User Segmentation

What is user segmentation?

User segmentation is the creation of different customer groups based on common attributes or characteristics in order to better understand and prioritize their needs.

When it comes to serving your customers with your B2B SaaS services, there is no such thing as “set it and forget it.” Businesses need to constantly evaluate and evolve how they are targeting, marketing to, communicating with and serving their customers. To do this, they need to understand who their customers are, where they live, the challenges they are having and how and why they are using their services. Depending on the results, you will eventually find that your company can group your customers based on certain types or categories of similar qualities, known as user segments.

While there are plenty of user segmentation examples out there, here is one demonstration of how user segmentation works:

If your B2B SaaS business sells access to web-based cybersecurity training for banking and finance professionals in the northeast region of the United States, then you can use user segmentation to better recognize that these customers have different types of needs than others out there. For example, your high-level user segments are B2B and finance, which can be further broken down into those that work for low-, medium- and high-revenue businesses, in urban or suburban areas, in different years of experience and by how they use technology to facilitate their work.

What are the types of user segmentation?

While there are common user segmentation criteria, it is highly likely that no two companies will end up with the same results at the end of the process. At a high level, user segmentation is typically done based on three questions:

• Who are your users?
• What are they doing with/using your platform for?
• What outcomes do they want?

These questions can be further broken down into factors such as age, income, industry, job function, geography, frequency of use and how long they have been customers.

To answer these questions, companies will need to consolidate data from across their platforms, such as sales, marketing, product usage, finance and web analytics data as well as through more direct solicitation and surveying such as product satisfaction questionnaires and contact forms. It is for this reason that many organizations utilize customer success platforms to help organize, visualize, analyze and automate many of the product and customer experience processes that can help set your company apart.

Why is user segmentation important?

User segmentation is important because it helps your business not only better understand the types of customers that could be or are using your platform, but also how to more effectively communicate, serve and market to them over time.

If your user segmentation efforts reveal that one type of group uses your platform far more than others, your business can more objectively prioritize the needs and features that these customers have over others, knowing that this will drive more business impact over the long run. This can then, in turn, encourage these high-use users to stay longer, expand the depth of their product integration and spend more as their loyalty grows. This information can also be used to more precisely pinpoint the challenges or hurdles that some users have in adopting your service or additional features while, for long-time repeat customers, you can upsell or reward using incentives that you know will appeal to them.