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Customer Segmentation Benefits to Optimize Your Marketing Strategy

by Mathew Gollow. Last updated on August 29, 2023

You have to know your customers to market your product. But to market most effectively, you have to target subsets of those customers and hone in on their specific needs. That is the power behind customer segmentation. It is a strategy that starts with grouping customers by certain characteristics.

Baremetrics can help you develop this strategy. Baremetrics actually has a feature built directly into the product that will do customer segmentation for you. Check out this tool for segmenting customers, tracking growth by group, comparing groupings, and identifying the needs of your customers.

Here's what you need to know about what marketers mean by customer segmentation. You'll learn how these customer groups can help you avoid the one-size-fits-all approach and target customers the right way.

Want to know how Baremetrics helps you to use your data to learn about customer segments? Sign up today for a free trial!

What is Customer Segmentation?

Customer segmentation is the process of grouping your customers according to certain criteria. The four most common types of segmentation are:

  • Demographic (B2C)/Firmographic (B2B): This looks at criteria like age, income, education, and family size (demographic) or number of employees, market share, and company size (firmographic).
  • Geographic: This looks at where customers reside, from state all the way down to zip code.
  • Behavioral: This looks at customers' interactions with your website, including time spent on page and number of visits before purchase.
  • Psychographic: This is a sometimes intangible part of market segmentation. It groups customers by lifestyle, opinions, and personal values.

Your segmentation strategy helps you to create a more comprehensive profile of your individual customers.

Want a state-of-the-art tool to focus your marketing efforts and increase customer retention? Find out how you can get a new angle on your data today with a free trial from Baremetrics!

Pitfalls of Not Segmenting Customers

If you fail to divide your customer base into specific groups, you may still have a healthy ROI, a strong ecommerce strategy, and messaging that engenders brand loyalty. But they won't reach their full potential.

Not having a market research strategy that focuses on specific segments can negatively impact your company. Here are the common negative effects of an unfocused marketing strategy:

It's hard to meet customer expectations. Not every customer wants the same thing from your brand. If you look at your new and existing customers as a whole without taking into account what makes each one unique, you risk pleasing only a few. You can still get those other customers back, but it will cost you time and impact sales in the process.

You can miss out on key insights into the success or failure of marketing campaigns. Segmentation tells you who purchased your product and when. This gives you knowledge about the effectiveness of pricing strategies, targeted digital marketing ads, website landing pages, and more. Without segmentation, you'll have to settle for just one figure: your profit or loss.

You can waste money and resources marketing the wrong way to the wrong people. Those marketing campaigns may produce some success, but there is one way they will always fail your company: They didn't reach your target customers. If your campaign does not focus on market segments, you are talking to people who may never buy your product. That's a waste of your creative energy and marketing budget.

Product development may take longer and may not lead to profitability. Customer segmentation is not just about marketing. You can use this information at the product development stage by modifying your product to appeal to the customers or firms that are most likely to buy from you.


Benefits of Market Segmentation

Taking this all into account, the benefits of market segmentation come down to a few key points:

  • Targeted, personalized communication with customers that increases brand loyalty
  • Insight into prospective and current customers through purchasing decisions
  • Knowing how to improve the customer experience through psychographic segmentation and other groupings
  • Higher return on investment and conversion rate optimization

In summary, customer segmentation gives you the information you need to improve your marketing strategy.


How Baremetrics Helps

Many companies task their existing teams with the responsibility of compiling and sorting sales metricsinto segments. This isn't cost-effective. Instead, turn to Baremetrics. Our tool helps you develop segment insights from your existing data. You can track changes on a rolling or month-to-month basis and gain insight into your customer groupings.

Ready to give Baremetrics a try? Sign up for a free trial today!


Mathew Gollow

Mathew spends his days bringing the brilliant ideas of the Baremetrics team to the blog. When Mathew’s not chasing after his team for more accurate and clear information, you can find him teaching voice at the local music academy.