Customer segmentation analysis involves looking at how your customers divide into groups and using that insight to guide brand strategy and positioning. Explore how customer segmentation analysis can guide your marketing strategies.
Customer segmentation analysis is a technique companies use to gain insight into marketing strategies and product positioning by segmenting their customers into distinct groups based on demographics, interests, spending habits, or other characteristics. It can guide marketing and outreach strategies by helping you understand what your customers need and what is most important to them. It’s also an important tool to stay competitive in tight markets.
Explore the benefits of customer segment analysis, different methods of segmenting your customers, and careers that involve analyzing this data and directing marketing strategy.
Customer segment analysis is the process of grouping your customers by relevant demographics or information to structure your operational processes in a way that reaches the most customers. This strategy for understanding your customers is integrated within greater customer relationship management (CRM) considerations. Understanding and nurturing relationships with your customers can be a way to stand out in competitive markets. Customer segment analysis is a method of organizing those efforts.
Customer segmentation analysis plays a crucial role in enhancing marketing efforts and business strategies by:
Personalizing marketing to increase engagement and conversion rates
Identifying high-value customer segments for focused attention and retention strategies
Optimizing product development and innovation by understanding specific needs.
Maximizing ROI on your marketing budget by prioritizing marketing efforts that get results
You can organize your analysis using different types of customer segmentation. Some types to consider include demographic, geographic, psychographic, behavioral, needs-based, and lifetime value segmentation.
Dividing the market based on demographic factors like age, gender, occupation, education, or income level is known as demographic segmentation. Each offers insight into how your customers will react to marketing strategies. For example, if your product is popular among parents, you may use demographic segmentation to create separate marketing messages. You may target parents of young children, newly married young adults, or new grandparents in marketing that speaks to their needs.
Geographic segmentation groups customers by location to tailor marketing strategies according to regional preferences. This approach can offer insight into customers' preferred language, cultural practices, local climate, and even their daily lives, such as the population density of their town or city. For example, if you sell a clothing item usually worn in warm, sunny weather, you may choose to run your advertising seasonally in places with colder winters, where customers will be less likely to purchase your product.
Psychographic segmentation focuses on lifestyle, values, and personality traits to offer highly personalized products or services. The goal is to sort your customers by their motivations and how they think. This may include your customer’s interests, lifestyles, attitudes, or personality. For example, if you sell cars, customers may want to purchase a newer car because they have more wealth or appreciate the status symbol. Customers may also wish to purchase more dependable, less expensive, or used vehicles because they are cost-conscious and prioritize other values. You can develop marketing strategies to meet each group of customer needs.
Behavioral segmentation is based on customer behaviors and interactions with the brand, including purchase history and engagement level. Instead of sorting customers by their thoughts, behavioral segmentation sorts them by what they do. It might include their purchase history, loyalty, how customers use reward programs, or website and social media activity. The insight you gain from behavioral segmentation can help you determine the most effective way to spend your marketing budget. For example, you might use this method to sort interested and engaged potential customers from customers who are no longer interested so you can target the former group.
Lifetime value (LTV) segmentation groups your customers based on the historical amount of money they have spent on your product or brand. This system can also sort customers by their likelihood of moving to a competitor’s brand or their future potential for purchases. LTV segmentation can give you insight into your customer’s buying habits so you can prioritize customers who have spent more money or are likely to spend more in the future. For example, if you run a donut shop, you will have casual customers who stop by, regular customers you can count on every week, and potentially even corporate accounts that order a great deal of donuts for events from time to time. You will approach each of these clients differently, depending on the type of promotion you might offer them.
Needs-based segmentation focuses on what your potential customers need. This may include the features they need in your product, the method of delivery they need, or how your company meets their needs with things like customer service. 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.
Customer segmentation benefits professionals across various industries. For example, check out career details as a segmentation analyst, product marketing manager, or media planner.
Average annual salary in the US: $67,799 [1]
Job outlook (projected growth from 2023 to 2033): 8 percent [2]
As a customer segment analyst, you will be responsible for gathering data and analyzing it to look for trends and to segment customers by demographic, LTV, or other metrics. You may share your findings with team members or be directly involved in crafting marketing strategies as a result of your analysis.
Average annual salary in the US (Glassdoor): $115,683 [3]
Job outlook (projected growth from 2023 to 2033): 8 percent [4]
As a product marketing manager, you will be responsible for designing and implementing a marketing strategy for a specific product. You will use customer segmentation analysis to understand your customers and your competitors to determine the value that you offer customers, then communicate that message in engaging ways that complement your brand.
Average annual salary in the US (Glassdoor): $71,389[5]
Job outlook (projected growth from 2023 to 2033): 8 percent [4]
As a media planner, you will determine which media streams are most appropriate for your company or client’s brand. This will require customer segmentation analysis to determine which media platforms and channels will be most engaging for your client’s product.
Whether you want to start a career in customer segmentation analysis as an analyst, media planner, product manager, or through another career path, you can take a few steps to begin. First, you will likely need to earn a bachelor’s degree. Potential areas of study include marketing, business, communication, or a related field.
You can also work to develop career skills that can help you be successful, such as:
Marketing skills like market research and creating marketing campaigns
Data analytics
Digital marketing skills like SEO and SEM
Communication skills
Analytical skills
Customer segmentation analysis involves organizing customers into groups to gain insight into their habits, demographics, behaviors, and more. Consider an online course if you want to explore customer segmentation analysis in more detail. You might want to explore Data Analytics Methods for Marketing offered by Meta, Customer Understanding and Digital Marketing Channels offered by Unilever, and Customer Relationship Management offered by Starweaver, all available on Coursera.
Glassdoor. “Salary: Segmentation Analyst in the United States, https://www.glassdoor.com/Salaries/segmentation-analyst-salary-SRCH_KO0,20.htm.” Accessed February 13, 2025.
US Bureau of Labor Statistics. “Market Research Analysts: Occupational Outlook Handbook, https://www.bls.gov/ooh/business-and-financial/market-research-analysts.htm.” Accessed February 13, 2025.
Glassdoor. “How much does a Product Marketing Manager make?, https://www.glassdoor.com/Salaries/product-marketing-manager-salary-SRCH_KO0,25.htm” Accessed February 13, 2025.
US Bureau of Labor Statistics. “Advertising, Promotions, and Marketing Managers: Occupational Outlook Handbook, https://www.bls.gov/ooh/management/advertising-promotions-and-marketing-managers.htm.” Accessed February 13, 2025.
Glassdoor. “Salary: Digital Media Planner, https://www.glassdoor.com/Salaries/digital-media-planner-salary-SRCH_KO0,21.htm.” Accessed February 13, 2025.
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