Think about the groups of people in your life — family, friends, coworkers, educators, coaches, and more.

Chances are you don’t communicate with each of these groups the same way. For example, you most likely chat with your family in a different way than you do with your co-workers. You probably have different expectations of and methods of interacting with each of these groups, too.

The same goes for your customers. Within your business’s base of customers, there are inevitably various groups of people. The people who make up these groups are from a variety of places and have unique needs, traits, pain points, and expectations for your business in terms of communication, support, and more.

The key to creating and maintaining successful relationships with your business’s different customer groups is understanding their preferred styles of communication and their unique needs. This helps you effectively and efficiently meet (and, hopefully, exceed) their expectations.

The best way to do this is through customer segmentation.

What is customer segmentation?

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

Segmentation offers a simple way of organizing and managing your company’s relationships with your customers. This process also makes it easy to tailor and personalize your marketing, service, and sales efforts to the needs of specific groups. This helps boost customer loyalty and conversions.

Why segment customers?

There are a number of other reasons why customer segmentation is so important. Here are some of the things this process can help your business accomplish:

  • Learning about your customers on a deeper level so you can tailor your content to their unique needs and challenges
  • Creating targeted campaigns and ads to resonate with and convert segments of customers
  • Improving your customer service and customer support efforts by understanding and preparing for challenges different groups are likely to experience
  • Increasing customer loyalty with customized content and interactions
  • Understanding who your most valuable customers are and why
  • Communicating with segments of customers via preferred channel or platform.
  • Meeting specific groups of customers where they are
  • Identifying new opportunities for products, support, and service efficiently

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.

Customer Segmentation Models

  1. Demographic Segmentation
  2. Geographic Segmentation
  3. Psychographic Segmentation
  4. Technographic Segmentation
  5. Behavioral Segmentation
  6. Needs-based Segmentation
  7. Value-based Segmentation

Although the following list doesn’t cover every type of customer segmentation, it provides you with a starting point for organizing your customers. Along with each model is an associated list of ways to segment your customers.

SEGMENTATION MODELHOW TO SEGMENT CUSTOMERS
Demographic SegmentationAge, gender, income, education, and marital status
Geographic SegmentationCountry, state, city, and town
Psychographic SegmentationPersonality, attitude, values, and interests
Technographic SegmentationMobile-use, desktop-use, apps, and software
Behavioral SegmentationTendencies and frequent actions, feature or product use, and habits
Needs-Based SegmentationProduct/ service must-haves and needs of specific customer groups
Value-Based SegmentationEconomic value of specific customer groups on the business