5 Benefits of Customer Segmentation

The goal of any marketing campaign is to ensure that your information reaches the people that need it most. Segmenting your customers for your brand is crucial but understanding its advantages is much more vital. And in the criteria which best suits them 

Customer Segmentation is a better choice to know your customers better. It is not that bifurcating your customers into good and bad but in the different criteria. And segments via which you can pitch your message better. With customer segmentation, you can break down your customers into smaller, more detailed groups depending on their needs — and target them even more specifically.

And in the wholesome goodness of this segmentation, you tend to know the benefits of customer segmentation also.

What Is Customer Segmentation?

Customer segmentation is the process of dividing customers into groups based on common characteristics so companies can market to each group effectively and appropriately. 

This gets segregated in context to:

  • Demographic (age, gender, religion, sect, family size, family size and more)
  • Geographic (location and where they work)
  • Psychographic (social class, lifestyle) and
  • Behavior (spending, consumption, habits and more)

Benefits Of Customer Segmentation

Price Optimization Leading To Best Economies Of Scale

price optimization

Understanding the social and financial status of your customers will assist you to pace up with the price optimization accordingly. This data helps in better allocation of resources which in return helps you to gain economies of scale.

Economies of scale mean when you are able to achieve your desired goal and that too at most efficient cost. This can be done through customer segmentation. Therefore, try to focus on a limited number of resources which will help to serve with resources.

Enhances Competitiveness


More customer retention. More will be the revenue generated. And all of this will enhance your competitiveness in the market. If you segment up your market, you are well known to your customers. And you can even come up with new products or variations according to the changing preferences of your customers. If you are vigilant enough, you may also have the first mover’s advantage in a product segment. Customer segmentation will also broaden your channel of distribution by increasing competitiveness. By knowing the right number of customers you can direct the right channel of distribution. This will remove confusion among your team members about whom they have to deliver the product & at what time.

You will be able to choose a precise channel of distribution & that too at minimal cost which eventually serves the best needs of your customers.

Brand Awareness

brand awareness

By segmenting your customers, you can make them well aware of your brand. Identifying your brand will help your customers to directly engage with your products. This will increase your goodwill in the market & a brand value will be established among your other competitors.

Users love personalized emails. When they receive something that’s made just for them, they’ll feel more comfortable purchasing from your company because they know you care.

This also builds brand awareness because customers will remember you as the company that sends them personalized emails based on their interests, previous spending habits, and more.

Acquisition & Retention

acquisition & retention

A personalized connection with your customers will help you to win satisfied customers.

About 75% of satisfied customers are more likely to remain with that organization who regularly meet up their needs.

Better Customer segmentation will lead to developing a better relationship with your prospective customers. Customer segmentation allows you to learn a great deal about your customers so you can cater to their needs more efficiently. You can also tailor your communication depending on the customer’s lifecycle. 44% of marketers in a CMO survey said that they use customer segmentation to decide their acquisition strategy. And 38% of them said that they use it to decide their retention strategy.

For example, when you’re trying to convert a prospect, your communication needs to be more informative. At this stage, they would prefer to learn about the solutions to their problems. In later stages, you may need to talk about other related products in your communication.

Revenue & ROI from Marketing

ROI from marketing

By fine-tuning your marketing message, you’ll see increases in your revenue because users will be more likely to make a purchase when they’re delivered exactly what they need. In fact, segmented and targeted emails generate 58% of all revenue for a company, which isn’t hard to believe.

When you segment your emails, you’ll also have a subject line that that is personalized to the recipients’ needs, which can increase the open rate by 26%. And it’s obvious that the more emails are opened, the more sales you’ll make. 

Successful marketing not only requires knowledge about who your customers are but also where exactly they are in the buying process. And customer segmentation based on such information can ensure that your marketing campaigns are truly effective. The campaigns that are sent to well-thought-out customer segments have 200% greater conversions than those that are sent to broad audiences.

Which Channel Is Most Benefitted By Customer Segmentation You Ask?

The answer is Email Marketing! Yes, Email marketing is probably the channel you first think of when you hear customer segmentation. That’s because it’s super easy to divide out your contact list into more specific groups and deliver them exactly what they are interested in.

email marketing

It’s important to first talk about the overall importance of customer segmentation for your marketing strategy as a whole, especially your content creation.

Marketing strategies such as search engine optimization (SEO), pay-per-click advertising (PPC), email marketing, social media marketing, and content marketing all start with content — so it’s important to keep customer segmentation in mind throughout you’re content brainstorming and creation.

For example, if you’re going to start customer segmentation in your email marketing campaign, you’ll need to have customized content for those emails that will go to each group of users that you decide to target. You might decide to include a link to your latest blog about the cute sweaters you found online for dog owners.

This is highly specific content that can be targeted with long-tail keywords, which will help you to really hone in on your specific targets and get your detailed information to the users that will benefit from it the most.

Overall Thoughts

The standards of good customer experience are ever-increasing so Customer segmentation should be done very carefully as your whole business plan depends upon your target audience only.


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