What is Customer segmentation?

Or for customer support, different audience segments can help distinguish loyal customers from people that might be a churn risk. Customer segmentation should be done on an ongoing basis to help different teams at an organization understand how to best interact with their customers. Geographic segmentation is when consumers are organized into groups based on their location. There are a variety of ways to segment your customers, but the four most common categories include demographic, psychographic, geographic, and behavioral, as we explain below. Customer segmentation lays the groundwork for sending the right message, to the right user, at the right time.

You'll be able to identify what's truly unique about your customer base and tailor your entire business to serving those niches. It’s about understanding who is already interacting with your brand, or who could be, and how you can better serve them. But its impact goes even further, helping product development teams design better solutions and customer service teams deliver faster, more relevant support. In this article, we’ll break down the definition of customer segmentation, why it’s more important than ever, emerging trends you should know, and Customer segmentation how to put segmentation to work for your business. Show me some other free resources instead!

It's also smart to limit the number of people who can modify customer segments to preserve the integrity of your marketing data. You might consider creating a key or guide to your customer segments to help your team understand the purpose of each segment or group. Follow these seven steps to build a customer segmentation strategy that's right for your business. Although you can choose your customer segments, there are five main ways to segment customers that can help jumpstart your strategy. It’s not just about putting people into buckets—it’s about digging deeper into the "why" behind their actions. Customer segmentation analysis is the process of reviewing and interpreting your customer segments to better understand behaviors, patterns, and opportunities.

What are Market Segmentation and Targeting?

Behavioral segmentation helps you learn about your audience’s needs, enabling you to customize your messaging so that you’re making relevant offers. This allows the retailer to send targeted promotions, such as activewear offers to fitness-focused shoppers, making marketing more relevant and effective. This approach helps you answer the "where" in your customer base, allowing you to tailor offers, messaging, and products to the specific context of a location. Once you’ve identified and refined your customer segments, the next step is to use segment data to optimize different areas of your business and offer better experiences to the people who invest in your products and services.

• By segmenting customers in this early stage, your team can proactively offer check-ins, tutorials, or fast-track support—then gradually scale back as they become more self-sufficient.
• Helpful additions include LinkedIn Sales Navigator for prospect research, Google Analytics for website behavior, and marketing automation platforms for campaign activation.
• Creating a multi-stage campaign with several paths is as simple as two-steps campaigns.

Most teams don’t know if their “VIP segment” is still driving the majority of their revenue, or if it’s been replaced by a different cohort. You want to target them with a tailored win-back offer. When segments are based on incomplete data, retention marketers waste their spend on irrelevant messages, and analysts lose credibility when performance tanks.

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The industry a business operates in can include sectors like technology, healthcare, finance, education, manufacturing, and more. For example, a tech startup might have different service needs than a well-established manufacturing firm. Lastly, and similar to individual demographics, firmographic segmentation caters to B2B markets. If scores are high, that’s a sign that you’re on the right track with your services. This can help you determine how customers feel about your offerings and if they’re truly satisfied. Thanks to the many ways customers rate their experiences, it’s easy to keep track of customer satisfaction scores (for example, NPS).

Behavioral segmentation

Aligning your customer segments to your objectives will help to guide you about how specific these customer segments should be. Customers do the customer journey in different ways, so a better understanding of how different segments behave will allow you to create journeys that cater to different segments and make it as easy as possible for customers to complete the journey. Once you’ve created your customer segments based on the correlations you found, they should be used to determine your brand positioning, messaging, and your go-to-market strategy. Indirect streams will involve insights derived from data that wasn’t directly obtained, but can still point to important trends that will help understand any correlation in behavior within the customer base. So bear this in mind when you’re digging into the data because it may or not be helpful to get very specific; it depends on your circumstances and objectives. Some products will have a stronger tie to demographics (like music), whereas products like food, for example, are for all.