What is a Customer Segment, Meaning, Objectives, Benefits and Types

Customer segment or segmentation is one of the best ways to get information about customer characteristics in a timely manner.

By segmenting customers, it will be easier for you to understand customers, including their needs which are beneficial for business.

Understanding customers or customers in business is one of the crucial things.

It could be said that by understanding customer needs, your business growth will be more precise and targeted.

So, for this reason it is necessary to understand customer segments better. Come on, see in full below!

What is Customer Segment?

Quoted from Shopify, customer segment or customer segmentation is the process of grouping customers into groups based on their general characteristics.

The grouping aims to optimize marketing efforts in each group.

HubSpot also added that this grouping is based on several general characteristics such as age, industry, gender, and others.

Customer segments are the right step to personalize marketing, including service and sales that can reach certain groups.

In the business-to-business marketing or B2B area, customer segmentation is carried out based on several factors including:

• industry;
• number of workers or employees;
• products the company has recently purchased; And
• location.

Meanwhile, for business-to-consumer marketing, companies usually group customers according to their demographics as previously explained, namely:

• age;
• gender;
• marital status; And
• location.

More targeted and accurate campaigns for each customer group will increase brand loyalty and customer satisfaction.

Customer Segment Objectives

The main goal of customer segments is to create a more accurate marketing strategy for each customer's characteristics.

However, it should be noted that customer segmentation is not just about grouping customers.

Through customer segments, you can create appropriate content and find unique challenges for each customer group.

Efforts can be made in the form of communication with customers and product development.

More specifically, the customer segment objectives are as follows:

• Create and communicate marketing that is relevant to customer needs based on customer segmentation results.
• Choose good communication media for each customer segment, for example via email, social media such as Instagram, radio advertisements, and other media according to customer group preferences.
• Identify how to improve products and services to customer groups.
• Build good relationships with customers.
• Forming a more focused business strategy to increase customer satisfaction.
• Helps increase sales of other products and services owned by the company.
• Improving customer service in the company.

Benefits of Customer Segments

According to Forbes, the two main benefits of customer segments are improving good relationships with customers and brand loyalty, as well as improving customer experience.

Both boil down to the level of customer satisfaction with the products or services offered by the company.

According to HubSpot, here are some of the benefits that customer segments can provide for your company:

1. Excel in a Competitive Market

In marketing or building good relationships with customers, the approach is often one-size-fits-all or all customers are considered the same.

This will make you the same as other brands so it doesn't make your business stand out or excel.

Customer segments are more profitable because the targets are in accordance with the grouping.

2. Targeted Paid Campaigns

Customer segments will make it easier for companies to determine in which areas and what kind of paid campaigns should be carried out.

Through effective paid campaigns, the budget used will also be efficient and not wasted because it is on target.

3. Improve the way you communicate

The easiest example is email. Of course, the Gen Z customer segment and other generations must be differentiated to make it more attractive.

Grouping customers will certainly make it easier to communicate your brand with customers.

Types of Customer Segments

Reported by Forbes, here are several types of customer segments that are usually carried out by companies:

1. Demographic Segmentation (Demographic Segmentation)

Segmentation based on demographics is a customer segment that is grouped based on the same and common characteristics. For example, gender, age, marital status, education level, occupation, income and location.

A simple example is if you have a bookstore, then segment it for people who are older. Or you can make groupings based on age.

2. Geographic Segmentation (Geographic Segmentation)

For geographic segmentation, you need to group customers based on language and location.

This location can be a neighborhood, city, province, or country. You can also add transportation mode preferences for geographic segmentation.

This geographic segmentation can be applied if you have at least two business locations in the same area.

Apart from that, you can also apply this segmentation if your business requires delivery of goods in different regions.

3. Psychographic Segmentation

Psychographic segmentation includes grouping customers based on attitudes, values ​​they believe in, lifestyle, personality, and interest in something.

Usually for this type of customer segment, the company will consider previously purchased products, survey responses, and shopping habits.

Usually this segmentation is used by companies that offer several types of services and products at once.

4. Habit Segmentation (Behavioral Segmentation)

For behavioral segmentation or segmentation based on customer habits, several things that can be taken into consideration are:

• customer product purchase history;
• response to marketing campaigns or brand campaigns;
• website activity;
• purchasing activities in e-commerce; And
• customer engagement or frequent customer interactions.

From these habits, customer characteristics are formed and segmentation can be determined.

The basis is the frequency and tendency of habits carried out by customers.

So, that's some important information about customer segments that you need to know to develop your business.

Customers or consumers are an important asset for the development of a business.

It is important for companies and brands to understand customer needs amidst increasingly tight competition in the market.

That's why it's important to learn how to build positive relationships with your customers so that customer satisfaction is also met.

So, to learn more, you can take part in the Customer Satisfaction & Relationship Program from the prasmul-eli!

Through this program, you will be given knowledge and understanding of customer satisfaction and loyalty as well as concepts related to both.

What are you waiting for? Increase your business development and join the program now!