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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.
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:
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:
Micro-segmentation, on the other hand, 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 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.
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:
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 segmentation are in the Slideshare below:
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.
By splitting your audience into micro-segments like “Most likely,” “Moderately likely,” and “Least likely,” 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.
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.