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Customer Segmentation

This is part 1 of a 5 part series on Customer Segmentation.

Not all customers are equal

Last week we saw a brief glimpse into the power of customer segmentation, the practice of separating your customers into different groups for deeper analysis. While you likely already segment your customers by simple things like location and demographics, there are many other segmentations that can help you better understand your customers. This week we’ll dive into customer segmentation and show how it can help you identify hidden problems and opportunities!

Segmentation, in its simplest form, breaks through the illusion that all of your customers are equal. The reality is that your customers make up many different groups that have different interests, needs and requirements. The better you understand the core segments that make up your larger customer base, the better you can understand how your business might change in the future.

How do you create customer segments? That is straightforward: your analytics tools should allow you to segment your customers by any customer characteristic (almost all do). A much harder question is what segments should you create? The right way to segment your customers depends greatly on your business so there is no simple answer.

This week we’ll cover both common and advanced customer segmentations and how to use them to super-charge your business. Which ones you choose to use are up to you!

This topic was requested by loyal reader Abhinav (hi Abhinav!). If there is a topic you’d like to see me cover in the future just let me know!

Quote of the Day: “There is only one boss-the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton founder of Walmart


The Customer Segmentation series