Meaning of Customer Segmentation

Simple definition

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

How to use Customer Segmentation in a professional context

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

Concrete example of Customer Segmentation

Netflix segments viewers by watching patterns to recommend personalized shows.

How granular should customer segments be?

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

What methods are used for segmentation?

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

How do you measure segment effectiveness?

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