What is Customer Segmentation? Practical Guide with Templates

In as little as six months, you can explore fundamentals of digital marketing and practice how to engage with customers, measure marketing performance, and build an e-commerce store. Customer segmentation helps businesses group customers by shared traits, behaviors, and needs to improve marketing and customer experiences.

I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings. Since 2012, we have provided business templates to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries. Customer segmentation is the practice of dividing customers into distinct groups with common characteristics.

Behavioral data can also reveal which customers are more likely to upgrade or respond to special offers. It’s a critical step in understanding not just who your customers are, but how to serve them better. Customer segmentation can also reveal patterns and opportunities that help optimize internal operations, from prioritizing support resources to informing upsell strategies.

Four Types of Behavioral Segmentation

In addition to industry players, market segmentation research is conducted on behalf of government agencies, educational institutions, and law firms—and even advertising and marketing firms. Consumer goods, retailing, ecommerce, and media are the most obvious sectors to leverage market segmentation, but all industries benefit from the customer insights that this analysis provides. Management believes proper market segmentation is critical to driving revenue growth, according to multiple historical studies by Bain & Company and the Harvard Business Review.

• If this is your first time doing customer segmentation, start small.
• Once you’ve built your customer segments and launched targeted campaigns, the next critical step is showing the impact.
• However, a company may not be able to serve the whole segment because of a lack of resources.
• Segment your customer base by demographics, behaviors, product-related characteristics, or any criteria you see fit.
• You can use this type of segmentation to offer your customers more useful products, build trust with them, and develop new markets for customers who could use your product but haven’t heard about it yet.

It’s also a good idea to include customer lifetime value in your calculations. Businesses can allocate resources effectively by assigning tiers to leads, focusing on high-value prospects and tailoring marketing efforts accordingly. Customer segmentation Tier-based B2B market segmentation involves categorising prospective customers based on their potential value to the business.

What tools are needed for B2B SaaS customer segmentation?

Customer segmentation divides customers into groups by shared traits, letting businesses send targeted messages, improve products, and build stronger relationships with each audience. Customer segmentation and market segmentation use similar criteria to create subgroupings. B2C companies can also customize offers based on the predominant languages spoken in each region. Positioning will require you to identify the best ways to position your product, service, or brand to appeal to the customer segments you’re targeting. Your project goals may include brand repositioning, launching new marketing campaigns, understanding how new employees perceive your company, or if B2B customers would use a newly developed app. When combined with location, industry, and customer base information, technographic segmentation data increases the effectiveness of reaching specific target specific audiences.

Customer segmentation also enables businesses to anticipate meaningful market trends and to lay the foundation for offering a superior customer experience. Customer segmentation is the process of breaking down a company’s customer base into smaller groups, to better reach them and communicate with them. Customer segmentation is updated continuously; market segmentation is often refreshed periodically. Customer segmentation focuses on people who are already your customers, using first-party data you've collected through transactions and product usage.