An effective communication strategy begins with сustomer segmentation — an increasingly crucial step that no mobile marketer can skip. Read on to learn how to divide (your customers) and conquer (the market) by using practical tips from Pushwoosh.

How customer segmentation can improve your business
Why customer segmentation is even more important in 2023
Before you get to develop your segmentation strategy: Checklist
Four ways to segment customers
Best practices of customer segmentation with Pushwoosh:
What data should you collect to create proper customer segments?
5 key scenarios of segmented communications
Tips for your industry
Media & Entertainment
Subscription-based apps

This blog post is based on a Pushwoosh webinar. If you’d rather watch and listen than read, here is the complete recording:

How customer segmentation can improve your business

Customer segmentation is about who you target, where you reach them, and how you talk to them. Most obviously, well-implemented segmentation improves your marketing performance. Let’s see which areas are the first to benefit.

📈 More effective communication

Dividing customers into groups based on common characteristics is a great opportunity to determine exactly what messaging will drive them to make a purchase.

With proper segmentation, you can run a variety of A/B tests and experiments to identify the most effective channels for particular types of customers.

📈 A better-tailored offering

You can use segmented messaging to figure out which of the existing products and services meet your clients’ demands.

This is also a powerful way to identify your audience’s unmet needs. Companies can identify underserved segments to outperform competitors by developing and providing some unique services, products, and experiences.

📈 Positive customer experience

Segmentation is key to creating a more personalized experience. When you know your audience’s micro-moments — and when you are actually there when they occur — you can provide a higher-quality interaction with your brand.

Undoubtedly, customers who are delighted with your brand are more likely to stay with you longer and recommend you to other people. This paves the way to the next positive effect of customer segmentation:

📈 Improved customer retention

By distinguishing your customers’ needs, you can come up with a compelling reason for your clients to return. Credible re-engaging messaging is a proven method to increase customer retention, loyalty, and lifetime value.

📈 Reduced churn

Thoughtful customer segmentation will allow your business to focus every effort on giving your customers what they need, and satisfied customers are less likely to churn. Precise product recommendations, feature updates based on customer needs, and personalized communication are truly effective ways to prevent churn.

Why customer segmentation is even more important in 2023

Consumer attitudes, values, and behavior have changed greatly at the recent years' economic downturn, and it seems that 2023 will bring even more reasons for businesses to be on standby. Here is what we have to face now:

🚫 IDFA tracking restrictions

iOS 14.5 changed the mobile marketing landscape forever. App marketers and developers are now obliged to request user consent to track their IDFA data.

Before iOS 14.5, retargeting, exclusion targeting, and segmentation relied strongly on using the IDFA. The system update had a knock-on effect on ad monetization and user acquisition. For some apps, cost per install (CPI) has already tripled. Is there a way to counteract the negative consequences of the IDFA deprecation?

Switching your marketing focus from user acquisition to engagement and retention can mitigate these effects. Under such circumstances, the use of first- and zero-party data for customer segmentation is argued to be increasingly crucial.

Read more about mobile marketing in the post-IDFA era

🔴 The overall trend for privacy

Apple is not the only driver of privacy changes; Google is set out to limit publishers’ access to collecting user data too. The company declared its course to cookieless Chrome, and in April 2021, Google already released a restricting Developer Privacy Policy. More constraints regarding push notifications came with the Android 12 release. And modern marketers have to adapt to these and any upcoming changes.

Next challenges

iOS 15 may have dashed the hopes of many marketers who bet on engaging push notification strategies. Users of the updated iOS get to restrict the hours when apps are allowed to display their alerts. Moreover, all the notifications arrive to their phones in the form of a summary, prioritizing personal messages and time-sensitive pushes.

How are marketers supposed to react?

For iOS-focused professionals, we have two exclusive guides approved by thousands of marketers:

For everyone responsible for mobile app marketing in general, we've got a checklist to rely on:

Before you get to develop your segmentation strategy: Checklist

Plan data gathering along with your development team

When you apply customer segmentation in Pushwoosh, there are a variety of default parameters you can choose from.

If you need to add any extra data, we recommend you refer to your development team. They should help you install any events on your site or in your app and track them properly.

Choose the segments that will be discernibly different

When splitting your audience (even a potential one), make sure the segments have some fundamental differences. If one group of customers has almost the same needs and behavior patterns as the other, treating them as different segments in your marketing strategy will be pointless.

