What is customer segmentation?

Customer segmentation is the process of dividing a customer base into groups based on shared characteristics. This method allows businesses to tailor their marketing strategies, products, and communications to meet the specific needs and preferences of different customer segments. By understanding the unique traits of each group, such as demographics, purchasing behavior, or preferences, companies can create personalized marketing campaigns that resonate more effectively with each segment.

This targeted approach can increase customer satisfaction and loyalty, improve marketing efficiency, and ultimately drive sales. For instance, a company might segment its customers based on age groups, interests, or buying patterns, enabling them to tailor their messaging and offerings accordingly.

The other choices do not accurately describe customer segmentation. Analyzing competitor performance pertains to competitive analysis rather than customer characteristics, managing complaints relates to customer service practices, and the combined total of all customer purchases does not reflect the strategic grouping of customers based on shared traits.