The How-To Guide On User Segmentation

This article will be your how-to guide on user segmentation, the types of segmentation used in marketing, and a typical use case leveraging the Snowflake Platform.

Your Guide On User Segmentation

Our previous article on Marketing Funnel Strategies explored the funnel stages in detail.

At the core of every funnel, strategy is the desire to convert leads to consumers of  your  product.

To do this, your product or service must extensively appeal to your  target market . You must ensure you are marketing the right products to the right people at the right time, hence the need for the concept of “ Market Segmentation.”  

The “What” of Segmentation – Know Thy Customer 

“The aim of marketing is to know the customer so well that the product or service fits them and sells itself.” – Peter Drucker.

This statement could not be more accurate, especially in marketing. Knowing your customer is at the crux of every effective marketing strategy, and that’s what Segmentation is all about.

Market Segmentation  can be defined as dividing the market into subgroups of similar customers.

Now we have a definition, let’s discuss why.

 The “Why” of Segmentation – One Size Does Not Fit All 

“85% of some 30,000 new product launches have been reported to fail because of inadequate market segmentation” (Christensen, Cook, and Hall, 2005).

This is just one out of many statistics regarding non-segmentation. Without clearly defined market segments, you’re essentially trying to market to everyone, and everyone is no one.

By applying segmenting in your market strategy, you can identify your audiences, focus your product development efforts and ultimately create tailored stories and campaigns that will appeal to your target market.

Here are a few additional reasons why you should start segmenting your audience:

• Increased Understanding of Customers’ wants and needs : Segmentation exercises give companies a fresh look at their core market and an improved understanding of their customers’ needs and wants.

• Different products for different groups : By identifying your customers’ wants and needs, you can develop products that best match their persona.  

• Better match between customer wants and product benefits : It helps better match the company’s strengths and capabilities with the target market requirements.

• Focused marketing expenditures : Companies cannot always satisfy all potential customers. By using segmentation procedures, companies can focus on satisfying those segments they assess to be the most attractive for their products.

• Competitive advantage : Once a segment has been identified, an appropriate marketing mix can be developed. With this mixed strategy, companies gain a competitive advantage as offers can drive sales and increase customer satisfaction.

Types of Segmentation

Depending on our market type (B2B/B2C), various techniques can be used when segmenting data. Experts have identified four main categories of market segmentation; here is your guide on user segmentation namely. 

Demographic Segmentation:

This is arguably the most basic of the segmentation types. Demographic Segmentation divides a group or population based on variables like Age, Gender, Income, Education, Marital Status, Religion, and Nationality.

Pros 

Segmentation by demography is usually the start of any segmentation exercise. This is because demographic information is easy to collect, simple to analyze, and cost-effective.

Cons:

On the flip side, It has been criticized for being vague and based on assumptions and not considering individual consumers’ needs and wants.

Geographic Segmentation: 

Geographic Segmentation typically involves grouping users based on their geographic details.

 Similar to demographic, geographic tends to be objective and solely based on facts about the user.

Five key areas marketers take into account when segmenting geographically are Location(world regions, city, state), Urbanicity(urban, sub-urban), climate(tropical, humid), culture, and Language.

Psychographic Segmentation: 

Psychographic Segmentation is arguably one of the most subjective and difficult to quantify segmentation types, but it’s also the most valuable. 

Psychographic Segmentation focuses on a user’s psychological attributes such as attitudes, personality, interests, and lifestyle. This data can be collected through surveys, interviews, or other platforms where users freely reveal their personal lifestyle information, e.g., favorite tv shows, political views, etc. 

Pros :

The benefits of using psychographic data in your strategy cannot be overlooked. It offers a personal look into the heart of your customers, i.e., what they like, their needs, wants, and preferences. 

Cons :

Very subjective, Harder to collect and analyze.

Behavioral Segmentation: 

Behavioral Segmentation refers to segmenting users based on user behavior in a store, website, or app. 

Behavioral data tends to be analyzed with tools like Google Analytics and others. These tools can measure metrics like a user’s dwell time on a website, bounce rate, online or in-store actions, etc.

An excellent example of successful brands leveraging this type of Segmentation is Spotify and Netflix. Their ability to leverage behavioral Segmentation to deliver personalized content and stories has made them stand out.

Segmentation With Snowflake:  A Typical Use Case 

Asics digital,  a GPS fitness-tracking company, shared how they achieved successful market segmentation with the snowflake Cloud Platform in an interview with Snowflake.

At the time, Asics digital had just acquired Run-keeper (a GPS fitness-tracking app). With this merge, Asics digital now had more data to deal with. 

The stakeholders saw this as an opportunity to personalize engagements, offers, and eCommerce journeys to their now +1.7 million users.

They already had a good idea of their target market but needed a platform that could serve as a foundational premise for all their data needs, hence Snowflake.

With Snowflake serving as their data platform, they were able to:

• Simplify Segment Generation and ETL: 

According to Mateusz Zwienieki, a senior data scientist at Asics, Snowflake allowed them power segmentation.

The data team had to write lengthy code to target users with their previous data architecture.

However, using Snowflake, they were able to automatically fit a user into a bucket by building all necessary logic directly into the segments.

• Create Personalized Segments & Simplify Targeting:

 With Snowflake providing that 360 view of the customer, they could easily focus on creating segments that allowed for more personalized content to be shown through their CRM.

According to Mateusz Zwienieki, with the snowflake cloud platform as their foundation, they experienced over a 180% increase when targeting past customers, higher email engagement of over 7%, and more customization opportunities.

Simplify User Segmentation Techniques With Datameer

If you’re a marketer or a marketing analyst, you’ve most likely heard of segmentation techniques like RFM Analysis- A way to quantitatively measure your user base’s recency, frequency, and monetary value.

These are the more technical aspects of Segmentation that require lengthy SQL coding, 

even for Snowflake Customers like Asics digital.

What if I told you there was an easier way?

What if I told you you didn’t have to be super data-savvy to perform RFM analysis or another segmentation modeling?

It’s Datameer.

The tool that takes the coding  out of SQL   coding.  With accessible drag-and-drop modeling features, non-technical analysts can create base models specific to their needs. 

So, we’ve covered your guide on user segmentation if you’re writing SQL code for RFM analysis or prefer building a segmentation model using a GUI!

Don’t believe me? Try Datameer Today