Build your segments around up-to-date parameters

You want to base your segmentation a) on the most recent data and b) around the attributes and events that are still relevant for your business.

Consider major shifts in category demand

The economic turbulence may have added new groups of people into the category of your customers, and now you need to understand who they are and what matters to them. Or, the other way around, some people have churned, and you need to know how to re-win them over, as well as how to communicate with those you’ve retained.

Identify your KPIs and ignore other metrics

When launching a well-segmented campaign, you may be confident about getting a boost in your marketing performance. Be careful about tracking the right metrics, though.

A higher click-through-rate in a paid customer acquisition campaign, for example, will certainly look like an achievement. However, it won’t always result in increased conversions that drive sales, at the end of the day.

Don’t fixate on vanity metrics stick to your chosen KPIs instead and never stop researching your audience.

Four ways to segment customers for stronger marketing communications

When selecting the right approach to conducting customer segmentation, think of this idea as a mantra: send relevant messages at the right time. This is what you want to achieve.

Right, but how do you reach such an accuracy level? Here are four actionable segmentation strategies:

1. Segmentation by attributes

Start by tracking all the data your audience has allowed access to. The more zero- and first-party data you collect, the more focused segments you will be able to make.

2. Segmentation by behavior

Track and react on users' actions with relevant content that will take your customer further down their journey.

3. Combined attribute + behavior-based segmentation

Users with similar behavior but different attributes (and vice versa) may show different response to your communications. So always remember to consider both kinds of criteria in your experiments.

4. RFM segmentation

Especially useful for e-commerce and gaming apps, segmentation based on RFM analysis allows for making a difference between your best-paying customers and occasional buyers. It is only logical to approach them differently – please read our dedicated blog post on RFM segmentation to discover all the cases and tips in detail.

And if your conversions are not directly measured in monetary metrics, you can still benefit from RFM analysis! Explore how in the post linked above.

Best practices of customer segmentation with Pushwoosh

Using Pushwoosh segmentation tools, you can create the right customer segments and build a communication strategy that works. Here is how.

What data should you collect to create proper customer segments?

Our team believes that the more information you track, the better. Sufficient data will help you build precise segments, target them with the right content at the right time, and also use personalization as a key component of communication strategy.

By default, Pushwoosh collects the most critical attribute data for you:

  • City & country

You can use this data to differentiate the audience geographically and target them with more relevant messages. For example, media apps can achieve higher CTRs if they send local news instead of general updates.

  • Device model info
  • Install date and last open date

This information is the most valuable for marketers to start onboarding and re-engagement campaigns. Timely content can retain users in your app and increase conversion values in your funnel.

In Pushwoosh, you can collect and use any extra information you need for your campaigns:

  • User interests
  • Subscription type
  • Indicated names (to be used for personalization), etc.

Needless to say, all of this data will be impersonalized, and it will be sufficient for effective customer segmentation.

All of this data is accessible via Tags in Pushwoosh. There are a lot of attributes to use in your segmentation!

Customer segmentation with Tags

Learn how to set Tags in real time

As for behavioral data, you can track any action users perform in your app and use this knowledge in your communication.

In Pushwoosh, there is a number of general Default Events — you can start using them from day 1 on our platform.

There are also Recommended Predefined Events we recommend specifically for certain industries.

You can easily activate these events by copying and pasting the required code and integrating it into your app or website. Right, it will be easy if a developer can help.

To make use of all the information you’ve collected with Tags and Events, create Segments – in Pushwoosh, you can base them on multiple criteria. For example, you can segment out those users who purchased their first-time annual subscription at a selected period:

Segment users by multiple criteria in Pushwoosh

By targeting more focused segments based on several attribute- and behavior-based characteristics, you can increase the effectiveness of your messaging and boost conversions.

As a very special sort of behavior-based segmentation, RFM segmentation required tracking purchase events. To set it up properly, you may want to refer to Pushwoosh documentation on RFM segmentation or, even better, hear about it firsthand on a personal call with our team:

How to use customer segmentation data in marketing communications: 5 key scenarios

Let’s take a look at several communication scenarios you can plan and execute with Pushwoosh Customer Journey Builder. This is our stellar drag-and-drop tool for mapping and automating cross-channel marketing campaigns. Using the tool, you get to complete event-triggered and segment-based workflows. You can read more about the functions and use cases of our improved campaign builder in the dedicated blog post.

