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The Future of Customer Experience Lies in Segmentation

5 minute read
Susan Ganeshan avatar

Customer segmentation isn’t a new strategy. 

For years, companies collected data to better understand who their customers were and how they interacted with the brand. However, many have yet to pair these insights with the actual voice of the customer. 

When you combine customer demographic and behavioral data with customer feedback data, you capture what various personas want and need from your company. More importantly, you learn how each specific audience feels about the brand. 

A Winning Data Combination

Using this data strategically across the business, in marketing, operations and customer service empowers you to offer various groups a unique experience at a lower cost. And that’s game changing.

At this point, customers expect personalization. We live in a world where AI assistants track behavior patterns and tailor services accordingly, and ads market products based on previous purchases and browsing history. It’s time to prioritize personalized experiences or you’ll lose out to competitors.

Here are three tips for how you can pair voice of the customer data with behavioral and demographic data to drive results that increase the bottom line:

1. Help IT, Help You

The first step toward combining data sets to improve the customer experience across marketing, operations and customer service is to start with the IT department. 

IT holds the key to Customer Relationship Management (CRM), ERP and data warehouse solutions that store the information about your customers and market. This data sits in systems like SAP, Oracle (including Siebel and PeopleSoft), Salesforce and Teradata. By working with the IT department, you will gain access to the customer demographic and behavioral data available.

Once you have a better sense of who your customers are and how they behave, you’re ready to take the next step and pair these facts with how they feel about the brand. Customer feedback is usually gathered from surveys, social media platforms like Twitter and Facebook, online review sites, call center recordings and beyond. You’ll need a place to store all this information, so before you begin pairing customer demographic and behavioral data with customer feedback data, find a central hub where you can easily manage and access all this rich data.

Keep in mind that collaborating with the IT department is not a one-off action. Elect a point person on both the IT and customer service team who will manage this process, or check in regularly with the IT department to keep up with what they have to offer and how that data might be of use.

2. Slice and Dice the Data by Audience

Now that you have access to all this information, step back and figure out how to best segment your customers. The following example data sets are likely available to you through the various software systems your company uses today:

Learning Opportunities

  • Behavior (purchase history, product usage history, frequency of purchase/return, lifetime value)
  • Demographics (age, sex, location, life status)
  • Customer Loyalty (participation and use of loyalty programs)
  • Digital Behavior (how often does the customer visit the brand’s website and social media handles)
  • Customer Service (how often does the customer contact customer service, total time to resolution, complexity of support requests)

From there, you can look at each data point, layered with customer feedback on top individually, or combine the data points to determine what specific groups are looking for. Remember that not all data sets will benefit your company, so choose the ones that best fit your needs in order to maximize results.

For example, when a large bank layered customer feedback over customer age, the company discovered that millennials had drastically different needs than customers from Generation X. The younger customers were interested in digital ecommerce and easily transferring funds between friends while the more mature customers prioritized mobile deposits and investments. 

By going beyond just segmenting customer feedback and adding emotion into the mix, the bank was able to adjust its marketing strategies and product offerings to meet the unique needs and expectations of both demographics.

3. Don’t Forget to Communicate

Every department should start thinking about customer needs more deeply, digging into what various groups want rather than using simple metrics. Make a point of broadly sharing the insights you’ve collected on a regular basis. Having this open dialogue will allow every team within the company to overcome the misconception that customers are the same.

Catering to Customers' Needs (Strategically)

Of course, it’s not economical to cater the product to every individual need, but by being aware of these distinctions and placing priority on your most important customers (as defined by your brand’s priorities), each department will be able to quickly optimize the business. In return, you can implement changes that benefit the right customers instead of just one specific audience.

Additionally, by tracking the behavior of a variety of groups, you will be able to prioritize and calculate the return on investment on changes that impact a particular group. 

For example, when United Airlines’ frequent flyers asked for better coffee, the customer service team had to evaluate if this change would be worth the expense, and ultimately, answer how valuable frequent flyers are to the company. After honing in on the frequent flyers’ spending behavior and the cost of frequent flyers to the airline, the customer service team found there was a clear return on providing higher-end coffee. Starting in July of last year, United made the not so easy switch to illy coffee because they knew this bold move would be worth the effort.

Ultimately, by combining segmentation data with customer feedback, you will be able to offer customers an unmatched, personalized experience so that they never have a reason to turn to competitors.

About the author

Susan Ganeshan

Susan Ganeshan is Chief Marketing Officer of Clarabridge, which provides intelligent customer experience management solutions for some of the world's top brands.

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