Top 4 Customer Segmentation Metrics

Mathew Gollow on May 19, 2021

“Every customer is the same.”

It’s that kind of thinking that’s tanked many businesses over the years.

Think about it—do you know your customers’ preferences? Buying habits? Transaction history?

What about purchasing behavior or favorite online channels?

Customer segmentation is a must—because all customers are not the same. The Baremetrics customer segmentation tool helps you divide your customers by any metric you choose.

But what are the top customer segmentation metrics?

Want to see what Baremetrics can do for your business? Consider a free 14-day trial.

What are Customer Segmentation Metrics?

Customer segmentation is the act of dividing your customers into groups based on shared characteristics. Some of the most usual customer segmentation characteristics include:

  • Demographics
  • Geographic region
  • Customer profit levels
  • Purchase or transaction history
  • Interests and lifestyles
  • Customer lifecycle-based

But there are additional segmentation metrics that can help your subscription business get ahead of rivals.

You can discover customer segmentation metrics anywhere from social media to search engines—you can even directly survey your customers.

In fact, some companies use research firms to really dig into who their customers are on a whole new level. The world is focused on experiences, most of which are digital, making metrics easy to discover in the digital footprints your customers leave behind.

Want to learn more about your subscription customers? Baremetrics offers the above data and more! Consider a free 14-day trial.

What’s the Impact of Customer Segmentation Metrics?

Understanding customer segmentation metrics leads to retention, less churn, and, ultimately, business growth. It’s your lifeline to sustainability.

Customer segmentation metrics impact your strategies in marketing, your ability to up- or cross-sell, and implement risk mitigation. Knowing your customer segments intimately impacts other marketing campaigns, such as those email- or text-based.

Trying to improve customer experience and boost your overall customer base through traditional methods simply doesn’t work anymore in such a connected environment. Creating different experiences for different types of customers is a must—but you can only accomplish this when you know who those customers are.

4 Customer Segmentation Metrics You Should Be Tracking—And Why

The above metrics impact your business, your churn rate, and, ultimately, your bottom line, but let’s dive into these customer segmentation metrics you should be tracking and why they’re most important.

1) Cohort segmentation

While you’re probably used to the average segmentation metrics listed above, cohort segmentation is a bit different. Rather than grouping your customers by quantifiable characteristics, you instead segment them by the date they first visited your site, first signed up for service, and so on. Analyzing various time-based cohorts allows you to review the behavior of different subsets and compare cohorts over time.

2) User churn segmentation

It’s important to know your churn rate. Compare the number of customers from month to month. Your churn rate is the number of customers you lose each month. When you use churn rate in conjunction with other segments, you can detect where churn may occur before it happens.

3) Customer lifetime value (LTV) segmentation

Customer lifetime value (LTV) uses predictive analytics to assume how much revenue a specific customer will bring in over the life of their relationship with your business. Segmenting your customer by LTV allows you to send each LTV segment the most relevant targeting messaging. For instance, you can send VIP messaging to those customers you predict will spend more than a given amount over the next year. For customers on the lower end of the LTV calculation, special sales messaging can help you increase their spending.

4) Monthly recurring revenue (MRR) segmentation

MRR is a predictable calculation of recurring revenue. SaaS businesses depend on subscriptions to survive. While month-to-month subscriptions are good, it’s your annual subscribers that are your real bread and butter. Segmenting subscribers by MRR helps you identify customer characteristics that point to higher, ongoing revenue and lower maintenance costs.

How Baremetrics Can Help

Understanding various customer segmentation metrics is like having your hands on the Holy Grail of Business.

Baremetrics has your back. Ready to see how we can help improve your subscription business? Reach out and start your free trial.

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.