1. User onboarding

Imagine you have many newcomers whom you’d like to welcome and explain the concept and main value of your product. To begin a communication sequence, choose a Trigger-based Entry — in our scenario, it will be ‘Application open’. Then filter the user flow with the ‘New in there’ segment. Consequently, you will only target new users coming to your app, and your existing users will be excluded from this communication.

Engage your new audience in an in-app messaging sequence. Use appealing images and explain your main value. Add as many steps and messages as you see fit. The onboarding scenario is customizable, and its range and depth only depend on your goals.

Read more about how to build a strong user onboarding flow

2. Selling/upselling to your customer segments

Start a journey by an event — we’ll choose ‘Application open’ for our example. Then split your audience based on whether they’ve purchased something or not. Such a filter is extremely useful for targeting discount vouchers to the users who bought something in the app, or to those who didn’t in order to motivate them. Accordingly, adding vouchers would be the third step.

Learn more ways to increase sales in your app

3. Testing your messages for different segments

A testing scenario will help you see what type of segmentation and messaging works best for your audiences.

In Pushwoosh, there is a number of features made specifically for in-depth testing. The most recent Tags feature allows you to mark users right inside your communication segments. For example, using Tags, you can keep track of those users who have opened your application. Then you can compare how many users you have in each of the resulting tagged groups and see which message performed the most effectively or which initial segment was the most interested in your communication.

4. Exporting A/B test data

Sometimes you need to export some data to an external system for further analysis. Pushwoosh’s functionality can totally help you with it.

You can start an A/B test, mark each group with a specific Tag value, and then send messages to each of them. You will be able to export your experiment statistics for another stage of analytics.

Explore in detail how A/B tests can increase your CTRs

5. Combined segmentation for more relevant messaging

Combining behavioral segmentation with attribute-based is a great way to achieve granular understanding of your audience — and get an impressive boost for your campaign performance too!

With Pushwoosh’s Tags feature, you can create a segment for customers who have triggered a specific action. Begin a journey with the ‘Trigger-based Entry’ element and set a Tag immediately to keep a record of all the users who have completed a target action — in our example, it will be ‘ProductAdd’.

Later on, you can create a segment based on this behavior-based Tag and target some messages specifically at these users.

Tips for Your Industry: Enhance Your Marketing Strategy with Customer Segmentation

The way you segment your audience highly depends on many factors: what type of app or website you have, your business goals, etc. The most critical condition, though, is the industry you’re operating in.

🛒 E-Commerce

From our experience, e-commerce companies tend to apply the most advanced segmentation. They see the most benefit from grouping customers and sending relevant, timely promotions to them. E-commerces make use of every possible parameter: gender, age, location, browsing habits, and personal interests.

These efforts pay off, as Pushwoosh’s internal research has shown. Without segmentation, one e-commerce business’s broadcast pushes typically had 0.5% CTR. Once they started segmenting customers by their favorite product categories, their push notification click-through rates increased by over 10%.

Recommended next steps for e-commerce:

  • Prompt users to put items from the preferred category into their cart;
  • Promote goods from a specific category to the users that are most likely to buy them;
  • Return churned clients using abandoned cart emails.

🍿 Media & Entertainment

One goal of customer segmentation for you is to gain better insights into your customers’ needs and preferences. Another objective is to identify customers with potentially the highest lifetime value and conversion rate.

Recommended next steps for media and entertainment:

  • Collect user preferences for news topics based on their preferences or views history.
  • Prepare and send weekly digests with relevant content.
  • Send relevant news based on geotargeting.

To our knowledge, segmentation by users’ preferred content results in high CTRs (7-9%, on average) and strongly contributes to audience growth.

👍 Subscription-Based Apps

By using segmentation, subscription-based apps can send highly focused marketing messages, for example, targeting their most loyal customers.

Recommended next steps for subscription-based apps:

  • Keep your segment of just-installed users always up-to-date. Welcome newcomers with valuable onboarding messages to retain them in the app;
  • Increase app retention by launching re-engagement campaigns on specific segments;
  • Test pricing options for your subscription-based software.

To wrap up: divide (your customers) and conquer (the market)!

Today, mass marketing tactics are still able to bring results. However, a correct customer segmentation strategy can provide enormous returns when compared to ‘one-size-fits-all’ approaches. It allows for the effective allocation of your marketing resources and the maximization of cross- and upselling opportunities.

Despite the apparent trickiness of customer segmentation, we at Pushwoosh are deeply convinced: it doesn’t have to be that complex. Contact our team now to see Pushwoosh's segmentation and messaging abilities in action.