Tags are used to organize and allows you to subgroup your contacts.
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To create tags, please select Labels under Location on your left menu. Select Tags tab under Labels.
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You can create different tags by clicking Add New Tag Source button, you can also edit and delete existing tags. There is a column where you'll see howmany contacts were under the given tag.

You can do crossover tags which means you can tag clients from different contact groups. Select the clients you want to tag from the All Contacts group.

Choose the tag you want, either an existing or new tag