Smart Segmentation Done Right: How to Build Segments and Send the Most Relevant Offers

One of the most unfortunate mistakes marketers can make is underrating the importance of mobile user segmentation. Even though many companies do invest their efforts into building distinct user segments, they are often created based on limited geographic and demographic data. As a result, app marketers struggle to understand and segment audiences and consequently fail to meet user expectations.

It’s difficult to significantly increase user engagement and maximize conversion rates with solely traditional segmentation approaches. In the competitive market of mobile apps, understanding your audiences and targeting specific groups of users with tailored messaging and strategies often becomes a crucial aspect that will determine your success. And smart segmentation can help you achieve the desired results.

In this article, we’ll describe smart segmentation and its role in turning leads into customers. You will also learn the key steps in implementing smart segmentation into your marketing strategy.

What is Smart Segmentation and Why It Matters?

Smart segmentation is a holistic approach to segmenting audiences. It applies multiple segmentation models to create very precise user segments. For example, this technique divides audiences into groups based on how likely the leads are to become paying customers.

An app’s marketing team can also use smart segmentation to identify user groups more likely to upgrade their current plan. By analyzing factors such as usage patterns, customer preferences, and past behavior, the company can pinpoint segments that exhibit higher purchase intent or show signs of interest in specific offerings.

Once these high-conversion-potential segments are identified, the company can tailor their marketing messages, promotions, and customer engagement strategies to target a specific audience. This targeted approach increases the chances of converting customers and maximizing the return on marketing investments.

The key advantage of smart segmentation over other techniques is that it allows marketers to allocate resources better. If you have an idea of what prospects will complete in-app purchases, then you know which user segment is worth investing in and can find a way to monetize those unlikely-to-buy users. 

Different Customer Segmentation Models

A segmentation model is a framework or approach used to categorize a target audience or customer base into distinct groups or segments based on specific criteria. A segmentation model typically involves using different customer data types and analytical techniques to identify meaningful patterns and characteristics among customers.

Here are the most common segmentation models you can use to create distinct groups of users:

Demographic

This model divides customer profiles based on demographic factors such as age, gender, income, occupation, education level, and marital status.

Geographic

This customer segmentation model divides customers based on their geographic location, such as country, region, city, or neighborhood.

Psychographic

This model categorizes customers based on their lifestyles, attitudes, values, interests, and personality traits. It goes beyond basic demographics to understand the motivations and preferences.

Behavioral

Behavioral segmentation groups customers based on their past behaviors, actions, and interactions with an app. It considers factors like purchase history, browsing behavior, frequency of purchases, loyalty, and engagement with marketing campaigns.

Benefit

This model focuses on the benefits or needs that customers seek from a product or service. It categorizes customers based on their desired advantages, such as cost savings, convenience, luxury, performance, or social status.

Technographic

Technographic segmentation categorizes customers based on the technology they use, helping mobile marketers optimize mobile advertising campaigns based on the specific OS or device.

Advanced segmentation tools use machine learning and consider the above-mentioned models to create high-quality segments. A holistic approach to segmentation involving multiple segmentation models is vital, as it allows businesses to form the most precise segments. It will determine the success of all further marketing campaigns.

How to Build a Smart Segmentation Strategy: A Step-by-Step Tutorial

Let’s take a look at the process of creating an effective app user segmentation strategy that will enable you to target and engage every mobile audience with precision.

1. Define your goals

You may need to segment your audiences to adjust messaging or channels, or even create completely different marketing campaigns for every custom audience. It is crucial to understand what is the goal of user segmentation. So, identify what you plan to achieve, like improving targeting, personalization, or increasing customer engagement. It’s vital that your objectives align with your overall business strategy.

2. Collect and consolidate data

You need to gather comprehensive customer data to get quality segments. You can use various sources to get this data, such as customer databases, CRM systems, analytics, transaction records, and even customer surveys. Every piece of information can come in handy, for example, demographic data, purchase history, browsing behavior, engagement patterns, and other relevant data points.

Reteno can be particularly helpful in collecting information about in-app events and user behavior. This tool helps marketers track users' actions, such as subscriptions, orders, views, taps, and others. The collected data will give valuable insights into customer preferences and reinforce your segmentation efforts.

3. Identify key variables

Once you collect customer data, you need to analyze it and identify the most significant variables that can be used for customer segmentation. These variables will depend on the nature of your app and the data at your disposal. They could include age, gender, location, purchase frequency, average order value, product preferences, or any other relevant factors that enable you to create customer segments.

4. Create segments

After you analyze data and identify variables, you can create distinct user segments based on similar characteristics or behaviors. You can use various customer segmentation models outlined above.

