March 22, 2023

Best Practices for Customer Segmentation with CRM

Written by
Why is TechnologyAdvice Free?
Tags: CRM

Key takeaways

  • Market segmentation is a time-tested method for boosting the effectiveness of sales and marketing efforts.
  • Most CRM tools can help implement and automate segmentation efforts, and incorporate them into outreach campaigns.
  • When you treat the “leads” in your CRM as “people,” everyone wins. The tech can help with that.

So you have all of this lead info in your CRM … now what? Having a way to follow up with leads is great, but if it’s inefficient it’s no better than using your email client’s contact list. That’s where CRM customer segmentation comes into play.

By grouping leads based on relevant characteristics and following up based on their interests and buyer stage, you improve the odds that they will find your nurture campaigns and outreach helpful (rather than annoying). But how would one go about doing such a thing?

What is customer segmentation and why is it important?

Let’s talk about socks for a moment. If you’re in the business of selling socks, you can try selling ankle socks to everyone you meet. “Who doesn’t need socks?” you might say. “This product is truly universal.”

But that’s a professional fallacy. The wiser option is to try and identify characteristics that different sock buyers have in common. Do women or men buy more ankle socks? Are athletes more inclined to buy them or less? Does their history of shoe purchases factor into the decision? Is weather or geography a factor?

By breaking the pool of potential customers into groups based on their relationship to the core offering, you can build a profile of attributes that aids in recognizing other leads that likely fall into a given group. 

If you have a good idea of what the lead is looking for and why, the work of meeting that need becomes a lot easier.

The “how” of CRM customer segmentation

Before we go any further, it’s important to know that customer segmentation is a useful business process with or without software tools like CRM. Using applications to automate parts of the process and reduce the workload can facilitate better implementation of the strategy with lower overhead.

Keep in mind that, like segmentation parameters, CRM tools and what they can do will vary by vendor. Interfaces, options, and functions all depend on the tool, subscription tier, integrations being used, and a host of other factors.

In this section we’ll cover general best practices and provide some examples with broad application for a majority of use cases.

1. Define the segments

This whole step could be a dissertation on its own. In fact, the subject has been given that very treatment both in print and online. Rather than try to distill that kind of wisdom into a few hundred words, let’s instead cover some guidelines to get you started.

When defining segments, the primary objectives are quantifying levels of interest and highlighting the factors at play for the decision-makers. Criteria for these distinctions will differ wildly based on brand offerings, ICPs, and a lot of other things. 

They might include details such as:

  • Age
  • Gender
  • Nationality
  • Industry
  • Education level
  • Socioeconomics
  • Nationality
  • Political, religious, or philosophical leaning

How you get information like this from your audience will depend on what systems and campaigns you have in place already. Ebook downloads, blog visits, newsletter signups, survey answers — all can be used to help gather details that will aid in segmentation.

Finally, never underestimate the value of feedback from the front lines. Sales and customer support agents should be seen as the treasure trove of voice for customer insights. Interview them to learn about the complaints and compliments they hear from leads and customers alike. 

Why are people buying or signing up? Why are they passing on the deal? Why do they stick around or walk away? These are questions that should guide the segmentation and define how different groups are pursued (or in some cases even discouraged from buying). 

It sounds like a lot of work, and it is. But the better you can pin down these details the more effective a sales/marketing follow-up will be with any segment you establish. Once the parameters are in place then and only then can the software do its job. 

2. Leverage the CRM

With the plethora of available CRM options on the market, a comprehensive step-by-step guide for segmenting using every tool would be quite the fool’s errand. Instead we’ll cover some basics and then use the ever-popular Hubspot platform as an example of how a CRM can be used.

Once you’ve determined personas, characteristics, and metrics that can be used to categorize leads you’ll need to do some setup so the app knows how to sort leads automatically. This is done by building lists.

Rather than painstakingly adding each relevant lead to the appropriate segmentation category, you can use smart lists. Set the criteria for who should and shouldn’t be in the list and it will update automatically as contacts meet those criteria. 

