User Segments in SaaS: 8 User Segments To Focus on and Create Better In-App Experiences

User-Segments-in-SaaS-8-User-Segments-To-Focus-on-and-Create-Better-In-App-Experiences

“What is the purpose of creating multiple SaaS user segments?” you may ask.

Customers act differently. Some are more active and engaged, while others get stuck in the process. Thus the goal of creating multiple segments is to understand the needs of those segments and enhance their customer journey.

Consider customer segmentation as a lighthouse that directs your efforts around customer success and product marketing in the right direction. Otherwise, you will end up breaking your team’s focus and preventing your product from growing.

So, in this article, you will find a detailed breakdown of how to segment customers and how to act on each segment.

Let’s dive right in!

TL;DR

  • SaaS user segments (or customer segments) stand for the groups of customers that share common characteristics — for example, free trial users, power users, or inactive users.
  • SaaS customer segmentation allows you to understand users on a deep level, create personalized in-app experiences that are specific to their use cases and improve customer experience and satisfaction.
  • You should include at least eight customer segments in your segmentation strategy. These are the new customers, free trial users, lifetime free users, power users, inactive customers, users with low MRR, users with low Net Promoter Score, and churned users.
  • New users are a critical segment, as you should nail your product onboarding to impress your new signups and drive them to the activation point.
  • Use welcome screens to gather customer information and create personalized onboarding for new users.
  • Users with low NPS scores are also your prime goal as they are at high risk of canceling their subscriptions. Understand the reasons behind their low rating and fix the issues not to lose them.
  • Churned customer segments are of paramount importance to analyze as this particular segment includes mistreated or unhappy users. Explore what caused them to churn to improve drawbacks of your product or customer support.
  • Implement interactive in-app guidance (walkthroughs) to show around your product to your customers once they sign up and get them to the activation point faster and boost customer engagement.
  • Use modals to target your freemium customer segment and prompt them to upgrade using the right message at the right time.
  • Use a customer segmentation tool like Userpilot to create all these user segments using one tool. Book a demo to see Userpilot in action.

What are user segments in SaaS?

User segments (or customer segments) stand for the groups of customers that share common characteristics — for example, free trial users, power users, or inactive users.

Each segment can also be divided into smaller groups to analyze customer behavior more specifically to find product drawbacks and the way to fix them. For example, you can separate inactive users with high and low MRR to first focus on the former.

The process of categorizing the entire customer base by concrete criteria is called product customer segmentation.

What is the importance of user segments?

In a nutshell, SaaS customer segmentation allows you to understand why your users behave in a particular way. What causes them to churn, how fast do new users adopt your product, or why do users with low MRR avoid upgrading — proper user segmentation answers all of these questions.

Three important reasons why segments are important:

  • Understand users on a deep level. As mentioned, you can group your customer base by precise criteria and find particular patterns in users’ behavior. For example, you can find out that users of the A plan churn more often because they can’t afford the B plan, but plan A doesn’t offer all the features they need to get their job done.
  • Create personalized in-app experiences that are specific to their use cases. When you have different user personas engaging with your product, you’re simply obliged to build a customized onboarding flow for each. Hence, they shorten the time to value and fulfill product expectations.
  • Improve customer experience and satisfaction. By segmenting users you will easily spot pain points that they encounter across their customer journey. Thus you can fix those issues to improve their overall experience with you.

8 user segments that you should focus on

Now you’re ready to explore what SaaS user segments you should create in the first place, what customer segmentation goals to follow, and how to act on different user segments.

Let’s break it down.

New users

This is one of the most critical segments, as you should nail your product onboarding to impress your new users and drive them to the activation point.

This particular customer segment can be broken down into smaller, more specific parts by the type of users’ roles, company size, or business priorities to personalize the onboarding checklist or other modals.

Free trial users

Focus on this segment to shorten the time to value so that users can understand the value of your product and become paid customers. This approach will boost your free trial to paid conversion rate.

