Customer segmentation is the process of separating your customers into groups based on certain behaviors (e.g. personality, interests, habits) and attributes (e.g. demographics, industry, income).

Segmentation offers a simple way of organizing and managing your customers relationship.

This process enables the company to stratify its customers in the purpose of tailoring and personalizing marketing incentives, service, and sales efforts to the needs of specific groups.

Understanding your customers can boost customer loyalty, retention and revenue.

Multiple reasons for customer segmentation

There are a number of reasons why an organization will devote resources to develop customer segmentation. Among many reasons, here are key advantages of customer segmentation:

– Deep understanding of customer population

– Optimize marketing resources by developing appropriate ads to target and convert a specific segment.

– Improve customer service and customer support

– Improve customer retention and reduce customer churn

– Identify new opportunities for cross sell or upsell

– Devote resources on your most valuable customers

– Improve revenues

Now that you understand what customer segmentation is and why it’s a process worth investing time in, let’s cover the most common models and types of segmentation.

Different segmentation models:

1. Demographic Segmentation

Customer segmentation based on Age, gender, income, education, and marital status

2. Geographic Segmentation

Customer segmentation based on Country, state, city, town and other geographical features

3. Psychographic Segmentation

Develop customer segmentation based on personality, attitude, values, and interests

4. Technographic Segmentation

Mobile-use, desktop-use, apps, and software

5. Behavioral Segmentation

Tendencies and frequent actions, feature or product use, and habits

6. Needs-based Segmentation

Product/ service must-haves and needs of specific customer groups

7. Value-based Segmentation

Economic value of specific customer groups on the business

In our next blog, we will describe each model with more details to unveil the power of big data in customer segmentation. 

DataOi has resources and capability to customize a customer segmentation analytics that will enable organization better understand its customers and improve its revenue streamline.

Contact us for more details about our customer segmentation model.