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How to Build User Segments for Travel, Food Delivery, e-Commerce, F2P Gaming, and Subscription Services

Alex Yusupov (Guest Author) Dec 07, 2017

User acquisition is giving way to a strong trend in mobile app marketing: retargeting.

The outlook for user acquisition is not too rosy and optimistic, since the number of advertisers is growing much faster than the mobile ads market itself. The cost of acquiring a new user is doubling. In addition, consumers are experiencing an information overload, so it is becoming increasingly difficult to grab their attention with an ad. And to top it off, the user base of many apps and games hit the millions a long time ago, which means that attracting new users is becoming quite challenging.

If you have already run into even one of these issues, now is the time to think about retargeting. Retargeting technology helps you “wake up” users who have already showed interest in your service or installed your mobile app. In other words, in a retargeting campaign your target audience only includes users who have somehow interacted with your brand, either by making a purchase or by just viewing your offers. Re-engaging these users usually has a much better ROI than pursuing new users does.

The secret to a successful retargeting campaign is to segment the audience correctly. Segmentation largely depends on the category and type of business. Retargeting is effective for almost any type of app that offers in-app purchases.

This article looks at segmentation in-depth and examines approaches for working with segments in travel, food delivery, e-commerce, F2P gaming, and subscription services.

General user segments

An effective approach to segmenting a retargeting campaign is to base segments on the purchasing history and users’ purchasing behavior. Users in any service can be divided into four categories:

  1. Active purchasers. This varies from service to service, but usually these are users who use the app on a regular basis and recently made a purchase (less than 30 days ago), or who made multiple purchases.
  2. Active non-purchasers. These are users who interact with the app on a regular basis but have never made a purchase.
  3. Lapsed purchasers. These users made a purchase a long time ago (more than 30 days ago), but they have either stopped using the app, or they use it occasionally without paying for anything.
  4. Inactive non-purchasers. This is the largest layer of users in any user base for any app. These users have done nothing (or almost nothing) in the app, and they are the most difficult to reach with retargeting. The cost may end up to be as high as new user acquisition.

Each of these segments requires an individual approach and solutions for a retargeting campaign, depending on your app category. Let’s take a look at the different  segments and methods for working with them using specific verticals as examples.

User segmentation for travel or food delivery service

This is one of the most popular verticals for retargeting.

  1. Users who have already made a booking, placed an order, or completed a payment in the app. Each of the segments below can be filtered by recency, frequency or the purchase amount.
  • Users who recently made a payment (10, 20, or 50 days ago) and have been active recently.

Solution: Offer them extra services, special deals, privileges or new products.

  • Users who made a payment more than 90 days ago and haven’t shown activity.

Solution: Remind them about the service and offer special deals or promo codes.

  • Users who made a purchase a long time ago (90 days have passed) and have been active in your app recently (for example, 7 days ago or less), but haven’t completed purchases or orders recently.

Solution: These users are most likely interested in your service, so you need to close the sale. You can and should break users up by their searched content.

  1. Users who have never purchased anything but have shown recent activity in the app. Most often, these are new users and you need to tell them more about the service and finish your sales pitch. You can segment them by frequency and recency.
  • Users who searched for something (10, 20 or 30 days ago) but never made a purchase. Most likely, these users are interested in buying, so you just have to remind them and provide the proper motivation.

Solution:  Semi-dynamic retargeting works well here. Choose a user segment with similar search terms and create ad content for them. Dynamic banners work great for this – they are created in real time based on user queries and served at the most relevant moment. Users who have recently shown interest in one of the categories or added something to favorites or the shopping cart.

Solution: Group your audiences up by a shared feature or category of what they were searching for, then use ads to remind users that they were interested in these items (semi-dynamic retargeting).

  1. Users who installed your app and never had a single event conversion. This is the most difficult group for re-engagement. You can approach this group if you have already learned how to motivate the second group to make purchases. There is no guarantee that the user still has your app installed, so the path to app content follows the same route as for new users.

Solution: The simplest approach is to segment these users by recency of install. The user installed the app (10, 20, 30, 60 or 90 days ago) but didn’t do anything in the app after that. The more recent the install date, the more likely you will be able to promote the service with discounts, feature descriptions and promo codes. The further away the install date, the lower the conversion rate to reattribution.

User segmentation for mobile e-commerce

You can adopt the approach for purchasers from the travel and food delivery segments. However, e-commerce also has excellent results with product linking. The user bought item A during the past 7 days, and statistics show that this item is most often purchased with items B, C, D and E. So you can build an audience of customers who bought item A and serve them banners with the related items.

 

As for non-purchasers, you can divide them into two segments:

1.Users who recently viewed a specific item or category and didn’t purchase anything.

Solution: Segment users by search category and run semi-dynamic campaigns for specific categories. Ideally, deeplinks should take the user directly to the category they were searching in.

2. Users who recently added an item to the shopping cart but didn’t complete the purchase. Retargeting is an excellent way to finish the sale, especially if you have deeplinks to the user’s shopping cart.

Solution: A great approach here is dynamic retargeting with photos of the added items in the banner ad.

Giving the user a gentle nudge at each stage of the sales funnel can make a big difference.If the cost per new customer is less than the user’s LTV, you’re in a great place.

User segmentation for F2P gaming

Grouping users by recency and purchase amount works great here, because it’s always profitable to re-engage the so-called “whales” who have quit playing. For instance, you can build a segment of users who spent more than a certain amount and haven’t opened the app in 30 days. These users respond well to news about updates to the game, new maps and levels, and so on.

 

Solutions for non-purchasers:

  • “Drag” the user through the levels: reached level 1, but didn’t reach level 2; reached level 3, but didn’t reach level 4, and so on. This works well if you have an idea of which achieved “level” will probably motivate the user to keep playing and eventually make a purchase.
  • Add retention milestones. For instance, you know that after day 28, users stop dropping off. So you drive your users at specific points in their lifetime (1/7/14/28 days)  to try to increase retention and the percentage of purchasers.
  • Use resource levels. For example, the user doesn’t have enough of a certain resource in the game, so you offer them a gift or a special deal with this resource. This works well if you have customized promo offers and gifts.
  • Major promo offers. Sometimes a game offers really great deals. Target your ads for this promo at users who have been active in the game recently and didn’t spend anything, but haven’t opened the game for a few days and might miss the special offer.
User segmentation for subscription services

Almost every subscription service has a category of users with a trial subscription. You can’t classify them as purchasers, because they haven’t paid for anything yet, but their card data is already saved.

Solutions for re-engagement for this segment:

  • Use the expiration date of the trial period. Let’s say that the free trial subscription lasts 14 days. Create a segment of users who activated the trial subscription more than 14 days ago and don’t have a renewal event conversion yet. Sell the service to them. You can even take it further and target users who clicked on the campaign ads and still didn’t activate renewal – offer them a discount, if the service allows.  
  • Build a second segment of users who paid for the subscription once after the trial period, but didn’t renew it a second time. The activation date is the length of your subscription plus the absence of the renewal event. Try to remind these users that they were happy during the subscription period. If you have enough users, you can further segment them by frequency of use. This will help you single out users who are most likely to renew, and also get metrics for a particular audience.

You might get a broad segment of users who installed the app and never opened it, or showed very little activity. This is the time to offer them your free trial subscription, so they can realize just how much they were missing out on in their previous life before subscribing.

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