Segmentation refers to the process of grouping customers based on certain qualifications. While we generally hear about segmentation being used by marketers, this type of data can also be used by product managers to develop new product hypotheses and zero in on what will resonate with users.
In this article, we’ll explore how different types of user segmentation help reveal questions about different parts of the product and ultimately generate new hypotheses for testing.
Before diving in, we recommend you try to forget everything you know about your product and question assumptions that arise while reading this piece. Why does a particular assumption come to mind? What data can confirm or disprove it? We hope this approach will help you gain new perspectives on what you thought you knew.
To learn more about how PMs can leverage customer segmentation, we talked to:
- Gabriella Hayes, Fractional Product Leader, The Brave Start
- Žilvinas Lešinakas, Product Director, Omnisend
- Brigitte Gillis, Director of Product, White Glove
Thanks to Nikki Carter for helping create this piece for GoPractice.
Nikki Carter is a journalist and editor.
She’s worked with companies like Indeed, Skillshare, and Wistia. Her articles have been published in Business Insider, The Muse, and more.
How to dig deeper with segmentation
User segmentation involves dividing the user base of a product based on some type of shared characteristic(s). The ultimate goal with segmenting is to create more value for the end users by developing the product with that segment in mind.
A common problem while working with user segmentation is that we focus only on the most obvious characteristics while neglecting to dig deeper into the data.
For example, we might choose to segment by age groups, country, or language to get an overall impression of users. And that’s helpful! But the most impactful insights might lie deeper.
More specifically: What if one demographic uses a certain feature more than others? What if a certain group of B2B customers comes back to your product on one specific day of every month?
Thinking beyond the baseline segments can bring new hypotheses, which is a step forward toward improving the product. If you discover, for instance, that a certain demographic relies on one of your features to get their jobs done, you might survey those folks to find out how that feature can be improved.
You can also go further with segmentation by combining different types of characteristics or evaluating a certain demographic’s behavior in different parts of the product.
So, what are some of the most common demographics that product managers can use? Read on to learn!
Common types of segmentation data
Here are some of the most common types of user characteristics that can be used to segment and come up with new hypotheses to test. While this isn’t an exhaustive list, it’s a great starting point!
User demographics
- Age
- Gender
- Income level
- Education level
- Occupation
- Marital status
Geographic characteristics
- Country
- City/town
- Urban or rural
- Language
- Time zone
- Climate
Behavioral characteristics:
- User spending: amounts and patterns
- Engagement
- User journey stage
- Loyalty to the product
- Response to marketing offers
Firmographic characteristics (relevant to B2B products)
- Industry
- Company size (i.e. number of employees)
- Business model
- Location
- Financial results
Again, this is far from a comprehensive list. The characteristics you decide to use will depend largely on your specific product.
Segmentation in action
Next, we’ll see a couple of examples of how well-known products have leveraged user segmentation to the benefits of both the company and its users.
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Brawl Stars focuses on South Korea
Brawl Stars is a mobile game created by the Finnish studio Supercell. The game was released worldwide at the end of 2018 and though it achieved global success, Brawl Stars became a nationwide phenomenon in South Korea.
Recognizing the game’s potential in South Korea, Supercell strategically enhanced its efforts to cater to the local audience. This included creating localized content, collaborating with popular Korean influencers and gaming personalities, and running targeted advertising campaigns that resonated with Korean gamers.
Ultimately, South Korea was chosen as the first country to host the Brawl Stars Championship, which was the result of Supercell’s close attention to this local market. The championship not only highlighted the game’s success but also solidified Supercell’s position in the local market.
Slack sets its sights on startups
Originally designed specifically for game developers, the team messenger tool Slack quickly discovered through client research that the tool was gaining significant popularity among startups.
This insight prompted the team to tailor the product further for this user segment. Focusing on these early adopters helped Slack build a strong foundation, eventually leading to its widespread adoption across various other sectors and laying the foundation for its current position on the global market.
Real-life experience in leveraging user segmentation
To hear more detailed stories about finding product insights through user segmentation, we asked several product experts to share their stories.
