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Four Types of Customer Segmentation That Will Elevate Your Business Efficacy

Jun 9, 2021 8:00:00 AM

Customer segmentation is a system or practice that helps businesses divide customers into target groups based on some degree of similarities to uncover insights that can inform sales and marketing strategies. Demographic segmentation can focus on the different aspects of a customer, such as education, age, income, occupation, family, gender, and other factors. 

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Four Types of Customer Segmentation Your Business Should Know

The following are some of the most impactful and used types of segmentation for businesses to learn about their customers’ preferences and meet their expectations by developing targeted campaigns, improving customer services, identifying new business opportunities, and more. 

Economic-IconEconomic segmentation takes into account the educational qualifications, marital status, occupation, income, and other socio-economic characteristics of a customer to help determine the economic worthiness of a segment.

Geography-IconGeographic segmentation identifies the customers based on their location and topography. It helps businesses develop, expand, and promote itself within localized markets.

Behavioral-IconBehavioral segmentation identifies the behavior of the customer, such as online presence, social media habits, technology usage, and purchasing patterns. This type of segmentation helps build loyalty and keeps customers happy.

Psychographic-IconPsychographic segmentation takes a deep dive into the customer's personality by understanding not only the history of their actions but also their nature, beliefs, personality, and interests. This provides a psychological viewpoint of their thinking.


How These Segmentations will Benefit Your Business

Leveraging these segmentations effectively will help businesses reach targeted customers through personalized content, product, pricing, packaging, and more to cater to their specific needs and preferences. Targeted campaigns using customer segmentation will give businesses the following benefits:

  1. Help drive sales and address customer's needs through personalized promotions
  2. Lead to higher profits with cost and resource optimization
  3. Build stronger, customer-centric relationships based on addressing customers’ needs to boost loyalty 
  4. Increase the customer’s lifetime value by providing a competitive edge and retaining customers

Key Takeaways

There are several different ways of segmenting that have helped our clients in their data journeys to date but the following are the main benefits: 

  • Customer segmentation can be easily achieved by defining similar characteristics related to economic conditions, geography, behavior, and psychology and grouping them together.
  • A business cannot be customer-centric without defining customers' needs and customizing their interactions with them according to those requirements and preferences.
  • Customer segmentation helps drive sales, aids in customer relationship building, and contributes to profitability.

How Nisum Can Help

Nisum has helped several clients understand the importance of customer segmentation to boost sales. Customer segmentation also adds tremendous value in retail when it is used to find the customer lifetime value (CLV) of each customer. This is how Nisum helped a Fortune 500 retail company boost sales penetration using segmentation followed by targeted loyalty programs, and how we helped increase ROI with a loyalty program by targeting segments of high-value customers. To learn more about how we can help your business get started, contact us


Vyasraj Vaidya

Written by Vyasraj Vaidya

Vyasraj Vaidya has been working with Nisum as a lead data scientist. He has a Masters in IT from the Technical University of Ilmenau, Germany, and has experience working in the media and entertainment sectors.


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