional message every week. It is easy to follow this logic by setting up matching rules between groups, message types, and sending schedules.

Customer segmentation software
Automated campaign frequency strategy for different user segments

To Sum Up

Customer segmentation is not only a direct way to increase profits through repeat purchases but also an exciting way to get to know your audience better and improve customer engagement.  By analyzing who your users are, why they choose your product, and what attracts them the most, you can find new development points for your mobile marketing strategy. 

Do you need a vivid example? Get inspired by an international food delivery app that increased orders by 65% and returned 25% of inactive users with the help of segmentation. Just follow this article to get familiar with that case.

Anna Zabudska

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September 13, 2022

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