How to segment customers and make your marketing more effective

Every business, customer, and opportunity is unique. So, how do you deliver a personalized experience when engaging with a broad audience?

‍Customer segmentation.

By grouping customers based on shared characteristics, you can create tailored marketing campaigns that help you build deeper relationships with your target audience.

And when you talk to people based on their unique needs and interests, you're more likely to get better-qualified leads, higher conversion rates, and longer-term relationships.

But how should you segment customers: by behavior, demographics, psychographics, or a hybrid approach?

The best segmentation strategy depends on your specific situation. We're breaking down the four different segmentation approaches, their advantages, and how to use them. But first, you need to understand who your target audience is.

Defining your customer persona: who are your buyers?

Before you segment customers, you need to know who they are, what motivates them, and why they purchase from you.

Imagine you're a subscription box company that delivers curated wellness products. You send out a customer persona survey to learn more about the people buying your top product—a monthly subscription of personalized fitness gear and snacks.

You discover busy professionals and parents mostly order this wellness box. After digging through survey data, you find that 25-40-year-old health-conscious individuals who value curated, time-saving wellness solutions are your primary buyer persona.

With your new knowledge, you can begin targeting these people with more personalization and tailored marketing campaigns, leading to a better user experience and higher conversions. 

But understanding your audience is just one piece of the puzzle—you need to decide how to segment customers. So let’s dig into the four different approaches to customer segmentation.

1. Behavioral segmentation: what do they do?

Behavioral segmentation is about grouping people based on their behaviors and habits.

You can segment customers by:

• How often they make purchases
• What they purchase
• How much money they spend
• How frequently they use your products or services
• Browsing behavior
  
  

This type of customer segmentation helps you tailor marketing based on customer behavior, like how they shop, what they buy, and how they interact with your brand. 

For marketing teams, behavioral segmentation is key to creating more effective marketing campaigns and winning repeat buyers. You can deliver more personalized communication and recommendations by segmenting customers based on their behavior. 

And that results in a better overall experience for shoppers—encouraging them to "buy now" and come back again.

Pro tip: Keep a close eye on key metrics. Tracking ongoing metrics like click-through rate (CTR), lead generation rate by channel, or time to conversion will help you build out future campaigns.

2. Demographic segmentation: who are they?

Open your wallet and look at its contents. What do you see? There are likely artifacts inside that indicate your:

• Age
• Geographic location
• Income level
• Job type
• Marital status

This information paints a picture of who you are by outlining certain aspects of your life. It's one of the most common and intuitive forms of audience segmentation: demographics.

Demographics provide essential context. And, in marketing, this context helps create personalized strategies and campaigns that meet your customers' needs, wants, and values.

Let's say you run a retail store that sells outdoor apparel. Your shop is in a neighborhood of young professionals, families, and retirees with varying income levels. To maximize your chances of making a sale, you’ve got to understand who falls into each group. 

How do you do that?

You could run a giveaway for a popular item and ask individuals to share information through a brief demographic survey questionnaire in exchange for a chance to win. 

Ask for things like their age, zip code, income level, and whether they live alone or with family. By capturing this information, you’ll be able to refine your messaging, recommendations, and promotions to appeal to different groups—targeting customers with the outdoor apparel they’re most likely to buy.

→ Get started with this demographic survey questionnaire template.

For sales teams, demographics can be extremely helpful during sales calls. Speaking in a way that relates to them enhances the chance of conversion. The same goes for marketing teams—using demographic data to localize marketing campaigns or translate your messaging into different languages can make your efforts even more effective.

For startups, demographic segmentation can be a good starting point since it doesn't require data like purchase history, browsing behavior, or other info that may not be available yet.

But be cautious about segmenting people based on how much they earn, their gender, or cultural characteristics. These demographics can open the door for discriminatory strategies if you're not careful.

The best marketing strategies don't rely on demographic information alone—they use a combination of segmentation strategies to learn more about what your target audience values... which brings us to the next segmentation approach: psychographics.

3. Psychographic segmentation: what motives them?

Psychographic segmentation categorizes customers based on their personality, motivations, values, and interests. This form of segmentation helps you understand not just who your customers are, but why they make the decisions they do. 

When you understand what your customers care about, you can create campaigns and experiences that feel personal and reflect your target audience's attitudes and aspirations.

Imagine you're marketing a fitness brand that sells high-performance workout gear. Rather than simply targeting customers based on their age or location, you can dig deeper to identify psychographic traits, like their underlying motivations for buying your gear.

Perhaps customers buy your products to feel more confident in and out of the gym. You can use this insight to create marketing campaigns that speak to the emotional side of fitness, showcasing people who embody the same values as your customers. 

By aligning your messaging with customers' deeper motivations, you'll create stronger connections and drive customer loyalty. 

You can gather psychographic data about customers by using surveys to dig deep into their:

• Emotions
• Opinions
• Values
• Interests
• Preferences

Psychographics give you a deeper understanding of your customers, helping you craft strategies that go beyond transactions and build meaningful, long-lasting relationships. 

→ Here are some survey ideas to help you get started.

4. Hybrid segmentation: pick the mix that’s right for you

As the name suggests, hybrid segmentation combines two or more customer segmentation methods for a stronger segmentation strategy. You can mix behavioral and psychographic segmentation, demographic and psychographic, or any combination that suits your marketing needs. 

Using a mixed approach helps you narrow in on your target persona by weaving together all the different aspects of their life, behavior, and values. Hybrid segmentation lets you reap all the benefits of audience segmentation. 

For example, imagine you're building a customer satisfaction survey to see what people like (or don't like) about your brand. You wouldn't just want to collect one type of customer information—it wouldn't give you the holistic outlook you need to truly understand the customer experience. 

Instead, you’d create a questionnaire that collects demographics—like their name or industry—and asks customers about what they bought, why they bought it, what they liked or disliked, and if there’s anything that would improve their experience.

The result? Clearer target audiences, insights for future products and marketing campaigns, and feedback to improve your customer experience. 

Pro tip: Hybrid segmentation data can be difficult to manage, so make sure you keep your data organized. Consider using marketing or sales automation tools to streamline data collection and analysis.

Improve your customer experience with customer segmentation

Customer segmentation adds a positive and personalized experience to the customer journey.

Your customers all have distinct identities, so avoid grouping them all together as though they share the same traits, preferences, and values. Instead, test different customer segmentation strategies and see what works best for your business. Each approach comes with its own benefits and challenges.

Behavioral, psychographic, and demographic segmentation often work best when used together—giving you important context to personalize every interaction with your customers. Your job is to adjust each mix to fit your situation.

And remember this: the more personalized your sales and marketing strategy, the more likely you'll turn leads into loyal customers who will tell their friends about you.