Meaning of Customer Segmentation

Simple definition

Customer segmentation groups customers based on shared traits like behavior, demographics, or needs.

Companies use it for personalization, targeting, and product development.

Netflix segments viewers by watching patterns to recommend personalized shows.

Too broad misses personalization, too narrow makes campaigns inefficient — balance is key.

K-means clustering, decision trees, and RFM (Recency, Frequency, Monetary) analysis.

By tracking KPIs like conversion lift, engagement, or churn reduction.

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