Customer Segmentation

How to Segment and Retain Your Customers

By October 15, 2021No Comments
How to Segment and Retain Your Customers

Knowing the answer to the question, “What is market segmentation?” is the first step any business should take to achieve a passive income stream.

With market segmentation, websites can retain their customers better and build brand loyalty.

While converting new website visitors into customers is always a big win, consistently getting them to buy more from the same company can be challenging. In a recent study, 61% of businesses are having a tough time with customer retention. Furthermore, with no customer loyalty, a company can lose 23% to 30% of its customers every year.

Market segmentation is easy to understand, but implementation requires the right tools and experience. Read on for a crash course on how to segment customers that results in more efficient marketing efforts.

What is Market Segmentation?

Simply put, marketing segmentation enables a business to categorize its target customers into specific groups that make them easily approachable. It helps companies understand their target audience better based on their needs, priorities, and other criteria.

Market segments have a variety of uses encompassing product development cycles and marketing strategies. Businesses can innovate products tailored to their audience’s specific needs or deliver targeted ads to a particular customer group.

Some of the specific benefits of Marketing Segmentation include:

  • More powerful marketing messages: When businesses know what their target audience exactly wants, they can connect with their customers better – as if speaking to them directly.
  • Effective digital advertising: With proper knowledge of their audience’s characteristics, Google and Facebook ad campaigns can yield better results. Each campaign can focus on a specific group’s wants and needs, based on their age and location.
  • Lower acquisition costs: Laser-targeted marketing campaigns can lead to better conversion. As a result, businesses incur lower advertising costs.
  • Gain loyal customers: Customers will naturally develop brand loyalty to a company that understands their wants and needs.
  • Additional free marketing: When happy about a company’s product, most customers become brand ambassadors – promoting the products for free on their social media accounts.

How to Segment Customers

It is crucial to capture relevant data from customers to get the full benefits of market segmentation. Businesses need to implement effective segregation methods because, without them, segments can get limited and incomplete. The following are several ways to segment customers:

Transactional Data

The relevant transactional data to collect include the product and category, number of orders, and last order date. Treat customers who bought two orders differently from those who purchased in bulk. Grouping customers who often buy from a specific category can help in upselling them with related products.

Behavioral Data

This data will provide an understanding of customers’ buying habits. Do they buy after visiting the product page 10 times or more? Does a sale period matter to them, or do they make a purchase even if there are no discounts? The open and click rate of customers on an email marketing campaign is another example of behavioral data.

Common Types of Customer Segmentation Models

Using segmentation models allows for easy grouping of similar individuals. Below are the types most commonly used by marketing specialists:


This segmentation model may be very simple to collect, but it is still the most commonly used. Factors such as customers’ location, age, gender, race, and occupation always come into play when consumers buy products and services.


There is a tendency for people from the same location to have some commonalities on what they would purchase. For example, those living in Washington state are more likely to buy umbrellas than those in Arizona. Similar to advertising, it is easier to grab audience attention by showing ads relevant to their geographical location.


Segmenting based on behavior enables businesses to recommend products their customers are most likely to buy. This model is highly dependent on their audience lifestyle, which means people of different races or gender can have the same buying preferences.


Segmenting audiences based on their needs allows companies to make immediate and lasting relationships through their products and marketing efforts. Identifying and fulfilling a specific group’s needs shows that the business understands their customers, improving brand loyalty.


The audience’s personality traits, values, and opinions are the basis used in psychographic segmentation. Businesses in the fitness niche usually apply this model to categorize their members into individuals who want a healthy lifestyle and those who prefer a ripped body.


A technographic segmentation gives businesses data on how many existing customers use mobile devices compared to desktops. It can help them identify the best methods to reach buyers without incurring unnecessary costs. For example, there will be no mistake in running Facebook ads when most customers are on Instagram.

Retain Customers with Market Segmentation

Understanding how to retain your customers with market segmentation can help fulfill the company’s primary and common purpose. It allows the creation of products and services that answer the target customers’ wants and needs. When businesses address this, they can easily create brand loyalty and ensure continued success.

Contact us today for help in building brand awareness and loyalty to skyrocket customer engagement and conversions.

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