9 Customer Segmentation Models to Help You Understand Your Audience

What’s the best way to reach your target customers? The specific details are different for every business — but all effective marketing strategies share a few things in common.

Customer personas are part of it, and to create those, you’ll need to leverage customer segmentation models to collect the data to develop those personas. Customer segmentation analysis will help you break data down into useful information that your marketing team can use to better understand the various groups that make up your customer base. 

Let’s dig deeper to explore customer segmentation as a whole — plus nine different customer segmentation models that will help you examine your customer base from every angle.

What Is Customer Segmentation?

Every industry and every business has a target audience — and every target audience is made up of groups of people who have a variety of different personality traits and other characteristics in common. Age groups, geographical location, spending habits, value systems, and pain points are all examples of these kinds of characteristics.

As a marketer, identifying these groups among your target market is crucial — and that’s what customer and audience segmentation is all about. Once you’ve identified the customer segments that make up your audience, you can use that information to create high-value content and advertising campaigns to target each segment, and to position your product or service according to the needs and wants of each segment.

The end result? When you successfully segment and target your audience with a personalized marketing strategy for each of your different customer segments, you’ll see higher engagement, more conversions, reduced churn, increased customer loyalty, and a bigger return on your marketing investment.

9 Types of Customer Segmentation Models

What makes people interesting is that each has their own unique set of characteristics. Because of that variation, there are nearly infinite ways to organize people into different subsets or segments. 

However, some models are more helpful than others for marketing—and those will be the customer segmentation models we’ll talk about below.

1. Demographic Segmentation

Demographic segmentation categorizes people into specific groups based on demographic factors like age, gender, education level, marital status, or income. It’s one of the most popular customer segmentation models because it can help you identify the people who are most likely to want or need your products. 

For example, if you’re based in agriculture, then your potential customers are likely in their 30s or older and probably based in a geographical area where agriculture is prominent. 

But if you’re selling the latest fashions to college-aged people? In that case, one of the prominent segments in your customer base will be people aged 18 to 24 in urban areas.

2. Psychographic Segmentation

This type of segmentation focuses on the psychological aspects that different subgroups of people may share. Attitudes, belief systems, core values, and lifestyles are all facets that you’ll examine when you use this type of segmentation.

Psychographic segmentation helps you better understand the different needs among various personalities — family-oriented people vs. individualistic types, people who love adventurous vacations vs. those who enjoy staycations, and so on.

3. Behavioral Segmentation

Behavioral segmentation involves analyzing what people are buying, how often they are buying it, and why they’re making the purchase. For example, you could group customers by their usage level: Heavy users, moderate users, and light users. Purchase frequency is another metric you can analyze. Are people buying your product all the time, or is there something like a holiday that triggers them to make the purchase? 

Other behavior triggers include things like brand loyalty or a person’s stage within your customer journey. When you analyze customer behavior, you can better understand the specific behaviors of different groups so that you can create tailored marketing messages designed to reach those customers when they’re most likely to convert.

4. Geographic Segmentation

Geographic segmentation sounds simple on the surface—it’s all about where your target audience lives, right? Well, there are a couple of key things to know about geographic segmentation that will help you learn a lot about your customer base.

First, geographic segmentation can be as broad or as narrow as you like. Think in terms of major regions like the American Midwest or smaller areas, like a metro area or a single ZIP code. 

Sometimes you may only need the broad-strokes data that larger regions can provide, but if you zoom in on smaller geographical regions, you can often collect data about things like where people live vs. where they work, which can be helpful when part of your audience is a rural or suburban crowd who travels into urban areas for work.

The other aspect to consider is that geographic data offers a lot more information beyond a spot on a map. Location data sheds light on customer needs, their lifestyles, and their general preferences. You’ll be able to identify specific segments who may live an urban, suburban, or rural lifestyle, pick up on local culture and colloquialisms, understand how the area climate might drive purchasing decisions, and so on.

5. Firmographic Segmentation

A one-size-fits-all marketing strategy isn’t the best choice when marketing to consumers — and it’s not ideal for business-to-business commerce either. That’s why you need firmographic segmentation. 

Unlike other types of segmentation, this model looks at organizations rather than individuals. Often, this means basing datasets around organizational types, like nonprofit organizations, enterprises, small businesses, government agencies, or independent contractors. 

From there, you can delve deeper into each segment to learn more about common characteristics like their size, scale, funding levels, or industry.

6. Needs-Based Segmentation

While it has other uses, needs-based segmentation is particularly helpful when you’re developing new products. This model groups customers based on what they need from your product or service — and because of that, it’s best to center needs-based segmentation data around the must-haves. 

For example, if you’re creating an image-editing app, consider the fact that graphic designers need certain editing tools, whereas wedding photographers need the ability to edit images in large batches, and influencers need flattering filters and features that make sharing easier. 

Use a needs-based customer segmentation strategy to determine how you can solve problems or fulfill the functional needs for each of your groups of customers.

7. Transactional Segmentation

This customer segmentation model breaks existing customers down based on their transactions with your brand. That includes how they discovered your brand, how recently they’ve made a purchase, how often they purchase, and how much they spend on average. 

Using this information, you can target segments based on their purchasing behavior by, for example, sending out special offers to entice those who make more sporadic purchases.

You can also focus this type of segmentation on how much value each customer segment offers to your business. This is referred to as “value-based segmentation,” and it’s helpful when you offer products at various price points because it helps you match budget-appropriate products to each segment’s average spending level.

8. Technographic Segmentation

Technographic segmentation is popular among SaaS companies because it groups customers based on the way they use technology. Examples of these market segments include mobile users vs. desktop users or the types of apps and software that customers are using. 

With this data, you can improve customer experiences and retention by offering apps, software, or web-browsing experiences tailored to each segment’s preferences.

9. Micro-Segmentation

Technically, micro-segmentation can refer to any of the types of segmentation listed above. The key factor that sets this customer segmentation model apart from the others is that the goal is to drill down on highly specific customer data to create ultra-targeted segments. 

For example, if you’re selling branded apparel for a particular sports team, rather than focusing on a broad geographical region, you may want to focus your marketing efforts on the segment that lives within that team’s metro area. 

To drill down further, you’d create separate segments based on gender, age, and other demographic information. From there, you could further subdivide segments based on income level, so that you can target budget-appropriate offerings to each of your micro-segments. In this way, you can use customer segmentation to build customer engagement and conversions through highly personalized marketing campaigns.

Gather Data While Improving Customer Relationships With Jebbit

Looking for a solution that can help you build engagement and give customer relationships a boost? Use Jebbit to create rich interactive experiences that will capture your customers’ attention. Quizzes, surveys, lookbooks, trivia tests, and more — Jebbit offers over 50 pre-built templates designed to help you create and launch new experiences that your customers will love.

Even better, you can leverage these experiences to gain the kinds of insights you need to dive deep into your brand’s market segments. 

Ready to discover how Jebbit can help you enrich customer data? Schedule a strategy call to learn how we can help you collect the data you need to reap the full benefits of customer segmentation.