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How to segment customers

Updated: Feb 6

The author Shaina Peek of the article:" How to segment customers"

Author: Shaina Peek

Publication date: 15.09.2023

Customer segmentation is a common term in the business industry. In particular, it differs from market segmentation, as it goes more in-depth. Let’s take a look below on how to offer more personalised advertising to your customers.

Market Research

Get informed about the market

Firstly, it is important to get more informed about the market. This way, you have a look at recent data. For example, consumer behaviour and current trends can prove to be insightful. Also, having knowledge about the competition helps with determining strategies. For instance, what does current marketing in the industry look like? Researching this data makes segmentation easier.

Types of customer segmentation

There are different types of customer segmentation:

Demographic segmentation

This segmentation is based on characteristics. The population is studied and data is presented statistically. Some examples are age, gender, and occupation. For instance, knowing the income can help assess the willingness to buy your products.

Geographic segmentation

Geography refers to the location. So, in geographic segmentation you can choose the size of the location. For instance, you can choose to focus on a country or on a postal code. Knowing more about your customer's living location helps in choosing which language to communicate in. It also helps with the marketing strategy.

Psychographic segmentation

Psychographic variables are more personal based. These can be beliefs like religion. In addition, interests are also psychographic such as hobbies that people have, and what they do in their free time. Therefore, psychographic variables are part of someone’s personality. Knowing their values and interests helps in creating more personalised marketing.

Technographic segmentation

Technographic segmentation refers to the use of technology. In particular, it helps in determining the right communication platforms. It is also part of customer relationships. For example, if your customer segment uses apps a lot, creating an app for your company can encourage loyalty.

Behavioural segmentation

In this case, behaviour refers specifically to buying behaviour. In other words, it looks at interactions that consumers have had with your business. What products were they interested in? What pages did they visit? Looking at this data can help with finding improvements. Perhaps the information is not clear, or not interesting enough. Therefore, examining customer behaviour helps to maintain good relationships with your customers.

Needs-based segmentation

Needs pertain to the business process and it entails the products and services of the company. Actually, the product should fulfil customer needs. Therefore, it is important to determine if all features of the product offer customer satisfaction. So, for services, communication can be important as customers might expect regular updates about their orders. Also, the current increased focus on sustainability can also be a need.

Company goals

Determine the company goals

You should determine the situation for the company. Are you entering a new market or expanding in the current market? For new markets, it is easier to start with more statistical information. So, demographic, geographic, and technographic segmentation offer initial insights. In contrast, an existing market offers more opportunities for collecting data. Here, the needs and psychographic segmentation can be used. Additionally, keep in mind your company goals such as the relationships with customers and the company values.

Analyse the results

After having implemented these new strategies, the results can be analysed. First, you can collect data by looking at the sales in the recent period. An increase in sales or revenue is an indicator of a positive influence. Also, handing out surveys to customers offers more insights. By involving them in the process, improving based on their wants and needs is easier. So, using these sources shows if the current strategies are successful. If not, use the above information to determine new segments and successful communication channels.


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