Use Reteno for the most precise event-based segmentation. Behavioral segmentation is crucial for the success of any marketing activities, as it helps you to target and personalize your marketing efforts based on users' specific buying behaviors, preferences, and interactions with your app, leading to higher engagement and conversion rates.

You can also use Reteno to build segments based on the response to your messages.

These responses can further target marketing campaigns. Customer segmentation by campaign activity can help you segment VIP contacts who have yet to receive  important information. Plus, you can segment the most engaged subscribers to increase your campaign frequency.

5. Assign segment-specific marketing strategies

With quality segments, you can now develop tailored marketing strategies for each segment based on their unique characteristics and needs. So, it’s time to determine appropriate messaging, offers, channels, and content that resonate with each audience. Whatever your mobile app offers, personalization is key to success.

Reteno allows you to adjust your segments based on pre-set conditions with dynamic segments. This means segment members will automatically switch to other segments based on specified conditions. For example, you can set it up for reactivation, singling out active customers, etc. This feature allows marketers to automate manual processes and save time on mobile app user segmentation.

6. Implement marketing campaigns

Finally, you are equipped with precise user segments and marketing strategies, and this is where the fun part starts. You can now implement designated strategies to address each segment with personalized messaging and provide customers with the most relevant product recommendations. You can then monitor and track campaign performance using analytics tools to gather data on customer responses, conversions, engagement rates, and other relevant metrics.

7. Measure and analyze results

One of the most crucial steps in running marketing campaigns is the analysis. Analyze the performance of each segment and compare it against predefined metrics and objectives. You can use data to evaluate the impact of smart segmentation on KPIs — customer acquisition, retention, conversion rates, revenue, or customer satisfaction. Use statistical analysis techniques to identify significant differences.

8. Iterate and optimize

You can now identify areas for improvement and refine your segmentation strategy based on the analysis. Implement changes and continuously monitor the performance of your segments. Iteration and optimization of your smart segmentation approach over time will ensure ongoing effectiveness.

Smart Segmentation Use Cases

One of the best customer segmentation examples is shown by a world-leading music streaming platform, Spotify. The company utilizes smart segmentation to personalize music recommendations and playlists for its users. 

By analyzing user listening habits, genre preferences, and social interactions, Spotify creates segments of users with similar music tastes. It then generates personalized content and suggests relevant songs and artists to each user based on their preferences, ensuring an engaging and customized music streaming experience.

Apart from paid subscriptions, Spotify has a distinct segment of users with free subscriptions. The company has a separate monetization model to make income from free subscriptions with the help of ads. 

Another great example of successful smart mobile segmentation is the one conducted by the food delivery service Rocket. 

The company employed Reteno’s smart segmentation and campaign automation tools to deliver highly personalized push notifications based on users’ order preferences and behavior. By providing targeted messaging and improving customer shopping experiences, Rocket achieved quite impressive results:

• Reduced new users’ churn by 40%, sending triggered mobile pushes to app registrants who hadn’t made any orders.
• Drove back 25% of users with reactivation campaigns.
• Increased the average customer check by 16%.
• The number of orders grew by 65%.
• Increased LTV by more than 12%.
• ROI reached 152%. ROAS brings $5 profit per $1 of investment.

How to Analyze the Effectiveness of Smart Segmentation

It’s crucial to collect qualitative feedback on the effectiveness of user segmentation. This feedback can provide deep insights into customer perceptions, preferences, and experiences.

Analyzing the effectiveness of segmentation involves evaluating KPIs like customer acquisition, retention, conversion rates, and revenue per segment. By assessing the performance of each segment, you can identify areas for improvement, refine your segmentation strategy, and drive better outcomes.

Segment analysis involves evaluating the performance of each customer segment created through smart segmentation. In practice, you compare the key metrics across different segments and identify any significant differences or patterns. These differences and patterns will allow you to enhance your user segments and campaigns further.

Conclusion

Smart segmentation allows businesses to target specific customer segments with a tailored communication strategy and personalized offers and experiences. By understanding customers' unique characteristics and behaviors, companies can adopt personalized marketing approaches and messaging that resonate and drive higher engagement.

Smart app segmentation involves different customer segmentation models to create precise segments and target them effectively. It also helps marketers focus their efforts on customer groups more likely to convert, allowing them to allocate their resources effectively and optimize their marketing strategies to drive higher conversion rates.

Reteno is one of the most powerful solutions that can help you track crucial data, conduct quality analyses of your audiences, and create user segments. With its advanced customer segmentation features, you can create specific event-based segments and instantly respond to customers’ needs.

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