User segmentation

What is user segmentation?

User segmentation is the process of separating users into distinct groups, or segments, based on shared characteristics. A company might segment users based on language preferences, product version, geographical region, or user persona. With thoughtful user segmentation, product teams can study how user behaviors vary between segments, then design personalized experiences for each segment.

Why does user segmentation matter?

User segmentation helps organizations understand their user base. While no two users may be alike, cohorting groups of similar users can expose the attributes common to a company’s most successful customers. For example, if one were to create user segments for trial users who convert vs. those who churn, the go-to-market team could learn how each segment uses the product differently, and then determine which marketing channels are more likely to attract those who tend to convert to paid users. Segmentation can also help product teams design different experiences for different types of users, with an eye toward increasing engagement, satisfaction, renewal, and expansion.

What are the most common types of user segments?

While each company may prioritize different user segments, there are several segments common to most organizations. This list includes:

• Demographic: Information about the individual user, such as their age, location, language preferences, title, or role.
• Firmographic: Information about the user’s organization, like industry, revenue, employee count, or business model.
• Technographic: Information on the other technologies the user’s organization uses, including CRM provider, marketing automation tools, back office systems, or databases.
• Customer data: Information stored in a CRM about the customer’s relationship with the company, such as plan type, customer journey stage, annual revenue, account owner, or renewal date.
• Behavioral: Information about how the individual user has interacted with the product, including number of logins, pages viewed, features clicked, support tickets created, and time on site.
• Psychographic: Information on a user’s likes and dislikes, including product sentiment. This data can be captured with measures like Customer Satisfaction (CSAT) or Net Promoter Score (NPS).

How do I implement user segmentation?

1. Track individual behavior and sentiment. While some of the data required for segmentation will live in the company’s CRM system, product teams will also need to add information about product usage and sentiment with a product analytics tool. A key outcome from a user segmentation exercise is to understand how different groups use the product differently, so capturing product usage data is critical.
2. Define user groups. Product and go-to-market teams should determine user groups based on the organization’s business objectives at the time. If the company is focused on new logo acquisition, for example, the teams might create segments for trial users who converted to paid vs. those who didn’t.
3. Compare activity between segments. User segmentation is valuable because it allows companies to compare and contrast different types of users. Comparing segments can help product and go-to-market teams understand how to turn happy customers into promoters, increase engagement levels for stalled users, or even shift resources away from certain segments entirely.
4. Experiment and measure impact on segments. Through experimentation and measurement, companies can learn which levers they can pull to affect change in a segment’s behavior, experience, or sentiment. And they can learn if those changes contribute to desired business outcomes.

What are some examples of user segmentation?

Henry Schein, a Fortune 500 healthcare technology company, used segmentation to drill into their Net Promoter Score (NPS) program. When they looked at how dental practices used their solution, they found a large gap between two key personas. While dentists were generally happy with the product, hygienists were much less satisfied with a specific part of the application. By identifying the segment-specific needs and improving the product for this key user type, Henry Schein was able to improve their NPS by 43 points in just six months.