Are You Marketing Results Not Meeting Your Expectations? Here’s Why Segmentation Might Be A Path Forward.
Have you ever launched a marketing campaign that didn’t hit the mark? Maybe your engagement is slipping, or your messaging feels too generic. Perhaps you don’t know the differences between your different customer segments and are unsure where to start. The problem might not be your service, product, competition, or budget.
The problem may be how much you know your customer segments.
People now expect personalized experiences more than ever. Research shows that 76% of consumers get frustrated when brands do not offer tailored interactions. Despite this, many businesses still rely on outdated segmentation models or, worse, none at all.
If you want stronger engagement, better retention, and quicker marketing decisions, the first step is customer segmentation. Let’s break down why it works and how to get started with a data-driven approach.
Why Brands Are Prioritizing Customer Segmentation
More companies are investing in segmentation because it delivers real business impact. If you’re briefing a strategic partner for your biggest campaign of the year on your customer segments but not sharing data that addresses at least the four major types of segmentation, you’re not setting them or yourself up for success.
Here are some stats on why segmentation matters:
- Businesses that implement customer segmentation strategies see a 10-20% increase in revenue, according to McKinsey.
- Personalized marketing campaigns based on segmentation deliver 5-8x the ROI on marketing spend (ZIPPA Research).
- Companies with well-defined customer segments can reduce marketing costs by up to 30% (NotifyVisitors).
Spotify: A Masterclass in Personalization
We can also take Spotify, for example. When I think of personalization, Spotify quickly comes to mind. They have appreciated customer data for some time, even with a VP of Personalization whose day is dedicated to knowing their customer data and servicing up better messaging and better experiences at all the right times. Clearly, something is working because today, Spotify remains the leader in music streaming, with a considerable market share of approximately 31% and over 500 million users, including 226 million premium subscribers. They’ve mastered the art of tailoring customer experiences to individual preferences, which is working for them.
Spotify employs a combination of demographic, geographic, behavioural, and psychographic customer segmentation to understand and cater to its diverse customer base. For instance, they analyze users’ listening habits, preferences, and even the time of day they stream music to offer personalized playlists like “Discover Weekly” and “Release Radar.”
They not only use this data to customize their marketing efforts, but Spotify also uses it to improve the product by allowing their customers to create and share playlists, with even an option to collaborate with others—something their competitor Apple Music has not been able to deliver.
Spotify has been around since 2006, so its data collection (I can only imagine) is impressive. What’s great about Spotify is that it marries data with qualitative research, which uncovers human insights that resonate with a broader demographic. While delivering personalized messaging, the goal is always to make customers feel like they are part of a community of listeners.
Spotify has been doing this for decades. If you haven’t started yet, don’t worry. Once the wheels are in motion, you will be inspired to learn even more about your customers.
The Four Major Types of Customer Segmentation
There are different ways to think about how you segment your customers. There may be one segmentation type below that works for your brand or you may want to consider all four. It’s easy to get lost in data and concerned about what you have access to. As you go through this list, think about how much of this data you already have and how often you use it (consider this a mini customer segmentation audit).
Remember, effective segmentation isn’t just about breaking your audience into groups. It’s about using the right data to drive those decisions.
| Segmentation | Data Types | How to Collect | Example |
| Demographic | Age, gender, income, education, occupation | CRM data, customer surveys, purchase history | A SaaS company tailoring messaging differently from small business owners vs. enterprise clients |
| Geographic | Location, client, urban vs. rural | IP tracking, shipping addresses, regional sales data | Retainers promotion winter gear in Canada while focusing on summer in warmer areas |
| Behavioural | Purchasing habits, brand interaction, product usage, online habits | Customer interviews, website analytics, purchase history, engagement metrics | Sending targeted offers based on browsing behaviour |
| Psychographic | Values, lifestyle, personal traits and interests | Customer interviews, surveys, social media insights | Brands targeting customers who appreciate value and exclusivity |
This is how I like to think about the different ways to segment customers:
- Demographic Segmentation = Who they are
- Psychographic Segmentation = Why they buy
- Behavioural Segmentation = How they interact with your brand
- Geographic Segmentation = Where they are
The key to a successful marketing strategy is using data from each type of customer segmentation, allowing your strategy to combine qualitative insights (customer interviews, surveys) with quantitative data (website analytics, CRM reports) to finalize your tactics and key messages. You must understand why customers make decisions before relying solely on numbers to tell you what they did. If you want to develop a culture of being customer-obsessed, feel free to jump into my blog article How Understanding Your Customers Drives Success to get yourself started.
How to Get Started with Customer Segmentation
If you just realized your segmentation strategy is lacking, don’t panic. It is a process that your team members will need to contribute to. Here is a high-level look at the process so you can see that each step is achievable. I do not recommend trying to complete more than one step at the same time, as you will miss something, and the point of all of this is not to miss important customer details.
Step 1: Assess Your Current State (Always)
Identify what segmentation data you already have and where the gaps are.
Step 2: Collect the Right Data
Map out what you need to collect based on the segmentation type or types you are focused on. Plan out surveys, website analytics reviews, CRM insights collection, and regular social listening.
Step 3: Define Your Segments & Create Customer Personas
Group customers based on meaningful patterns that align with your business goals. Once you have your segment groups you can proceed to the next steps in creating customer personas. Your sales, marketing, and customer service teams will thank you. To understand the benefit of this process, check out my blog article The Power Of Research Driven Customer Personas, to get yourself started.
Step 4: Audit Your Marketing Tactics
Take the time to review your marketing tactics and where you are allocating the budget, does it make sense based on your goals for revenue from each
Step 5: Apply Segmentation to Marketing Strategies
Personalize content, adjust advertising strategies, and align sales efforts. This should be a phased approach, you do not need to tactic it all at once.
Step 6: Measure & Optimize
Track engagement, conversion rates, and customer feedback to refine segments over time.
The steps above are simplified to give you a glimpse into how to roll out your customer segmentation. As you go through the process, you will find yourself and your team filled with great ideas and improvements for your marketing strategy.
Just remember that you can prioritize and implement changes over the course of your fiscal year.
As you go through this process, your team will find it easy to develop new ideas and improvements for your marketing strategy. Just remember you don’t have to do everything all at once. Prioritize changes over the course of your fiscal year.
Keeping Customer Data Fresh and Actionable
Customer segmentation isn’t a “set it and forget it” process. To keep it useful, you need to update it regularly. This is about putting the checkpoints in place to allow these items to have an owner and an accountability mechanism.
Here’s how:
Regular Data Audits
Set a quarterly review of your segmentation insights to keep them accurate and actionable. Without routine audits, you might be operating with outdated information, leading to missed opportunities. Remember, I said everyone loves audits!
AI & Automation
AI-driven tools can track customer behaviour and adjust segments in real time. This allows you to stay ahead of trends and tailor messaging proactively. If you’re looking for a user-friendly tool, I recommend Dovetail.
Customer Feedback Loops
Gather insights from surveys, reviews, and social media interactions. Even a small amount of monthly customer feedback can make a big impact.
Cross-Department Collaboration
Segmentation works best when marketing, sales, and customer service teams share insights. Sales teams hear customer pain points firsthand, and customer service teams track satisfaction trends. Combining these insights strengthens your segmentation strategy.
How We Can Help
Brands that keep their segmentation data fresh see better marketing ROI and stronger customer connections. If your current marketing approach feels like a one-size-fits-all, it’s time to change that.
Want to take your segmentation strategy to the next level? Let’s chat! Reach out for a free consultation today and I’ll help you audit the customer data you currently have access to.
