8 Types of Customer Segmentation Examples (+ How To Use)

In today’s world – that’s driven by technology and the Internet-, it’s easier than it ever has been to gather customer data.

There’s not only an abundance of information available (and from seemingly every direction), but there is also an entire list of ways that it can be collected and used to benefit your company.

This important data can be used to better understand your customers, allowing you to improve customer satisfaction and increase customer loyalty while simultaneously boosting your ROI and revenue.

This collection is called customer segmentation and there are various methods and ways you can use it to improve your marketing campaigns — which is exactly what we’re going to go over in this article.

Table of contents
8 Types of Customer Segmentation
1. Demographic Segmentation
2. Behavioral Segmentation
3. Technographic Segmentation
4. Psychographic Segmentation
5. Geographic Segmentation
6. Value Based Segmentation
7. Needs-Based Segmentation
8. Customer Status Segmentation

1. Demographic Segmentation

This customer segmentation method creates groups of customers based on various life circumstances. It is arguably one of the most common types and most likely the one you are the most familiar with.

Examples of demographic segmentation include:

• Gender
• Age
• Income
• Marital status
• Education
• Race

The demographic segmentation business model can be used across a wide variety of industries. The fashion and ecommerce industries are two industries in which this model is particularly useful.

For example, the owner of a fashion business wants to sell to individuals in the LGBTQ community. The owner could segment this group by gender, which would help him/her to create products and messages that are relevant to the members of the group.

In addition, demographic segmentation can be used to identify people who may want to pursue higher education, target customers who are on a budget using financial data, or communicate with people of all ages through chat and email using age demographics.

a. Gender

Most businesses start out using gender to segment customers. It’s a quick way to get started, but when using this segmentation, it’s important to make this segment inclusive.

Be sure to offer plenty of gender categories — especially when your customers are from a demographic that may be more modern, younger, or have more progressive values.

b. Income

The income segmentation analysis can give you a good idea of how much potential customers are able to spend on your business.

This factor should include the income of all the household members and include a number of different customer segments, as income varies widely household by household and location by location.

c. Age

Age is another of the most common segmentations. The age of a person can tell you a lot about them — even if you don’t know anything other than their birthday.

For example, the chances of someone in their 20s who’s living in California and someone in their 80s and living in Wisconsin having the exact same financial situation is very slim.

d. Marital status

Marital status is usually segmented into three categories; married, single, and in a relationship.

However, the marital status customer segmentation can be segmented into other segments, as well, in order to accommodate the lifestyles and values of your general customer base.

e. Occupation/Career

You can segment customers based on what they do for a career. It can tell you about what they are interested in and give you an idea of what their availability looks like. It can also indicate other factors, such as their household income amount.

f. Race

Race can be used to create customer segments. The information obtained with this segment can give you insight into the group’s likes and dislikes, their values, and more. Again, race is a segment that requires a wide variety of categories.

If you don’t offer enough racial options to include all of your customers, some may feel left out, which can result in dissatisfaction — or worse; a loss of that customer’s loyalty.

2. Behavioral Segmentation

Behavioral segmentation is exactly what it sounds like — when customers are segmented based on what they are going to use a product for: in other words, their behavior.

You can use this customer segmentation strategy to group customers into the following segments:

• Stage of customer journey cycle
• Ecommerce activities
• Previous customer interactions
• How customers purchase products

Behavioral segmentation is most useful when it comes to running personalized ads.

a. Ecommerce activities

Ecommerce activities include anything and everything that both potential and current customers do on your website.

As an example, you could segment customers based on how many times they visited your home or info page, whether or not they interacted with a CTA, or by which page of your site that they went to first.

b. Stage of customer journey cycle

This customer segmentation category is used to help clarify where new customers are in their journey with your company.

Is the individual a brand new lead who is ready to convert to a sale? Or, are they already a loyal customer who could be an advocate for your business?

c. How purchases are made

When operating an online store, it’s important to be aware of how your customers are purchasing your products.

If you have both a physical store and an online store, you will benefit from knowing whether your customers purchase one way or the other most often.

You can segment them into categories: physical, or online. You can also go even further, segmenting into whether they use debit/credit, or another form of online payment.

d. Previous customer interactions

Shockingly, you can learn quite a bit about a customer based on the last interaction they had with your business.

If a customer has a positive customer experience, they could ready to accept a promotion if they are at a stage in their customer journey that makes sense in which to accept a good offer.

However, if the experience was negative, it could be helpful to get the customer service team to reach out to your target audience in order to repair the relationship.

3. Technographic Segmentation

Despite its complicated name, technographic customer segmentation is simply making customer segments based on how comfortable people are with technology.

• This information can be gathered by:
• Monitoring how people access your site
• Sending surveys
• Digging into what brand of device customers are using

You can do a number of different things with this information.