Once lists are in place it’s on to building workflows. These automate sales and marketing functions, like sending prebuilt emails. Then you can set enrollment triggers to further track the progress of leads from a list as they move through the sales process. 

You can also add branches to the workflow (e.g. “Did they answer ‘Yes’ to the survey? Then they go on to receive emails A, B, and C.”). This enables further breakdowns and subdividing, allowing you to send increasingly targeted and specific follow-ups. 

Finally, you can set workflows to apply additional actions to contacts that have met various enrollment conditions in a given branch.

In summary, the system is designed to give you the ability to send more meaningful communications to your leads. You can learn more about the details of HubSpot’s segmentation tools below.

An extensive rundown of CRM vendors, their pros and cons, and what use cases match which tool could be helpful at this stage. There’s also this Sales CRM guide.

3. Analyze and iterate

A word of warning: no successful sales or marketing pro ever “sets and forgets” a strategy or process. Long-term sustainable growth is always tied to self-reflection and self-improvement. Most CRMs know this and build their tools specifically to meet this need.

How reporting and analytics work depends on the software in question, but whichever CRM you’ve chosen you should put that data to good use. Look at the numbers and identify patterns of success and failure. Do your segments match buyer intent? Do the characteristics or criteria need tweaking to more accurately separate leads?

Test, review, revise, and iterate. Find what works, ditch what doesn’t, and try again. Failure can be an asset and an effective teacher provided you fail fast and adapt quickly.

The “why” of customer segmentation

The main factor determining what goes into the spam folder and what doesn’t for users is relevance. And low relevance is nearly always a result of low effort. 

In other words, lazy outreach alienates leads. Reactions may range from apathy to annoyance, but there’s no shade of “positive” among them.

Sales and marketing teams that want to find success with their efforts to generate leads and nurture conversations will need to step up their game — and back away from the “reply all” button.

In summary

When you treat the “leads” in your CRM as “people,” everyone wins. The tech can help with that. It is, in fact, uniquely designed to facilitate that kind of endeavor.

Looking for the latest in CRM solutions to get your customer segmentation under way? Check out our CRM Software Buyer’s Guide.


Customer segmentation is the practice of strategically grouping leads, target audiences, and market demographics to better target them. By identifying which potential customers want what kind of offering, sales and marketing professionals can avoid trying to sell ankle socks to buyers looking exclusively for crew socks (as a random, non-specific example).

Most of them can. The industry leaders all understand the importance of this function, and so it’s incorporated into their tools to varying degrees. That’s not necessarily true across the board, however, and different vendors implement the feature to different degrees. In other words, always double-check, as your mileage may vary.

1 monday CRM

Visit website

monday CRM is the customizable, no-code CRM that allows you to control your entire sales funnel and close more deals, while simplifying communication and collaboration. Automate manual work, capture and import leads, and centralize deal and contact info, all in one place.

Learn more about monday CRM

2 HubSpot CRM

Visit website

HubSpot is an intuitive CRM that makes managing your sales pipeline a breeze. Everything you need to track important metrics, set up time-saving flows and automations, manage clients seamlessly, and grow your business is available in one tidy dashboard. Plans are available for businesses at every stage of growth, starting at 100% free. Start taking the guesswork out of business management today with HubSpot CRM.

Learn more about HubSpot CRM

3 Salesforce CRM

Visit website

Drive growth with Sales Cloud 360, the best-in-class sales solution that has helped power the world's best sales teams. Firms of all sizes, industries, and geographies, realize value faster with Sales Cloud 360. Increase rep productivity with data-driven selling by quickly deploying industry-specific apps and best practice processes. You also get access to 150,000+ sales organizations and a 2 million user-strong community that are passionate about sales growth.

Learn more about Salesforce CRM

TechnologyAdvice is able to offer our services for free because some vendors may pay us for web traffic or other sales opportunities. Our mission is to help technology buyers make better purchasing decisions, so we provide you with information for all vendors — even those that don't pay us.
In this article...