The benefits of building a user segmentation matrix

Using demographics for personas. (Source: https://www.powerpersonas.com/post/ozzy-osbourne-prince-charles-a-quick-little-case-study)

Personas have their application and are often used in Marketing departments to illustrate key customer profiles. However, they often don’t have a wider application across the organization and the above example is just one illustration of how they can be misleading or not actually telling us what customers do, what they struggle with and how our services might be able to help them - because we have no insights about their experience.

Why a user segmentation matrix helps

In order to be strategic about your efforts, having a clear view of who your key EXTERNAL user segments are is crucial. A user segment is a group of users (and this is applicable in a B2B or a B2C context) that share the same characteristics but are different from each other.

Instead of using demographics I found that it helps to describe different dimensions for each segment that focus on what matters to each of them.

The dimensions I use are:

1. Segment definition - Who is this group?
   Define it in a simple, straight forward way so everyone understands, NO acronyms or abbreviations. If you have the size of each segment and the revenue associated with it, even better!

2. Their main goals - What are their main goals?
   Thinking outside-in and from this groups perspective, note the recurring themes

3. What are their “jobs to be done”?
   Define the key things they need in order to get their own work done (whether that’s currently available in your service or not, if you don’t know this - it’s time for some discovery)

4. How are they different from other segments?
   Segments should be clearly different in their needs, if they’re too similar, they might not be a separate group.

5. Main pain points - What are the pain points for each segment?
   What issues are they currently experiencing with your service/product, note the recurring themes

Knowing this information per segment is already incredibly useful - especially for your product organization.

So why use a matrix?

Organizations, teams, and leaders need to make choices. We all need to decide where to place our bets, what to focus on and where to place our efforts. If we don’t do that, then we’re only ever going to juggle the as-is state but never truly excel or do things well. So when we know that we have to achieve focus - we need to weigh the options.

Having clarity around how the different user segments sit against each other helps with that.

And I’m not arguing that revenue always wins here. Sometimes it might be a massive number of pain points in specific user segment that didn’t receive any love for a long time, or a user segment that is particularly large and where fixing one pain point affects a really large number of users. Seeing that in comparison and getting this overview can be very helpful to think about your offering holistically.

Note that there shouldn’t be any INTERNAL user groups considered here, because what matters here is the outside-in perspective.

Who should use it?

To be truly powerful ONE user segmentation matrix should be used across the organization, from Marketing to Business, Product, Data & Insight etc. allowing you to build user-centred value propositions fit for each user segment and ensuring that the services and products offered for each segment are full-rounded and strategically relevant.

Sharing this information and gathering it from across your organization, is also incredibly useful for all conversations between Product, Business and Sales - because you know you’re referencing the same issues and sharing the same mental model.

The more we speak about the same things, the easier it is to collaborate and work together on fixing things.

What are the benefits?

1| Thinking OUTSIDE-IN and USER-FIRST - instead of thinking this is what we offer, you think in what are the user problems we're trying to solve.

2 | Consistent End-to-End experience across the org - because everyone is starting to use the same language and there's more clarity around what you offer per user segment. So from Sales, through to Business and Product you’re speaking TO USERS and their needs instead of talking ABOUT PRODUCTS/SERVICES.

3 | Having a matrix helps to differentiate between primary and secondary groups and allows you to prioritize and focus your efforts.

As long as you ensure that for each segment you’re still providing an offering that makes sense as a whole. Because if that’s not the case, you should consider dropping a segment and doing a few things really well, rather than everything just about ok.

Here’s an example user segmentation matrix that I use.

Example User segmentation matrix that I created.

In a next post I will describe how to collect and summarize the information that goes into the matrix, how to work with everyone to get to a shared understanding and why this should be a living document that gets updated and amended, as you go and build new services or iterate the existing ones.