The importance of customer segmentation for creating a successful product

The importance of customer segmentation for creating a successful product

Rapid development in big data analytics provided great opportunities in customer segmentation. Traditionally, marketers segment customers based on their demographic, geographical, psychological and behavioral traits. Now, with big data, marketers or product managers are able to understand their users at an individual level so that they can tailor their strategies to target a certain group of users more accurately. For example, an individual’s behavior online can be traced and measured, based on big data, we can get abundance information about a person and this information is valuable for creating the persona.

It is without saying that understanding customer needs is one of the most important steps of creating a successful product. So, how can we figure out the true needs of customers? Conducting a thorough customer segmentation is the key. The best well-known psychographic classification system, VALS can be adopted in various cases. For instance, in the mobile gaming industry, there are multiple ways to segment gamers. Based on their activities, we can segment gamers into heavy users, who spend more than 3 hours per day playing and formed social relationships in the game; moderate users and light users. Based on their attitudes towards in-game purchase, we can separate gamers into paid users, potential paid users and play without paying users.

Although there are various ways of customer segmentation, the most appropriate logic has to be well defined to best serve its business goal. Taking the most popular mobile game in Mainland China “King of Glory” as an example. It cannot succeed without digging deep into customers’ needs based on accurate customer segmentation. They have tailored their marketing strategies to cater the needs of different groups of users. Gamers of “King of Glory” are logging in with primarily their QQ or WeChat accounts and once they established a profile, the profile is not shared across these two social media platforms. Users on these two platforms have different demographic traits. For those users who log in with their QQ accounts, typically are students according to big data analytics, they have created many marketing campaigns related to school events, vacations and eSports. Those users are generally younger than users log in with WeChat accounts. So the content delivered to those users are specifically paraphrased to be younger style and more dynamic.

In the market of mobile gaming, the quantity of games is increasing whereas channels for reaching customers are limited. Thus, how to best utilize those channel resources is vital. Especially for those channels with great traffic and user base, it is even more important to think about which group of users is your targeting market and how to reach them effectively. I firmly believe, this issue is not only existing in the mobile gaming industry but also in other internet related markets. As users becoming mature, their needs also became specific and more detailed. Big data allows for more personalized services or market strategies to best serve customers’ specific needs. The success of Netease cloud music proved personalized music recommendation service to be an added-value. The hot topic ranking list of Weibo also adopted big data technics to push different news based on customer segmentation. However, more data doesn’t necessarily to be good. Big data also generate useless information, so we will need to be more cautious while utilizing big data in customer segmentation.

References:

1.     Is There A Role For Customer Segmentation In A Big Data World? https://www.forbes.com/sites/teradata/2016/09/29/is-there-a-role-for-customer-segmentation-in-a-big-data-world/#d875ca97680a

2.     DAU千万背后的手游精品3.0时代 http://wetest.qq.com/insight/excellentInfo/10005010d460b9a486b50be89adb3031c07de2a7.html

By Shiran Jiang, 1155084678