3 ways to segment users and spending your marketing budget more effectively!
Most brands’ number 1 marketing goal is constantly trying to reach new users and expand their reach, but it’s important to think about lapsed or churned users, how to re-engage them, and set aside a budget for them from the get-go.
What is churn?
In mobile marketing, a churned user is someone who has stopped using the app. There are two kinds of churn: no more use detected or uninstalling the app completely. According to the mobile measurement platform AppsFlyer, only around 4% of iOS users and less than 3% of Android users were still active on Day 30 (D30 retention).
Retargeting is an important part of paid social advertising for apps to get these users back – and social channels are most effective for this approach. But how much budget should go into retargeting and what else do marketers need to consider vs. new user acquisition? In this post, we’re laying out a simple strategy on how to approach this problem for Facebook ads by segmenting your audience into Prospects, Cold and Hot Retargeting, and allocating campaign goals and budgets accordingly.*
Prospecting – cold users – 70% of the budget
Definition: users who haven’t interacted with your app or brand before (and users who have last interacted more than 180 days ago – see graphic).
The biggest chunk of the budget will always go towards attracting new customers (or cold users= who have never – to your knowledge – interacted with the brand, its website, apps, and other touchpoints before. These prospects can be addressed either using Broad targeting or playing with different targeting, such as:
- Age or
The messaging for this group would focus on the main service and especially the pain points that the product solves and the benefits of using it. CPMs will be the lowest for this group because it uses the biggest possible audience.
New users are targeted either using upper funnel events, such as sign-ups and installs that are frequent. It’s also possible to optimize for lower-funnel events, such as completing a level or a purchasing event, but only if there is enough event data to optimize for.
Retargeting / Nurturing churned users – 20% of the budget
Definition: users who have interacted with your brand, but their last interaction was at least 30 days ago and a maximum of 180 days ago.
This could be:
- Website visitors
- App users
- Add to carts
- Onboarding completed
- Social media engagers
The main objective for these users is to push them over the edge to conversion. That’s why the content of the ads would focus on what they’re missing out on if they don’t convert. Cases, testimonials, external validation, press coverage, or other trust-building messages can work here since these users aren’t entirely new to the concept of the brand or product.
CPMs will be higher because the audience size is smaller and more defined. However, this is balanced out by a higher CTR due to a more engaged audience, which should result in a lower CPC and higher engagement later in the funnel. Especially a higher conversion to purchase rate will make a difference and can offset the higher traffic cost:
According to the mobile measurement service of Adjust, users from retargeting campaigns generate 37% more revenue events in the first 30 days, compared to new users.
Usually, events that are further down in the funnel (Purchase, ROAS) are used because retargeted users already passed the early stages of the funnel once, and we know they are interested in the product. But retargeting can work equally well for higher funnel goals. As with everything in performance marketing, this is subject to tests and iterations.
Retargeting – hot users – 10% of the budget
Definition: inactive users who have been active less than 30 days ago
The third group is users who are similar to the Retargeting group but have interacted with the brand more recently (e.g. last 30 days), so their brand recall is still fresh. These users can also be targeted with user-generated content in addition to the tactics mentioned above.
Retargeted users have previously shown interest, they could also be pushed towards a deeper funnel event, the classic example being the abandoned cart in eCommerce where a user has placed an item into the shopping cart but didn’t finish the checkout process. These users are often retargeted shortly after they dropped out to get them to finalize their conversion-related action (e.g. complete purchase) while the interaction is still fresh.
Since these users will be most familiar with the product, the messaging aims directly at conversion: around fear of missing out when they don’t use the product, the expected benefits when using it and concrete results they can expect from it.
A deeper funnel (Purchase, ROAS) is used because these users have shown intent and active interest before.
Definition: excluding already converted users.
Depending on the business and buying frequency, we can exclude some segments like L7D (last 7 days) purchasers or L90D subscribers to avoid spending on existing customers.
There are many more sophisticated ways to slice and dice the data and create advanced user segments. However, this straightforward segmentation flow allows you to keep things simple and still target large enough segments while maximizing results. You can address users at different stages of the funnel with different messaging.
This will help you reach them where they are. And increase the ROI of the budget you’ve already spent in the initial campaign. Retargeting users reap the rewards of the brand awareness you’ve already built, and this can lead to increased conversion rates. According to data by Adjust, retargeting showed a 152% higher engagement rate (number of events per user) than new user acquisition campaigns over 30 days, as well as 37% more revenue events than new users. So, you should definitely allocate a budget to retargeting to build a complete funnel and not miss out on ROI.