In today’s competitive market, gaining a deeper understanding of customer segments is key to success. Customer segment marketing enables businesses to tailor their strategies to the unique needs of specific groups, boosting engagement and conversions. But how do you create customer segments in the first place?
Stay tuned—in this article, we’re answering that question and more by diving into the basics of identifying key customer segments, including:
How to create customer personas
How to identify key customer segments through market segmentation
3 benefits of identifying key customer segments
Curious about how the team at Nutshell can help with customer segmentation? Get in touch with us today about starting a free trial of Nutshell’s all-in-one CRM or attend a live virtual demo today to see what all the hype is about.
How to create customer personas
A customer, or buyer persona, is a collection of information about a business’s target audience that includes things like a customer’s preferred method of contact, pain points, preferred products or services, etc. Customer personas help marketers and salespeople better understand the people they’re trying to sell to and do so more effectively.
Establishing customer personas involves the following elements:
Looking at demographics
Assessing current customers
Gathering career information
Determining values, goals, and other details
How to identify key customer segments through market segmentation
When it comes to identifying key customer segments, one of the first questions we always get is, “How do I identify key customer segments?” Our answer? It’s all about market segmentation.
What is market segmentation?
Market segmentation is the process of designating people into groups that respond similarly to marketing strategies to better understand specific groups of people within your audience and keep marketing and sales efforts focused.
Through market segmentation, marketers and salespeople can categorize prospects into customer segments. The four most common types of customer segments include:
Demographic: This is the most commonly used form of segmentation. Demographic segmentation entails categorizing your customers based on gender, age, profession, income, race, religion, and education.
Psychographic: This form of segmentation is less tangible than demographic segmentation and involves grouping individuals based on lifestyle, values, beliefs, personality, and social class.
Behavioral: Behavioral segmentation involves segmenting people based on their actions. These actions usually relate to those happening within your sales funnel, like visiting your site’s landing page, interacting with an email, or leaving items in a shopping cart.
Geographic: Finally, geographic segmentation is pretty straightforward—it involves segmenting prospects based on their location. You can geographically segment people by country, state, continent, region, climate, etc.
Once you’ve completed your market segmentation through demographic, psychographic, behavioral, or geographic segmentation and identified specific customer segments, you can begin to reap the benefits of identifying your key customer segments.
3 benefits of identifying key customer segments
Identifying key customer segments come with quite a few benefits. Today, we’re shining the spotlight on three key benefits of identifying key customer segments that are too good to ignore.
1. Tailored marketing efforts that reach intended audiences
One of the biggest benefits of identifying key customer segments is using the information to tailor marketing campaigns to effectively reach and engage with customers. Customer segment marketing allows businesses to personalize their strategies, ensuring they address the unique needs of each segment.
By identifying key pieces of information about your customers, like demographic or geographic data, you can ensure you’re creating campaigns that your ideal customers will relate to.
For example, say you’re a clothing company looking to create campaigns targeted toward customer segments categorized by geographic data. With this information, you can target campaigns for clothing like jackets and winter gear toward audiences in colder regions, as opposed to those in warmer climates who have no need for winter clothing.
2. Understand customer behavior
Identifying key customer segments also allows marketers and salespeople to gain a deeper understanding of customer behavior and preferences like purchase habits, specific pain points, and insight into their decision-making process.
Incorporating customer segment marketing into your overall strategy ensures that your messaging is always relevant, fostering stronger connections with your audience.
For example, by understanding your audience’s decision-making process, you can create key pieces of marketing content that appeal to audiences at major stages of the buying process and encourage leads to take the next steps toward becoming a customer or further interacting with your brand.
3. Identify new opportunities
Finally, identifying key customer segments can help you to identify new sales and marketing opportunities among untapped customer segments.
For example, analyzing your current customer segments can help you to identify trends and patterns that may apply to other segments you don’t currently focus on.
Additionally, staying on top of industry trends and changes and cross-referencing them with your current customer segments can help you identify new areas of opportunity.
Identify key customer segments in your audience with Nutshell CRM
Did you know you can drive even more customer engagement with the help of Nutshell’s all-in-one CRM system? The Nutshell CRM helps businesses keep customer data organized, accessible, and in one place so you can easily analyze customer data and identify key customer segments.
Learn more about how you can use your Nutshell CRM to identify key customer segments and grow your business by starting a free trial today or getting in touch with one of our team members today.
Frequently asked questions
1. How do I start segmenting my customers if I have limited data?
Start with what you have—even basic transaction data reveals patterns. Focus on simple criteria like purchase frequency, order value, or product categories. Use free tools like Google Analytics for website behavior, conduct short customer surveys, and analyze your sales records. Begin with 2-3 broad segments and refine as you gather more insights over time.
2. What tools do I need besides a CRM to segment customers effectively?
While Nutshell CRM provides the foundation, complement it with analytics tools (Google Analytics, Mixpanel), customer data platforms (CDPs) for unified data views, survey tools for direct feedback, and marketing automation platforms. Many businesses also benefit from visualization tools like Tableau to spot patterns and social listening tools to understand customer sentiment.
3. What are the most common mistakes businesses make when segmenting customers?
The biggest mistakes include creating too many segments (diluting focus), relying solely on demographics while ignoring behavior, using outdated data, and failing to act on segments once created. Many businesses also segment once and never revisit, missing how customer needs evolve. Start simple, focus on actionable segments, and regularly update your approach.
4. How do I measure the ROI of my customer segmentation efforts?
Track key metrics for each segment: Customer Lifetime Value (CLV), Customer Acquisition Cost (CAC), conversion rates, and segment-specific revenue growth. Calculate ROI by comparing revenue increases against segmentation costs. Monitor engagement metrics like email open rates and customer satisfaction scores by segment to gauge effectiveness.
5. How does customer segmentation differ for B2B vs B2C companies?
B2B segmentation focuses on firmographics (company size, industry), buying committees, and longer sales cycles. B2C emphasizes individual demographics, lifestyle, and emotional triggers. B2B segments by business needs and ROI potential, while B2C segments by personal preferences and behaviors. B2B requires understanding multiple decision-makers; B2C typically targets individual consumers.
