Micro-segmenting: Bridging the communication gap between users & marketers
Micro-segmentation is already evolving. What marketers consider highly indexed users now, will seem elementary as the number of data variables increase, writes Almitra Karnik, Head of Marketing, CleverTap.
To connect with busy, digitally savvy users, marketers must adapt. To do so, marketers are straying away from acquisition models that focus solely on finding new customers and instead, shifting to retention models, where keeping users is the priority.
However, this presents a new challenge. Marketers have to design engagement campaigns that keep users coming back. But how? What’s the best way to engage users for the purpose of retention? The answer: Microsegmenting.
What is micro-segmentation?
Micro-segmenting is a personalisation tactic that relies on data to deliver tailored messages. Armed with user information, marketers group users into small niches based on several shared characteristics.
How is micro-segmentation done?
Micro-segments are usually broken into small groups based on the following attributes:
- Geographic: Country, region, population growth
- Demographic: Age, gender, income, education
- Psychographic: Lifestyle, values, social class
- Behavioral: Usage, loyalties, purchase patterns, price awareness
Gone are the days when marketers segmented groups by demographics. In the past, for example, an ecommerce app selling clothes would create a female and male segment and design in-app messages geared towards each gender.
Breaking users up by demographics isn’t enough. In micro-segmentation, users are broken into highly indexed groups. The indexes not only rely on geography, demographics, psychographics data, and behavioral information, but they also distinguish where a user is in the customer lifecycle.
There are three stages to consider:
- Recency: When was the last time a user used the app?
- Frequency: How often is a user active?
- Monetary: Is a user a paying customer?
By combining all of these data points, marketers can create highly indexed user groups.
Today, a micro-segment for the same clothing app could be women who are the most active app users, from New York City, between the age of 35-40, who are paying customers, that buy business attire only, and are most likely to purchase during a sale. This micro-segment represents a very specific kind of customer.
Why is micro-segmentation so important?
Micro-segmenting gives marketers a way to make meaningful connections with their users. More specifically, micro-segmentation is vital because of these data-powered reasons:
One of the most compelling reasons to use micro-segmentation is to boost revenue. By creating tailored messages, marketers engage more customers and work on building long-term relationships with measurable ROI. Micro-segmentation has led to 760% in revenue, according to research from DMA.
Reduces marketing costs
Research suggests that marketers waste an average of 26% of their marketing budget each year. Part of the waste stems from not reaching customers effectively. If your company is touting its excellent features to the wrong crowd, for example, it wastes resources.
Micro-segmenting increases the chance of delivering the right message to the right user, which cuts costs.
Research shows that 63 per cent of users expect personalisation as a standard service from any brand they interact with, according to a survey conducted by The Harris Poll. With an influx of messages, it’s not surprising to see why users only respond to messages that are relevant to them.
Fosters a deeper understanding of users
A recent IBM study shows four out of five consumers don’t believe brands understand who they are as an individual.
To create highly defined micro-segments, brands have to explore trends that enhance retention campaigns.
While creating indexes, brands realise what kind of content users respond to, their motivation for using the app, and what pain points are causing problems. With this kind of specific intel, marketers improve a variety of touchpoints.
What does the future of micro-segmenting look like?
Micro-segmentation is already evolving. What marketers consider highly indexed users now, will seem elementary as the number of data variables increase.
The tools used to collect and analyse mobile app data will grow alongside these needs. There are already tools that ease data collection and create automated micro-segments – quickly becoming the secret weapon for top-performing apps.
By using mobile marketing platforms, generating personalised messages for app users will be your differentiator. As a result, more brands can make a seamless shift from acquisition to retention as their primary growth strategy.