Customer Segmentation Strategies for Subscription App Marketing
Regardless of the category of your subscription-based app, every user you have is unique in their own way. Understanding this difference can be highly beneficial, as it allows you to launch more effective marketing campaigns and maximize your ROAS.
So, how can this be achieved? Well, everything starts with analytics-based mobile app user segmentation. That’s precisely what we’ll discuss today. We’ll take a look at important metrics that you should track, common segmentation types, and ways of dividing up your user base for optimal app marketing strategy development. Let’s dive in.
Most Common Types of Customer Segmentation
Segmentation is essentially a simple way of structuring and planning out your relationship with your mobile app users. It is also the first step of creating truly personalized marketing campaigns that cater to the needs of each specific group and result in higher levels of loyalty, conversions, and revenue.
Now that we’re all on the same page about the purpose of segmenting mobile app users, it’s time to take a look at the most common types of segmentation and the differences between them.
Demographic: the most common type of segmentation is based on factors such as age, gender identity, income, education level, and marital status. It is a rather broad way of splitting up your user base, but an important one nonetheless as behaviors and preferences differ in crucial ways between these demographics.
Geographic: as the name suggests, this option divides the users according to their country, state, city, or town. This is particularly effective if you’re looking to customize your communication efforts based on unique events or trends in certain regions.
Psychographic: a segmentation type that digs deeper into your users’ personality traits, attitudes, values, and interests. This kind of an approach looks more at the psychological differences between purchasers and the motives behind their buying decisions.
Technographic: this method of splitting the user base has become more prevalent with the rise of digital technologies. It refers to the different devices and software that customers tend to rely on. Are they Android or iPhone users? Do they spend a lot of their time on desktops or is their mobile phone their primary device?
Behavioral: in this case, you’re looking beyond who your users are and into what actions they are taking and the behaviors they exhibit. More specifically, you will split your users up based on their spending habits, usage trends, session frequency, typical searches, and levels of loyalty and engagement.
Needs-based: needs-based segmentation refers to your users’ emotional, rational or irrational, and explicit or implicit needs. Essentially, you consider what “requirements” drive them when using your application.
Value-based: this approach differentiates groups of users in terms of the revenue they generate for your business. It also accounts for the costs that go into establishing and maintaining relationships with them. This segmentation method is great for identifying the most profitable customer segments and adjusting marketing strategies accordingly.
These are only the most common ways of dividing your user base. There are many more. In the next sections, we’d like to introduce three other approaches that might be particularly relevant in the context of mobile app marketing.
Data-Driven Customer Segmentation
Before you can get started with segmentation, it’s imperative to track and analyze some of the most important subscription mobile app metrics. The idea is quite simple: by analyzing each subscription event and user group within your app and how they impact your Revenue and LTV, you’ll get an understanding of where to focus your segmentation efforts and which campaigns you should launch for each audience.
So, prior to segmenting your user base, make sure your analytics platform is keeping tabs on:
- Install-to-paid conversions
- Trial-to-paid conversions
- Revenue by subscription event
- Retention rate (cohort analysis)
- Acquisition source (marketing attribution)
Of course, there are plenty of other metrics that you should monitor to ensure the overall wellbeing of your business; however, these are definite must-haves if you want to make the most of mobile app user segmentation.
In particular, you should pay special attention to the LTV benchmark. This tells you how much revenue a single subscriber delivers over the course of using your solution. You should be interested in maximizing this number as it directly translates into a revenue boost for your business.
However, since different user cohorts express different behaviors, you should test different ways of optimizing LTV for each one of them. This starts with accurately separating your customers into groups based on specific characteristics. Let’s take a closer look at how that can be done.
How to Segment Your App’s User Base
In this section, we’re going to look at some of the best approaches for subscription mobile apps in particular.
Segmenting your users based on acquisition source means differentiating between organically obtained users and those that came to you through an advertisement. This approach is important because people who have downloaded your application from an ad likely have existing ideas about it due to the messaging they may have seen. Thus, their in-app experience might be different than that of someone who found your tool when searching for a competitor.