Freemium users

Freemium users will always be a part of your customer base. Indeed, some of those users are able to solve their problems using your product once or twice a month. That makes it almost impossible to convert them to paying customers.

On the other hand, there’re users in this segment who simply haven’t understood the value of your product because of poor onboarding, lack of experience, or poor customer support. Identify such users and reach out to them to offer your premium features to try.

Power users

Power users are the backbone of any business. They are the loyal users who use the product on a daily basis and are highly engaged. You should create personalized offers and messages for them to keep them motivated and valued.

Additionally, you can conduct in-person interviews with the user cohort to understand what made them love your product. Using the answers you get, develop a great customer value proposition for other segments and turn them into power users.

Product-User-Segmentation
Power users drive the highest engagement

Inactive users

Customers in this segment are at high risk of churn. You better know what caused them to stop using your product, so you can have a chance to fix the issues.

Due to the inactivity of stalled customers, you can’t communicate with them in-app (for obvious reasons), so have your customer success team re-engage them using personalized email sequences or by phone.

After you identified the reasons for their inactivity, you can offer personalized support to this segment.

Users with low MRR

Most likely, these are paying customers on the cheapest plans. Perhaps they haven’t realized the potential of the product, or maybe they chose this plan because they feel it fully meets their needs.

Develop a strategy to interview and upgrade this user segment in cooperation with your customer success manager.

Users with low NPS score

Users with low NPS scores (Net Promoter Score) are also at high risk of canceling their subscriptions. You should understand the reasons behind their low rating and fix the issues not to lose them.

You can also calculate the overall NPS score to understand what percentage of customers feel happy with product usage.

Got a low score (a 7 and below)? This is a red flag for you to take immediate action on improving your product.

Net_Promoter_Score
How to calculate the NPS score?

Churned users

Churned customer segments are your unhappy or mistreated customers. Every canceled subscription must be carefully analyzed to understand how to win them back. If left untreated, they can damage your reputation through word-of-mouth.

5 ways to create better in-app experiences for SaaS user segments

As discussed above, we highlighted which customer segments you should create for your SaaS and why.

Now let’s move on to the juiciest part and learn how to actually segment SaaS customers.

Ready, steady, go!

Use welcome screens to create personalized onboarding for new users

Welcome screens are a great way not only to greet customers but also to collect important info — job title, what type of business they have, what are their goals, etc.

Later, you will use gathered information to segment customers and create a personalized onboarding experience.

Don’t be afraid of showing these questions to new signups. Welcome screens can include even up to five or ten questions if necessary to tailor your onboarding for different segments.

For example, Kontentino — a social media planner tool, asks only the most essential three questions to collect info.

kontentino-welcome-screen
Kontentino uses welcome screens to collect info about new users

Use in-app guidance to onboard new users

In short, in-app guidance is an interactive method to show around your product to your customers once they sign up and get them to the activation point faster.

Lack of in-app guidance is a surefire way to confuse your new users, resulting in disengagement and ultimately churn.

However, long and boring product tours, which were popular years ago (and sometimes are still in use today), can also cause customers to churn.

Instead, provide interactive walkthroughs that instruct users on how to engage with a new feature step-by-step.

Here’s the walkthrough Kontentino created to guide users through customizing their chat widget for the first time.

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Kontentino uses interactive walkthrough to guide new users

Use modals to show freemium users what they are missing out

The worst you can do for your freemium users is to do nothing. I heard that some product managers are afraid of incorporating modals because they don’t want to annoy customers with pop-ups.

But this is nothing more than guesswork. Industry leaders like Dropbox, Semrush, and others use modals and tooltips to showcase premium features and briefly demonstrate to freemium users what they are missing out on.

Let’s look at the Dropbox case. We all know that we can use the storage for free until we reach specific space limits. But when Dropbox customers are running out of their free space, a pop-up shows up encouraging users to upgrade their plan.

It’s simple, concise, and on-point (and really helpful!).

