Customer Segmentation: What is it and How is it Beneficial For Your Business?

Customer segmentation is an effective business strategy that increases revenue and customer satisfaction. We understand that one product or service cannot fit every customer. You need to serve them according to their needs. With the help of customer segmentation, you will understand the needs and expectations of your customers.

What is customer segmentation?

Customer Segmentation

Before discussing further, understanding the main concept of customer segmentation is very important. Segmentation means creative divisions based on different factors. In customer segmentation, your customers are divided into certain categories based on their requirements, activity, social life, financial background, and so on.

After skillfully dividing your audience into different categories, you can set your targets accordingly. Without customer segmentation, all your efforts, marketing strategies, and promotion will go in vain.

What are the different types of segment descriptors?

Types of Customer Segmentation

After collecting data related to your customers, you can analyze it and divide them into several categories. Here are some of the major groups among which you can divide your consumers:

  • Demographic group

This group is based on the age, gender, education, and income of your customers.

  • Geographic group

It is basically about the geographical location of your customers. Some of them can belong to rural areas and some to urban areas. International and national clients also fall into this category.

  • Behavior group

This group is formed based on the behavior of your customer. Some of the consumers purchase your products, and some only browse through different categories. It will also enlist the habits of your customers.

  • Psychographic group

It is based on the lifestyles and social status of your consumers. Some people are interested in sports and some in fashion. Thus, keeping these in mind, this group is created.

These are all the groups used for customer segmentation. According to this data, you can start your promotion.

What are the benefits of customer segmentation?

There are numerous benefits of customer segmentation. You will understand your customers and utilize your marketing budget more efficiently. You can also give your rivals a good competition and stay one step ahead.

If you want to hire professionals for customer management, you can try the customer management and segmentation services offered by Commence. Below are all the advantages of customer segmentation.

Benefits of Customer Segmentation

1. Better marketing

Handling a huge customer base can be difficult. With customer segmentation, you can break the base into small parts and use different marketing strategies. It will also help you identify the target audience and promote your product to the most relevant viewers.

It also increases the conversion rate of your business.

2. Using different strategies

When you divide your customers into different categories, your marketing strategies become more focused and direct. You cannot use the same pitch for everyone.

So, you have to be creative and use different ways of reaching your audience. Thus, using different strategies will make your whole campaign more effective.

3. Better distribution

When you categorize your customers, you understand your customers’ needs. It helps you to plan your distribution strategy. Understanding the potential of a particular area will help you to sell the products in the most visited outlets.

4. Retention of customers

Retaining the old customers is an important aspect. Customer segmentation will retain your old customers by providing what they need. Sometimes we neglect a major section of our consumers.

With segmentation, we can easily identify a section and focus on it. It will also help you improve your services and get everyone’s attention.

5. Better competition

Customer segmentation will increase your revenue, which will make you one of the leading brands in the market. Thus, your company will give a tough competition to its rivals. Good competitiveness will also make you known to all your consumers.

6. Better customer relations

The success of a business immensely depends on its customers. If you can keep them happy, your way to success becomes smoother. Segmenting your customers according to their needs helps you to understand them.

As a result, you can offer them all the required services and products. Daily communication and feedback will help you to update your services so that you can meet their needs.

7. Optimized price

Right pricing of a product can be tough. When you use a customer segmentation strategy, you understand the financial condition of your consumers. It helps you to price your products correctly.

Making your products and services affordable is also a prime factor in achieving success in your business.


Every successful business has an excellent customer management capability. Without the support of your customers, you cannot survive a day. Segmenting your customers gives you a better understanding of your target audience. With this strategy, you meet their needs and earn their trust. So, use it as one of your marketing strategies and keep your customers satisfied.

Francis Nwokike

Francis Nwokike is a Social Entrepreneur and an experienced Disaster Manager. I love discussing new business trends and marketing tips. I share ideas and tips that will help you grow your business.

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