For example, if you’re in the gaming sector, an organically acquired user may know very little about your app and will thus require some in-depth onboarding to start enjoying everything you have to offer. On the other hand, a player who’s been obtained through a playable ad probably doesn’t need a heavy run through and may actually get annoyed if offered one.
So, if you choose to split your users based on how they were acquired, it might be a good idea to create unique onboarding experiences for each segment. Of course, you’ll still have to test out various approaches, but at the end of the day you might just find the right one that boosts your revenue.
At Qonversion, we understand the importance of tracking acquisition sources for your users. That’s why we offer powerful integrations with attribution partners like AppsFlyer or Adjust to help you stay on top of these types of analytics and improve your campaigns.
Geographic segmentation is one of the most common segmentation methods. As the name suggests, this option divides the users according to their location.
Our advice here is to start with dividing LTV and Revenue up by country. As you’ll see, this can significantly differ between countries, so it doesn’t make much sense to launch the same acquisition campaigns across the globe. For instance, LTV and retention rates could be less in Germany than in the US, while in the UK they are higher.
Knowing the exact numbers helps you to set up user acquisition campaigns smart and gives you an understanding of which countries should receive more of your marketing budget, and where you need to experiment more.
Track LTV, retention rate, and trial-to-paid customers per product. Most likely you’ll see a difference in user behavior for each segment and get signalled to improve your user onboarding or how you engage with your users.
For instance, if you see significant activity after the trial for a specific product, think about the customization of your app during the onboarding experience so that the end user gets the best user experience during his free period. A great tip is to track factors that typically precede unsubscription for each product – this will give you an understanding of when and how to communicate with your customers. If certain users have been inactive for a while, perhaps it’s time to send a push notification that might re-engage them and highlight the value of your app.
Identify which post-installation events for each of your products tend to lead to the highest trial-to-subscription conversions and adapt your strategies to reflect that. For example, if you have a photo editing application and statistics show that many users convert after testing a certain filter, then ensure that this filter is well displayed within the app and prompt users to try it out.
4. User type: new subscribers vs. subscription renewals
Another great way for app marketers and developers to split up their customers is according to user type: new subscribers vs. subscription renewals. These two groups have different needs and thus different engagement options. While you want to get new arrivals to convert into paying subscribers, you also want to keep loyal users happy and get them to spread the word about your app’s value.
A good approach here is to separately track your revenue from subscription renewals and revenue from new subscribers. You can do this manually or using Qonversion Sales dashboard, where you can use filter revenue between newcomers and renewed subscribers.
As you get your numbers, you’ll be able to optimize your strategies.
For new arrivals, make sure you:
- Onboard them thoroughly
- Send a welcome offer to prompt engagement
- Provide easy access to your most in-demand functions
- A/B test your paywalls to see which work best for conversion
- Advertise exclusive paid features to encourage purchases
The strategy for your renewed customer segment, however, should differ. For those users that open your app frequently, have a high session length, and have been with you for a while, consider:
- Developing a loyalty program that keeps them interested in staying subscribed
- Thanking them for their commitment and contribution to your growth
- Offering incentives to spread the word about your app and invite their friends
- Asking them for reviews and ratings on app stores (just don’t overdo it)
As you can see, the two segments require slightly different strategies, so don’t forget to differentiate between new arrivals and loyal customers when coming up with your marketing campaigns, and to track the results.
Get Started With Mobile Subscription Analytics and Segmentation
Customer segmentation is an essential part of a mobile app’s marketing strategy. All users are different and what works for one group won’t necessarily work for the other. In fact, poorly tailored strategies can often do more harm than good.
For effective user segmentation, everything has to start from comprehensive mobile app analytics. After all, it’s hard to divide your customer base accurately if you’ve got no data to draw conclusions from.
At Qonversion, we understand the value of keeping track of crucial subscription metrics. For that reason, we’ve developed an analytics platform that enables marketers and developers to better understand their customers, monitor the most important KPIs, and make data-driven decisions based on real-time insights. If you’d like to try it out, don’t hesitate to reach out to our team. We’re always ready to answer any questions you may have.