Read on to hear real-life examples of how segmentation helped with product management work.
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“We saw a 26% usage jump and a stellar 67% renewal rate in the first quarter.”
During a data visualization SaaS relaunch, we used behavioral segmentation to define our dashboard customization options. We knew users wanted quick data access, but customer discovery revealed different needs based on roles (gather & go, compare trends, or tell a story).
By tracking user behavior in the old tool, we categorized them into 3 segments. This let us create 3 personalized dashboards pre-loaded with the data each segment craved. Users saved time, found what they needed instantly, and the tool became a daily must-have. We saw a 26% usage jump and a stellar 67% renewal rate in the first quarter.
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Using segmentation and market timing to develop a new offering
At Omnisend, we recently launched a Product Reviews offering. Some background first: A significant share of our user base runs their e-commerce business on Shopify. Shopify announced quite a while ago that they are sunsetting their platform-native Product Reviews app this spring.
We saw that sunset event as a tailwind; Shopify merchants will be looking for other solutions to keep the gathered reviews live on their websites. We started building a Product Reviews offering solely for Shopify ecosystem merchants (meaning, we already segmented our customer base in making this decision).
We then carefully analyzed what technologies Omnisend merchants were using for their Reviews management (firmographics segmentation) and tailored both the product experience (like onboarding to Reviews flows) and communication on the feature launch. This helped our merchants to understand better why they should choose Omnisend for Reviews management, and, by extension, secure our feature adoption targets.
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“Segmentation has been instrumental in driving significant improvements in user engagement and satisfaction.”
In my role as a product leader overseeing a SaaS product (marketing automation tool), segmentation has been instrumental in driving significant improvements in user engagement and satisfaction.
One notable case study revolves around our efforts to optimize the user experience for different user personas within our platform, including content managers, end users, and compliance officers.
We began by conducting in-depth user research to understand the unique needs, pain points, and goals of each persona segment. This involved analyzing user behavior data, gathering feedback through surveys and interviews, and collaborating closely with our customer success team to gain insights from real-world user interactions.
Armed with knowledge, we implemented a segmentation-driven approach to product enhancement. We tailored the platform’s features, functionality, and interface to cater specifically to the workflows and requirements of each persona group. For example, we introduced personalized dashboards and reporting tools tailored to the needs of content managers, enabling them to track campaign performance and optimize content strategies more effectively.
Simultaneously, we streamlined the user interface for end users, focusing on simplicity and ease of use to enhance adoption and satisfaction. Also, recognizing the stringent regulatory requirements faced by compliance officers, we implemented robust compliance management features within the platform, including audit trails, access controls, and compliance reporting capabilities. This ensured regulatory adherence and instilled confidence among clients in a highly regulated industry.
To measure the impact of these segmentation-driven enhancements, we conducted user testing and analysis, tracking key metrics such as user engagement, support tickets submitted, and customer satisfaction scores across different persona segments. The results were overwhelmingly positive, with significant improvements observed in user satisfaction levels, platform usability, and a decrease in customer support tickets.
This case study demonstrates the power of segmentation in an environment with multiple user personas. By tailoring features, communication, and in-app experiences based on user roles and needs, we significantly improved user engagement and achieved better outcomes for our clients.
Final note: Segmentation isn’t the end-all, be-all
Customer segmentation can help PMs prioritize high-impact features and optimize the customer experience. In order to pull this off, however, you must have strong data. Brigitte Gillis recommends investing in tools that gather and analyze your customer information, and revisit your strategy regularly to make sure it’s still relevant. Things change quickly!
As a parting note, remember that segmentation is valuable, but it’s not all there is. Gabriella Hayes puts it, “Segmentation is a fantastic way to organize your findings and inform your product strategy, but it’s not the end all be all. Talking to customers is crucial. Think of it as the secret organization trick that helps us PMs personalize the product experience for each and every user.”
Learn more
— Qualitative research in product management: the guide
— Analyzing qualitative research results effectively
Illustration by Anna Golde for GoPractice
