What Is Customer Segment - DSers eCommerce Basics

Customer Segment

A customer segment is a group of users classified by similarities and characteristics that they have in common.

What Is Customer Segment

A customer segment is a group of users classified by similarities and characteristics that they have in common, such as demographics, interests, geography, behavior, psychographics, etc. Customer segments are directly related to the customer personas that you use to tailor your marketing efforts. In addition, segments make it easier for businesses to market to specific groups efficiently and effectively.

Why Is Customer Segment Important

The customer segment is considered one of the most significant marketing tools because it helps businesses better understand their target audiences. If done right, it can bring businesses a lot of benefits, including:

  • Better marketing campaigns

Customer segment enables companies to create more focused marketing messages or campaigns, tailored to each customer segment. 

  • Improved offerings

Getting in-depth insights about your customers allows you to tailor and optimize your offerings to meet customer needs and expectations. 

  • Ability to expand

Segmenting potential and existing customers into specific subsets can help businesses better understand what customers could be interested in. This promotes the expansion of new products and services customized to their target audiences.  

  • Price optimization

Identifying the customers’ social as well as financial status makes it easier for businesses to determine suitable pricing for their products and services that the clients would consider reasonable.

  • Loyal customer relationships

Fully meeting customers’ needs and expectations through tailored products and services at an affordable price helps build customer loyalty. Furthermore, the segment may reveal what types of incentives drive each customer segment to repeatedly choose your company over your competitors. 

  • Increased revenue

Spending less time, resources, and marketing efforts on less-profitable customer segments and more on profitable customer segments will help enhance revenue and profitability while reducing costs of sales.

How to Identify Customer Segment

There are many ways to segment your customers to find the right target audience. The four key ways to segment customers include demographic, behavioral, psychographic, and geographic segments. Let’s check out how to identify customer segments via:

  • Demographic

This type divides customers into smaller groups based on demographic factors such as age, race, social class, gender, income, family size, or level of education. Collecting basic user information at site entry can help businesses develop customer relationships and segment the user base more efficiently and effectively. 

  • Behavior

This method is possibly the most useful of all for eCommerce businesses. It requires data that can be gathered via your websites. You can segment customers with regard to their purchasing habits, spending habits, browsing habits, previous feedback, and loyalty to the brand (nonusers, potential users, 1st-time users, or regular users).

  • Psychographic

This is a technique for segmenting customers based on their personality traits, attitudes, interests, beliefs, values, and other lifestyle aspects. 

  • Geographic

This method is considered one of the simplest to identify and group customers with regard to their physical location (continent, country, region, city, town, population density, climate...).

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