Defining Customer Segmentation and Understanding its Value

Customer segmentation is a method of dividing customers into homogeneous groups with a high degree of accuracy, based on demographic, behavioral, predicted future behavior and other indicators.

In the online domain, multiple campaigns compete for customers’ attention, and the marketer’s challenge is to ensure that campaigns grab every customer's attention.

As more and more customer data becomes available, marketers must use this data to customize their campaigns as much as possible for customers’ needs and affinities.

Since the marketer’s goal is to maximize the value (revenue and/or profit) from each customer, it is critical to know, in advance, how any particular marketing action will most likely influence each customer.