Illustration by Avirup Basu
When someone asks you who your users are, it’s tempting to answer, “Everyone.” But in most cases, it’s better to be more careful about that generalization. By saying “everyone,” you say that you focus on the entire market, and only a few companies in the world are large enough to supply the needs of a whole market.
Proper targeting is an essential part of an effective product strategy. We know that some people are more important to our business than others. That’s why even the large companies typically break down their users into segments and decide which segments to focus on in different scenarios.
This article will help you understand the concept of user segments and the steps that will help you segment your users.
What is user segmentation?
User segmentation is the practice of dividing potential or existing users into groups that share similar characteristics. The underlying idea is that those groups will likely have comparable behavior and probably respond similarly to marketing/product activities.
When it comes to product design, teams collect a lot of data about their users, and one of the biggest reasons to build user segments is to make that data actionable. By segmenting your audience, you can tailor content and features to serve the audience (i.e., leverage contextual data in your messaging or features). The better product teams are at segmenting their users, the more personalization they can offer each group.
Marketing and experience segmentation
Depending on the goal of segmentation, it’s possible to define two types of segmentation: marketing and experience.
Marketing segmentation is focused on creating effective marketing strategies for a product’s target audience. A market segment is a group of people that:
- Have a common set of needs that they want to fulfill using your product.
- Are distinct from other segments (different segments have different needs).
- Respond similarly to a market stimulus.
- Communicate with each other. Since they have a shared set of needs, they can form communities and share the message with their peers.
The last property is what makes marketing segments so powerful. The goal of marketing segmentation is to create a message that resonates with a segment and make it circulate inside a segment (word of mouth). By segmenting users, it’s possible to create a more efficient marketing campaign for end users.
Experience segmentation model is a start-to-finish series of interactions a user has with a product. This type of segmentation typically focuses on understanding the needs of users with different levels of expertise. By segmenting users, it’s possible to create a better user experience for end users. For example, companies can learn the needs of experienced users and create product shortcuts to make the process of interaction with a product more efficient for them.
User characteristics required to perform segmentation
It’s important to lay out the information about your users in a way that will help your teams understand them. In its basic form, user segmentation is based on the following four parameters of a user:
- Demographic. Properties like age, gender, education level, occupation, or income level.
- Geographic. Geographic areas, such as countries, regions, or cities.
- Behavior. Behavioral patterns that users experience toward using a particular product. These can include buying behaviors (spending and consumption) and desired benefits.
- Technology. The level of users’ tech savviness.
User segmentation and user personas
The characteristics listed above can tell you what information you want to collect about your users, but they don’t tell you why you should do it. The ultimate goal of product design is to create product features that solve the user’s primary needs as best as possible. Different user groups have different needs and wants, and it’s essential to conduct research to understand the needs before creating segmentation.
Start by creating user personas (archetypal representations of user types), which will be used as a summary for the user. Collect information about real people who interact with your product and start to find patterns; where the characteristics of users overlap, you can build an archetype, or persona, that represents those users collectively. This knowledge will help you to adjust product design to create better usability for them.
Here are a few things that you want to focus on when working on personas:
Psychological aspects of a target audience
Psychological aspects of a target group are based on their activities, interests, and personal opinions. You need to explore the lifestyles of your target group and find the answers to the following questions:
- How do users spend their free time?
- What image do they want to project?
- What people/brands are they influenced by?
You also need to explore the user’s attitude toward your product: How do users respond to your product? Are they loyal to the product? What opinions do they have? When it comes to user behavior analysis, you need to rely on historical data from user actions and consider a few variables:
- Free vs. paid users. Paid users are likely to be more committed to using the product because they already paid some money. The goal is to retain paid users and convert free users into paid users.
- New vs. returning users. People can have very different requirements during their first engagement with a product versus once they’ve become regular users. Returning users are people who have found enough value in the product to come back.
Cultural segmentation, or classifying the target audience according to the culture of origin, can give you a lot of insight into certain groups of customers and their behaviors. As a result, you will be able to communicate with a given culture in the most effective way (e.g., using appropriate cultural references).
How to conduct user segmentation
To get a successful outcome from user segmentation, you need to follow a few simple steps:
State the goal of segmentation up front
It’s essential to understand what you want to achieve by segmenting your target audience. For example, the goal of segmentation might be to optimize a sales channel. In this case, you might want to identify the group of users to sell a new product to. The research methods you will use and the data that you will collect when working on a user segment should be selected according to that goal.
Measure user engagement
The ultimate purpose of product design is to make the product more valuable for people who use it. User actions allow you to see the paths participants took while performing their tasks, as well as the outcome of interaction, be it successful completion or abandonment of the task. Thus, after getting a grasp on your entire audience, take a few users that match a particular user persona and track their user journeys to find patterns. Then use this information to create segments.
When creating a user segment, pay attention to these aspects of a user journey:
- Time users spend interacting with products. By analyzing how users spend the time interacting with a product, product teams can learn which parts of a product (content and/or features) provide the highest user engagement.
- Customer journey milestones. Milestones can be important signifiers of user retention. For example, for the first-time user of an ecommerce website, the milestone can be a first-time product purchase.
- Unhappy paths. Users of an ecommerce website can abandon their carts. By analyzing the factors that cause abandonment, such as bad usability (slow-loading webpage with billing information, limited number of payment methods, etc.), companies can identify areas of friction and improve the overall user experience.
Analytics tools like Google Analytics or Hotjar will help you track user behavior data and the paths that users take. Still, you also need to use additional tools like surveys and interviews to understand why users interact the way they do.
Tie user segments with business goals
User segmentation should always tie back to activities that help companies make money. Every business model has data that is most valuable to capture. For example, when you measure how users interact with ecommerce websites, you might want to focus on activities such as user purchases. The business goal is for users to make a purchase, so you can focus on three segments: users who have purchased products, users who haven’t purchased products, and users who purchased products repeatedly.
Don’t create narrow segments
For most companies, it’s crucial to measure not only the quantity of the potential segment but also their quality. Too many narrow segments make it harder to adjust your design to different types of users and make it harder to analyze the results of the adjustments. Thus, at the time when you create your user segments, you need to review them. During the review, ask yourself, “Can I combine those two segments into one larger segment?” Teams should be able to identify meaningful differences when comparing one segment to another segment.
Introduce changes in your product based on segments
Analyze the segments and turn the insights from this analysis into a roadmap for building a better product. Some insights can be applicable to all user segments. For example, if you design an ecommerce app, you can find the areas that cause friction for most users when they purchase a product online, and a product team should focus on finding a solution that will help the average user complete the purchase with much less effort.
Validate your design decisions
It’s not enough to introduce changes in your design; you also need to ensure that they work for your users. Introduce changes gradually and see how they work for your segments. Use A/B testing, multivariate testing, and eye tracking to understand how different segments interact with interface designs. This knowledge will help you speed up your research-design-validate cycle.
User segmentation is an essential part of user research because well-defined segmentation allows for powerful action. When you use audience segmentation, you also adopt a particular perspective on a problem. This way of thinking makes you consider significant characteristics of a potential solution, and instead of creating one-size-fits-all solutions, you will try to provide a tailored experience for your users.