What is Customer Segmentation ?

Customer Segmentation

What is Customer Segmentation?

Customer segmentation is the process of dividing your customers into groups based on shared characteristics.

👆 By the way, companies that excel at customer segmentation achieve 20% higher customer lifetime value than those that don’t. Just as your customer journey map tracks the path, segmentation helps you understand who’s taking that journey.

Why is Customer Segmentation Important?

Just like a Marketing Funnel helps track conversions for different groups, segmentation helps you:

Personalize messaging
Target marketing efforts
Optimize product features
Improve customer service
Allocate resources effectively

Types of Customer Segmentation

1. Demographic Segmentation 👥

Age groups
Income levels
Education
Occupation
Family status

2. Behavioral Segmentation 🎯

Purchase history
Product usage
Brand interactions
Loyalty program participation
Customer journey stage

3. Psychographic Segmentation 🧠

Lifestyle choices
Values and beliefs
Interests
Attitudes
Personality traits

4. Geographic Segmentation 🌍

Countries
Regions
Cities
Climate zones
Urban/rural areas

Customer Segmentation vs Market Segmentation

These concepts work together but serve different purposes:

Customer Segmentation

Focuses on existing customers
Based on actual behavior
Uses customer journey data
Helps improve retention
Drives personalization

Market Segmentation

Includes potential customers
Based on market research
Uses broader market data
Helps acquisition strategy
Guides market entry

Customer Segmentation