What things, you ask? These “things” include deciding whether to launch a mobile app, design products that are easy for those who aren’t tech-savvy to use, and understand how to improve your product.

You can break this segment into the following sections:

• Type of device
• Source
• Browser being used
• Type of device

Your technologic marketing efforts will go a long way when you have a good understanding of what types of devices your customers are using. By this we mean the physical kinds of devices that your customers are using — iPad, tablet, phone etc.

This customer segment can help you determine what factors you should be prioritizing when it comes to the technological side of your product.

If most of your customers browser your online store using their phones or tablets, then you know that it is crucial for you to have a smartphone app with a seamless UI for your users to navigate.

a. Browser being used

The browser that people are using to access your store is going to have an impact on their experience, which is why the browser that is being used is a good market segment to think about.

What browsers are your customers using? Are they using Safari, Chrome, Firefox, or something else entirely?

There are dozens of different browsers that someone could be using, so it’s important to make sure that your website and store are showing up correctly on each one — even the older, less-popular browsers like Firefox.

b. Source

Source, or “original source”, is a a target segment that helps you to pinpoint where your website’s visitors found you.

This is arguably one of the most useful ways of segmenting customers because it gives you insight into how well your current marketing strategy is working.

For example, if most of your users are finding your site using Google but very few are finding it through social media, it’s a natural deduction that your Google search ranking is good but that your social media presence needs some work.

4. Psychographic Segmentation

Psychographic segmentation focuses on the inners thoughts, values, and feelings of your customers and website viewers.

This customer segmentation model allows you to get a deeply personal and in-depth look into the minds of your customers — which is a fantastic thing.

You can segment customers into some of these categories:

• Interests
• Lifestyle
• Values
• Opinions
• Attitudes
• Type of personality

Once you’ve gained psychographic data, you can use it to do a number of things.

As an example , you may target a certain segment’s feelings by including the origin story of your product, or you may choose to identify customers who like to read (interests) and then sell them related products such as bookmarks.

a. Interests

Interests that your customer base has may not be directly related to your business. However, they are still important to be aware of.

Your customer’s interests creates never-ending opportunities for fostering relationships with other business and for the launch of cross-promotional campaigns that can help you read a larger, wider audience.

For example, if your customers have a passion for hiking, you could partner with a hiking gear company to create a fun promotion that would win both businesses new conversions.

b. Values

In most cases, its harder to segment your customers by their values than it is by their interests or demographic data. In order to gather this data, you need to determine what your customers’ needs are.

Once you have this information, you can figure out what their biggest hold ups are with meeting their goals. If you can align with the customers using a posture of empathy, it’s then easier to know what they value in a product or service.

c. Customer personalities

Although a person’s personality can’t be summed up in one or two words (or even a sentence), you can segment them into categories based on specific personality traits.

Are your customer groups extroverted? Introverted? Are they serious and hard to joke with, or do they see the humor in things?

You have a higher chance of your customers turning into conversions when you know a bit about what their personality is like.

5. Geographic Segmentation

Geographic segmentation is pretty self-explanatory. It creates distinct segments based on location, which includes country, state/province, and city.

Using geographic segmentation you can:

• Send customers invitations and reminders to/about festivals and celebrations in their area
• Use slang and geographical terminology that your customers are familiar with

When creating your segments, consider using the following groupings to segment data:

• Language
• Home location
• Workplace location
• Transportation

a. Language

The language that a person speaks can be used to form a segment. It makes it much easier for you to communicate with your customers and to grow your business when you can speak to them in their preferred language, which varies by geographical location.

To utilize language segmentation, you could opt to segment based on the general language — German, French, Spanish etc. or segment based on regional dialect, which is much more specific and will help you weed out smaller groups of customers.

b. Workplace location

Knowing where your customers work and how they do so can be some of the most valuable information you’ll receive.

Having the locational data for where your customers work can help you decide the best ways to market to different groups. It can even help you brainstorm which products and services could be most useful for said groups.

c. Transportation

You probably don’t immediately think of all the ways that transportation could be used to the advantage of your business when asked what the word “transpiration” means for your business.

But it can be very beneficial to consider the ways that your customers get to and from their homes and workplaces. You can use transportation as an out-of-home market segmentation technique.

If an overwhelming number of your customers take the bus to work every day, you may choose to put in the cash to run an ad inside of the local city bus or subway.

In addition to inside of the bus or subway, you could also pay for an ad spot at the bus or subway station.

d. Home location

The general location – the country, region, and/or city in which your customers live – is important to know if you’re trying to make use of customer segmentation.

When you know where your customers live, you can more easily target different customer segments with marketing campaigns that make them feel seen, heard, and understood.

These key, but basic and easy-to-obtain data points can do more than just make your customers feel good, though. They can also give you an indicator as to how you should be approaching specific segments of your audience.

