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The complete guide to customer segmentation

Customer segmentation is the process of classifying customers into specific groups based on shared characteristics. This allows companies to refine their messaging, sales strategies, and products to target, advertise, and sell to those audiences more effectively.

This approach is used for both Business-to-Consumer (B2C) and Business-to-Business (B2B) marketing. B2C consumer segments are generally based on things like demographics, lifestyle, values, and needs. B2B marketers, on the other hand, tend to segment customers by industry, location, payment terms, or the specific products a company previously purchased.

Segmenting customers makes it easier for companies to sell their products and services. It is the difference between marketing a product to anyone and everyone, versus tailoring your messaging to address the needs or interests of specific groups of customers. 

Marketers often create buyer personas, or research-backed representations of their ideal customer, for each major customer segment. They will categorize customer groups using demographics, psychographics, shopping behaviors, and purchase motivations. 

Once a company has established buyer personas, it can map out a buyer’s journey that represents the decisions and steps a customer takes before, during, and after a purchase. This enables it to tailor its marketing messaging, branding, and pricing to every step in the journey.

Customer segmentation and vivid buyer persona descriptions bring specific buyers to life, increasing the chances of selling products and reducing the high risk of product failure. Companies use these descriptions to upsell and cross-sell additional products, improve the customer experience, and build overall brand loyalty. Segmenting helps companies identify their best groups of customers, understand which messaging and buying channels they prefer, and sell in a cost-effective manner.

Identify and understand your ideal customers with SurveyMonkey Audience.

Organizations often segment customers as part of a larger market research effort to understand the opportunities that exist in the marketplace. This includes finding the answers to questions like:

  • How large is the market opportunity for our product or service?
  • How does our brand stack up against the competition?
  • Which demographics are most likely to buy our product or service?
  • Which advertising campaign will resonate best with our target market?

Market research surveys are frequently used to collect detailed data on customer motivations and behaviors. These typically cover questions like:

  • How likely is it that you would recommend this product to a friend or colleague?
  • What do you like most about the product?
  • What do you like most about competing products on the market?
  • What reasons do you have for choosing the product?
  • What are the reasons why you might not purchase the product?

Often, these questions will be asked to the same audience several times over a longer period of time. This is known as a panel survey, which measures changes in customer attitudes and provides valuable insights to marketers.

You can use market research templates and other market research resources to understand why someone buys a product. But you also have to know who will buy the product. This is where customer segmentation comes into play. When you determine the characteristics of people who like and will buy your product, you can effectively divide your customer base into subgroups.

You will need to collect data to segment customers into specific groups. Surveys are a great way to get data related to demographics, purchasing patterns, preferences, and other distinct categories. You can also use interviews, existing customer data, focus groups, and other data collection methods. 

Once you have sufficient data, you can begin categorizing your customer groups. Demographics are a common way to segment customers. You can use surveys to collect data about a customer’s age, gender identity, income level, educational degrees earned, and marital status. Depending on your research goal, customer segmentation questions may also address who makes purchase decisions in the household, what lifestyle challenges they have, and similar purchase behavior details. These are a few examples of groups you can survey through SurveyMonkey's Audience panel:

General population

General Population (Medium Sample)

  • All Genders (Census)
  • All Ages (Full Census)
  • All Incomes
  • 500 Responses, United States (USA) - SurveyMonkey
Full-time employees

Full-Time Employees

  • All Genders (Census)
  • All Ages (Basic Census)
  • All Incomes
  • Employed Full-time
  • 250 Responses, United States (USA) - SurveyMonkey
Consumer shopper

Consumer Shoppers

  • All Genders (Census)
  • All Ages (Basic Census)
  • All Incomes
  • Primary Decision Maker in Household
  • 250 Responses, United States (USA) - SurveyMonkey

Based on the answers to these questions, you can define specific customer groups that will (and won’t) buy your products.

Once you have segmented your customers, you can work on targeting those groups. However, people often confuse segmenting and targeting. Segmenting is when you create multiple groups of people who have common traits. Targeting is when you focus on a particular segment or segments because they have a higher potential of buying your products. 

For instance, you might have a new type of tea to sell. Your customer segments might include people of different demographics who drink tea for health benefits, for a caffeine boost, or as an inexpensive alternative to soda. 

You will need to understand which customer segment is likely to buy your new tea. Demographics and behavior traits will help you define the right customer segment for your product. Both B2C and B2B companies use this approach to clearly identify the customer segments who will have the highest probability of sales.

However, to define your target audience, you will need to answer questions that further clarify your customer segment and how you might sell to them. Questions include:

  • Are you selling to individuals, businesses, or both?
  • Approximately how many people are in your target audience?
  • How many people or companies currently provide a product similar to yours?
  • How competitive is the market for your product?

Now you can create a survey for your target audience and include questions like:

  • How often do you drink hot or iced tea?
  • How often do you shop online?
  • How interested would you be in a tea delivery service?

When conducting a survey, you will want to make sure that you sample the right number of people in your customer segment. For instance, you might want a representative sample of 30 million people to see if they will buy your tea. Depending on your target audience, you might find that 400 survey responses from your target audience will provide the insights you need.

By using statistical sampling, screening questions, and appropriate questions, you will get the survey data you need to see if your tea will be a big seller.

Find tips, resources, and more in SurveyMonkey’s Ultimate Guide to Market Research.

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