Customer Segmentation: Meaning, Types, and Benefits

By Binary Demand - Last Updated on October 7, 2022

The ultimate aim of every demand-generation marketing solution is to satisfy customer needs and earn profits. And in a dynamic market environment, organizations have come to terms with the fact that involving their customers in innovation helps them understand which new products and services will work.

To this end, businesses have been quick to adopt a new approach – B2B marketers are now leveraging business intelligence to understand individual customers’ unique needs and preferences. Customers do not like to be treated similarly and want personalized experiences. This is why businesses must be able to recognize the difference between different customer groups. One way that’s also popular in the B2B space is to segment customers.

At the core, customer segmentation helps companies devise a marketing strategy that caters to every group in their customer base.

Let’s start by clearly defining what consumer segmentation is.

What is customer segmentation?

Putting things straight, if your B2B marketing campaign directs the right resources to the right audience, nobody can stop it from being successful. But the first step to identifying the right audience is to segment them.

Customer segmentation is a straightforward method of organizing and maintaining your company’s interactions with clients. It is a way by which consumers are grouped according to shared traits, like behaviors or demographics. This process makes it easier to tailor messaging and allows businesses to send personalized marketing messages with a focus on the needs of particular groups. This method also makes it simpler to organize and manage the relationship a company shares with its customers.

Why is customer segmentation important for B2B audience?

B2B customers are informed decision-makers, planned and driven by data. As a result, the B2B marketing approach ought to be laser-focused and relevant. Organizations must segment their audience for different Account-Based Marketing (ABM) initiatives to achieve just this. Audience segmentation at the granular level provides more depth and relevance to sales communication. It also offers the opportunity to forge strong connections with the audience.

Ways to segment B2B customers

The best way to segment customers is to rely on factors such as available data, industry type, budget, and so on. Customer segmentation can be done based on the following:

  1. Demographic Segmentation

The first thing that comes to mind when someone talks about “customer segmentation” is demographic segmentation. Although it may be the simplest method of identifying client groups, it is nonetheless effective. Demographic segmentation considers identifiable non-character qualities, including age, gender, ethnicity, income, marital status, degree of education, religion, and occupation.

To cite an example, demographic segmentation could help target potential clients based on their income, saving your marketing budget by not wasting it on those who are unlikely to be able to afford your goods.

  1. Psychographic Segmentation

This kind of segmentation focuses on your consumers’ personalities and interests. Customers may be defined by their personality traits, pastimes, life objectives, values, and way of life in this context.

This group may be more difficult to identify when compared to demographic segmentation. Understanding their value and obstacles is essential while trying to achieve goals and offer them what they value.

Well-researched and well-executed psychographic segmentation can enable successful marketing that customers will believe talks to them on a much more personal level, which requires good research.

  1. Geographic Segmentation

Comparatively, geographic segmentation, which groups clients based on their physical locations, is one of the simplest to define. This can be described in terms of a nation, a region, a city, a preferred language, transportation mode used, workspace, or postal code.

For instance, it is conceivable to group customers within a certain radius of a specific area. This is most suited for live event marketers who aim to reach local audiences. Knowing where your clients are, enables you to keep in mind various factors when marketing to them.

  1. Behavioral Segmentation

This form of segmentation is of greatest use for eCommerce companies. Like psychographic segmentation, it needs a small amount of data to be truly successful, but much of this information may be acquired through your website.

Clients can be categorized based on their eCommerce activity, browsing patterns, and previous interactions or loyalty to a specific brand. The browsing patterns can be found by checking the URLs they visited, time spent on the site, campaign history, inactivity, exit intent, and the number/type of pages visited.

For instance, you can tell the difference between a new visitor and someone who has visited your website several times but hasn’t made a purchase. This behavioral data allows you to adjust the communication content accordingly.

  1. Technographic Segmentation

Technographic segmentation finds and categorizes customers based on the role played by technology in their lives. This can entail identifying early adopter communities when promoting new marketing technologies. It may also be as easy as tailoring offers based on the device consumers use and the browser type to access your website.

With customization, targeting adverts at specific groups like this is convenient. For example, customers who may be using the Safari web browser to access an online phone store may be more interested in Apple items, and they can be shown these as a result.

Benefits of Customer Segmentation

In a survey of marketing professionals in North America, 62% of the survey respondents said that their top goal was to improve audience segmentation to make it easier to send targeted messages. There’s a reason why more surveyed respondents said that improving segmentation was their top priority. Market segmentation helps the best B2B companies generate high quality leads because it targets specific audiences and has many benefits for marketers, publishers, and others. It includes advantages such as:

Spending money in a better way

After all, your targeted marketing will give you a better return on investment, and you’ll waste less money on marketing that caters to the wrong people.

Effective marketing

This is one of the most significant and obvious advantages of market segmentation that works well. Customer segmentation helps understand customers’ needs better. Businesses can tap on this information to create specific marketing campaigns. Multiple marketing campaigns can be created to target a large customer base within target groups. This not only helps improve customer interactions and experiences with your business but yields better results and allows for strategic budget allocation.

Better quality leads

You’ll also notice that the more targeted your marketing is, the better quality leads it will yield. You’re connecting with the right people, and they are starting to see you.

Better customer retention

By figuring out customers on the basis of their needs, you can create marketing strategies that will compel them to visit again. This has been shown to increase customer loyalty, customer lifetime value, and customer retention.

Identifying niche markets

In the same way, research into market segmentation may help you locate markets that were not there on your radar earlier and help you devise a market penetration strategy. This could even lead to the creation of new products that specifically cater to these markets.

More focus

When done thoughtfully, customer segmentation will allow your firm to target serving customers with a focus on every element of its activity. Your marketing becomes directed toward your customers’ needs; R&D will be centered on meeting customer needs and will save on spending as there will be no wasted money on mistargeted marketing and planning.

Your company will become the go-to option for customers because of its improved ability to meet their needs. This will increase ROI from marketing activities.

Setting your brand apart

Market segmentation aims not just to help you reach your audience but also to let your customers see the actual value of your brand via marketing that speaks to them. This puts you ahead of your competitors and helps you reach your audience.


Now that you know the importance of customer segmentation, nothing should stop you from implementing it other than a proper knowledgeable resource. You can also contact us at Binary Demand to get the correct segmentation done and use that data for your business growth.