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Micro-segmentation: What Is It and How Will It Improve My Mobile Marketing?

Shivkumar M Shivkumar M has over 20 years of experience shaping technology product and GTM strategy. With B2B SaaS expertise across industries, he leads product launches, adoption, and GTM as Director of Product Marketing.
Micro-segmentation: What Is It and How Will It Improve My Mobile Marketing?

I wouldn’t be surprised if the ecommerce app on my phone has me pegged as an active app user from the San Francisco Bay Area, between 35 and 50 years old, who is a paying customer that buys home electronics, school supplies, and antiquated 1980s music on CDs, probably has a family with small children, and usually makes a purchase when presented with a discount.
Now there are probably scores of app users who fit all the characteristics above, but we are still a tiny and very niche batch of customers when compared to the total user base for that ecommerce app. We are a micro-segment — all sharing similar behavior and characteristics.
Based on that micro-segmentation definition, a smart ecommerce app would send us free shipping promotions or discount sales via push notification, email, or social media to get us to keep engaging, keep buying, and keep driving up customer lifetime value. And if they do it well, we’ll be customers for life.

What is Micro-Segmentation in Marketing?

Technically, a micro-segment is a tiny, defined slice of a company’s user base that is selected using the vast amount of user data a company has on its users, for the purpose of sending them highly relevant and personalized marketing.
The benefits of using micro-segments to customize your communication:

  • 70% of consumers say they prefer customized advertising content and ads.01
  • Email campaigns that are tailored to the customer are 26% more likely to be opened.02
  • Personalized experiences result in a 20% increase in sales.02

Micro-Segmentation vs. Traditional Market Segmentation

You cannot get into a micro-segmentation definition without delving into its place alongside classic market segmentation.
Traditional market segmentation is used by companies to identify their ideal customer group so they can focus their marketing spend on the users most likely to convert. Traditional segments are a very general slice of your users, selected along four distinct lines of data:

  • Demographics: by age, gender, income, education
  • Behavioral data: by app usage, brand preferences, purchase patterns
  • Geolocation: by location, typically country, region, or city
  • Psychographics: by lifestyle, values, social class, preferences, and more

Micro-segmentation involves slicing general customer segments into tinier, niche slices
On the other hand, micro-segmentation in marketing can be as granular as: “married females aged 25-50, located in Maryland, who have abandoned their cart in the last 90 days, who have purchased Crocs, and who are highly likely to convert when given a free shipping discount.”
A micro-segment therefore takes from the general bucket of a traditional segment, and whittles it down further using machine learning tools and AI-enhanced algorithms such as RFM Analysis, and Intent Based Segmentation.
But like any other tool, having a slice is not enough. In order to make optimal use of a micro-segment, you need a micro-segmentation strategy.

Micro-Segment Marketing: The Strategies

Micro-segment marketing is simply a way to personalize all campaigns sent to a micro-segment.
Here, you customize messages in order to increase the relevancy of your communications. You tailor your messages to match the preferences of your audience as well as send offers that they will likely engage with.
All of these actions result in driving engagement, increasing retention, and building up your revenue.

Micro-segmentation involves a strategy to personalize marketing

Customer Microsegmentation Using RFM Analysis

In order to make better use of a micro-segment, you should distinguish where a user is in your customer lifecycle. And this can be done automatically within CleverTap via RFM Analysis. Some questions that RFM answers:

  • When was the last time the user launched the app? (Recency)
  • How often does the user return to the app? (Frequency)
  • Has the user purchased anything? (Monetary value)

Based on the answers to these questions, you can personalize your campaigns even further. For example: a frequent buyer may simply need to be updated about the latest offerings in your catalog. Meanwhile a user who has only launched the app once might need a better explanation of the app’s benefits and features so they return to it more often.
More tips on how to use RFM Analysis for customer microsegmentation are in the Slideshare below:

Microsegmentation Examples Using RFM
By using RFM analysis, you can easily pinpoint specific micro segments based on how often a user launches your app and how much Customer Lifetime Value they bring to the table. Some microsegmentation examples, include:
  • Champions: your best customers, who bought recently, purchase often, and are heavy spenders
  • At-risk Customers: customers who have purchased often and spent a lot, but have not purchased recently
  • New Customers: customers who are predicted to become champions but who don’t purchase regularly

Micro-Segmentation Using Intent Based Segments

Intent Based Segmentation is a CleverTap feature that makes use of AI-enhanced predictive capabilities to estimate the likelihood that users will achieve a defined goal.
Say you identify a general demographics segment for “users living in New York” and create a goal to “Sell Taylor Swift concert tickets by January 30.” You can use Intent Based Segments to show how many of your New York-based users are likely to buy tickets.

Intent Based Micro-Segments
Microsegmentation Examples via Intent
You can split your audience into micro-segments such as:

  • “Most likely”
  • “Moderately likely”
  • “Least likely”

With these microsegments, marketers can then take a very clear next step: leaving the “Most likely” alone to buy without expending further marketing resources, and instead focusing campaign efforts on converting the “Least likely” and “Moderately likely” to buy.

The Difference is Personal

What is micro-segmentation? A clear way to enhance the effectiveness of your mobile marketing campaigns — because users expect to see marketing that is customized to their needs and preferences.
Even better, personalizing your marketing this way results in better engagement, improved conversion, and stellar ROI on your marketing spend.

Mobile Marketing is Easier with Expert Guidance

Last updated on March 29, 2024