In general, the way you market to groups of customers living in a small city like Whitefish, Montana is likely going to be different than the way you’re going to market to someone living in a large city like Los Angeles, California.

The neat thing about dividing customers by their home location is that you can make the segment more or less specific.

You can choose to segment based on the country, or go further and include a specific area within the country. Or, you can go further still and tailor marketing to certain cities.

6. Value Based Segmentation

Where you’d expect that value based segmentation would be the value that you offer the customer, it’s actually the other way way around; it’s the value that the customer offers you. Using this customer segmentation model, you measure your customer’s ROI.

It makes it easy to identify which of your customers are most loyal. You can sort customers by:

• Number of purchases
• Purchase value
• Customer satisfaction scores
• Number of purchases

Determining customer value is a process that can be simplified by taking note of the number of purchases that each one makes and grouping them accordingly. The more purchases that a customer makes, the more valuable they are to your business.

If you find that specific groups aren’t living up to their potential as valuable customers, you can use this information to determine which steps to take to improve their significance in relation to your business’ success.

a. Purchase Value

All customers are profitable customers — but some are more profitable than others, and those customers are the ones who have high average purchase value.

Like number of purchases, the higher the dollar amount is for each of your customer’s purchases (on average), the more valuable the customer is.

b. Customer Satisfaction Score

Regardless of which tools you use to determine customer satisfaction, customer satisfaction scores tell you a great deal about how your recent customer interactions have been going.

• Higher scores mean a higher satisfaction rate among your customers.
• Lower scores indicate – quite loudly – that you need to improve customer service.

You can segment your customers based on whether they are promoters or detractors based on their reported satisfaction scores.

This ensures that the value of your most loyal customers is increased while the customers who are classed as detractors receive the level of support that they need to change their scores later on.

If a customer is classed as a detractor, don’t let them slip away! Make sure that after they receive the service required to correct their dissatisfaction, you follow up.

7. Needs-Based Segmentation

Every customer is different and as such, each one needs something different from their products — including the ones they get from your company.

Using needs-based customer segmentation, you can easily figure out what areas you need to improve. This strategy uses your customers wants and needs.

Using a needs-based approach, you can create any of the following (and more!) customer segments:

• Service needs
• Quality
• Accessibility
• Service needs

In short, service needs are the things that your customers absolutely must have when interacting with your business.

As an example of service needs, consider HubSpot.

HubSpot is an online platform that has a slight learning curve for new users. This being said, a new user might require an in-depth video walk through or tutorial before they could properly use the service. If the new user is left without instruction to figure out the platform on their own, they may never get the most out of it, which could lead to low satisfaction.

A more seasoned user, though, likely would not need such a tutorial and instead of appreciating the tutorial, that user may be burdened if they were forced to go through it.

a. Quality

While some market segments are more than happy with a bare-bones, simple product that is functionable but not necessarily pretty or fancy, others require a certain level of quality to be pleased with a product.

This goes for services, too! Certain segments of customers will expect a high level of service, but another segment will be more low-maintenance and content with less.

This being said, it’s important to remember that even customers who are happy with a lower quality deserve to be given the highest quality of whatever it is they’re expecting as you can provide them.

b. Method of Delivery

Even if you have a top-of-the-line product, your customers aren’t going to want it if you don’t deliver it at the correct time or if you deliver it in the wrong way. Timing is everything, as they say!

This segmentation category allows you to put customers into groups based on their specific delivery and shipping needs.

You may choose to segment using categories that relate to timing. For example:

• Two-day
• 7-day
• Overnight/priority

You could also segment based on delivery method.

c. Accessibility

Accessibility is one of the customer segments that can make or break the success of your business.

You wouldn’t think that something as simple as a one word category could make such a difference, but in the long run, having a product or service that is accessible to your target market is going to help you succeed.

Your website should prioritize being accessible to ensure that customers with disabilities can navigate from page to page without trouble.

8. Customer Status Segmentation

Customer status is a segmentation model that isn’t talked about as often as others. It should be, though, as this model can help you identify your most profitable customers. This model uses two categories: lapsed and active.

Lapsed is a term used for customers who have not made a purchase or used a service in more than one year whereas active is used for customers who have interacted with your business more recently than that (6 months, 9 months etc).

From here, customers could be segmented even further, into more specific timeframes or by other characteristics.

Conclusion

If your goal is to grow your business, then building healthy customer relationships through customer segmentation should be one of your highest priorities.

Segmentation doesn’t have to be complex or hard to grasp, despite what you may have heard about it before perusing this article.

In fact, most of the time, segmentation is quite simple — especially if you’re familiar with the segmentation techniques we’ve covered today.

Using customer segmentation analysis, you’ll be watching your business grow by leaps and bounds in no time.