A Step-by-Step Guide to Customer Segmentation Analysis

Nike demographics include a wide range of users, aged roughly from 15 to 45 years. In FY2024, men’s products made up a little over half of total wholesale revenue worldwide. What are their aspirations, and how has the brand succeeded in building such a loyal fan base?

In practice, this means consumers may move between different mindsets without changing “segment.” A single consumer may move between price-conscious and premium behaviors without changing how they're classified. Many people hold multiple reference points at once — where they grew up, where they are now, and where they aspire to be. They're "directors who need to present monthly metrics to the board" or "power users who manage complex multi-team workflows." That level of understanding is what separates good segmentation from great segmentation.

“This method is especially helpful in segmenting customers to identify the highest performing across the three metrics (Recency, Frequency, Monetary) and understanding the steps these users took. To do that, you might segment users into groups such as ‘casual users’ or ‘power users. The answer is to put your product users into useful categories—otherwise known as customer segmentation. When you’re building, marketing or optimizing a product, there’s no ‘one size fits all’.

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A person’s lifestyle provides insight on what they value, or how they spend their time and money. Psychographic segmentation breaks down consumer groups into segments that influence buying behaviors, such as lifestyle, personality variables, and values (see Figure 5.5). It’s a concept people adopt in their life and in management. This is actually called the Pareto principle in marketing, which asserts that 80 percent of a company’s revenue comes from the top 20 percent of repeat or loyal customers.13 Consumers are typically divided into groups of non-, light, medium, and heavy product users. Usage-based segmentation identifies various segments of users based on how much they use a product.

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Refining customer segments based on these factors provides a clearer picture of your target audience and helps focus your subsequent data analysis efforts. Ideally, focus on identifying the characteristics of your most valuable customer segments – those exhibiting high customer lifetime value and strong brand loyalty. While you likely have existing buyer personas, revisiting and refining your customer segments is a crucial first step before diving into consumer behavior analysis. Performing a robust customer behavior analysis is an ongoing process, not a one-time task. Social media engagement metrics (likes, shares, comments, follower growth) quantify how customers interact with your brand on these platforms. Examples include purchase history, which reveals buying frequency, average order value, and product/service popularity among different customer segments.

• Online market segmentation is similar to the traditional approaches in that the segments should be identifiable, substantial, accessible, stable, differentiable, and actionable.
• Yes, customer segments can change as customer needs and preferences evolve.
• Considering that a significant portion of business revenue, often cited as high as 65%, typically comes from the existing customer base, ignoring the valuable insights derived from customer behavior analysis is a risk few businesses can afford.
• The target audience are regular and loyal users of the product who choose it for its refreshment value and to enjoy the good taste, as well as Pepsi consumption being part of their lifestyle habits.
• Not all customer segments offer equal potential for your business.

Additional Resources

A major Asia-Pacific telecommunications company set ambitious growth targets for its enterprise division, but revenue continued declining. We work with clients to understand their customer segments and align these insights to their organization's unique operational strengths. Netflix has the perfect model of behavioral segmentation, with each user receiving recommendations completely unique to them and based purely on their viewing behaviors. It’s the most commonly used form of segmentation because it’s essentially the root of all of our spending habits.

The next step would be to collect and analyze attitudinal data for light and moderate users. For example, a marketer might want to learn more about the motivations and demographics of light and moderate users to understand what tactics could be used to increase Consumer segmentation usage rates. This analysis of customer lifecycles is usually included in the growth plan of a business to determine which tactics to implement to retain or let go of customers. A sample of people in the target market are asked to explain where they would place various brands in terms of the selected variables.