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Dropbox encourages users to try Dropbox Business for free

To wrap up, use modals to target your freemium customer segment and prompt them to upgrade using the right message at the right time.

Use NPS surveys to measure customer loyalty

If you haven’t implemented NPS surveys yet, do it right now.

NPS surveys are not only for measuring the quality of customer support service, but also it’s a key to gauging user satisfaction across your SaaS product. This will enable you to identify customers at high risk of leaving.

You can also create different customer segments according to their NPS score and work with both detractors and passives. Reach out to users to uncover the problems they are dealing with in your product and offer help.

Pro tip: trigger NPS surveys once users have completed pre-defined events (e.g., they reached milestones) and ask for their feedback. This is what Adobe uses Adobe. Check out their NPS survey below.

Adobe-NPS-survey
Adobe NPS survey

Want to start tracking NPS in-app? Book a Userpilot demo and see how you can do it without coding.

Identify churned users and try to win them back

Implementing churn surveys can help you collect and analyze feedback on why specific customer segments churn.

Having those insights, you can improve your product or concrete features and reduce the churn rate.

You can also offer alternatives to cancelation depending on the user’s answer. If there’s no way to retain customers, use collected insights to create a win-back strategy for the future.

Here’s a great example of a churn survey. Lots of reasons to choose from, and the placeholder text encourages users actually to leave feedback.

churn-survey
Cancellations survey to ask users why they leave

How to do customer segmentation with Userpilot?

So now, after reading all of these segmentation methods, it’s time to know how you can create those segments.

Let’s see how Userpilot can help you do customer segmentation without a single line of code.

Interested? Let’s dive deep!

Use micro surveys to capture user data in the welcome flow

Remember the power of welcome screens? When applied, you capture user data and create SaaS user segments right from when users have signed up.

Use Userpilot to build a personalized welcome screen and the onboarding flow.

Here you can customize its look & feel and buttons, add a micro survey to collect user data, and build the logic of the welcome flow (see the screenshot).

userpilot-welcome-screen
Create welcome screens in Userpilot

You can also ask several questions right from the start to provide personalized onboarding to new signups.

Pro tip: send collected data for both product and customer success/onboarding teams. The former uses customer data to better the in-app experience from the first steps of the user journey. The latter can prepare personalized email sequences and a series of onboarding demos to help customers get the product value faster.

Postfity-welcome-screen
Postfity welcome screen created by Userpilot

Track in-app usage data for every customer segment

With Userpilot, you can track users’ in-app engagement and monitor their behavior. It will help you see factors like daily/monthly active users, how they interact with different features, and also friction they encountered while using the product, etc.

Analyze this data to detect suspicious activity — drops or stagnations.

Also, you can apply various filters to this report and learn customer behavior across different segments.

in-app-engagement-in-userpilot
Track in-app engagement with Userpilot

Build SaaS user segments by in-app custom events

With custom in-app events, you can keep track of user activity across your product. Identify what customer segments completed the onboarding checklist or what customers skipped the welcome micro survey.

With Userpilot, you can build these segments by creating and filtering in-app events.

Using this feature, you can also sort customer segments by NPS score, answers to the in-app micro surveys, engagement layer, web session duration, etc.

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Advanced customer segmentation in Userpilot

Run A/B tests to compare your customer segments

Surely you are interested in how conversion rates differ for customers who completed an onboarding flow compared to those who did not. Or you want to measure the impact of a specific product change on the overall experiences.

With Userpilot, you can run A/B tests to compare how your different customer segments perform.

Using this data, you can make data-driven decisions about your customer journey and refine product adoption/customer experience.

a_b-testing-userpilot
Run A/B tests in Userpilot

Conclusion

Customer segmentation in SaaS is the basis of product analytics. This allows you to understand the nature of customer behavior and make informed decisions about your customer retention and product development strategies.

Want to deploy customer segmentation code-free? Book a demo call with the Userpilot team and get started!

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