Best Customer Segmentation Software to Utilize in 2024

Understanding customers at scale has come a long way. Back in the day, companies used simple attributes to carve up their customer base in some way to apply different resources to support and/or expand those customers. Boy was it blunt though! Generally, it never got far beyond segmenting your account list by their spending or postcode. The problem, of course, was the lack of data, or at least, a lack of good, current data. The other problem was a pretty ‘rustic’ toolset—think performing brain surgery with a hammer.

Thankfully, things have evolved with customer segmentation software.

The challenge now isn’t a lack of data but how to combine, parse, and track that data to understand your customers better and identify changes in their profile, behaviour, or movement along their customer journey. This will guide you in maximising their health, engagement, and spending time.

So, beyond Excel, which, to be fair, is pretty great for what it is, what solutions and tools are out there to help you segment your customer base?

What is Customer Segmentation Software?

In B2B SaaS, segmentation software refers to any solution designed to divide a company’s customer base into distinct, manageable groups based on the profile or behavioural attributes (or changes around those). These tools use filtering systems or algorithms to parse the relevant customer attributes that allow for segmentation. These can range from a basic spreadsheet to complex machine learning/AI-driven solutions.

Different Types of Customer Segmentation

There are potentially infinite ways to segment your customer base (ok – maybe not infinite 😉) but they will broadly fit into one of several categories:

• Demographic Segmentation
  • This type of segmentation applies filters such as age, gender, income, occupation, education, and marital status to create your segment. It helps businesses understand the socio-economic profile of their customers and tailor their marketing messages accordingly. For the B2B SaaS industry, role, seniority, and time with the company are commonly used demographic attributes.
• Behavioural Segmentation
  • Behavioural segmentation categorises customers according to their actions. From a SaaS perspective, this is where key engagement metrics come into play, like Daily or Monthly Active Users (DAU/MAU), sessions, stickiness, and even custom event data. Also included are Voice-of-Customer (VOC) and support feedback, brand interactions, and purchase history.
• Psychographic Segmentation
  • Psychographic segmentation concentrates on customers’ lifestyles, values, attitudes, interests, and personality traits. This may be less impactful in a B2B customer success context, but it does have significant importance when it comes to developing a SaaS company’s Ideal Customer Profile (ICP), upon which all Go-to-Market strategy is driven.
• Geographic Segmentation
  • Well … this needs little explanation. One of the earliest forms of segmentation, this has obvious importance when it comes to sales territory planning as well as marketing and pricing strategy.
• Firmographic Segmentation
  • In B2B SaaS, we can’t segment and manage our (human) customers without also understanding the attributes associated with the companies they work with. Firmographic segmentation uses characteristics such as industry, company size, revenue, and organisational structure to inform sales, marketing, customer success, and support strategies.

How to Choose a Customer Segmentation Tool?

When selecting a customer segmentation platform for your business, it’s essential to consider several factors to ensure it meets your specific needs and objectives:

• Data Integration Capabilities
  • Choose a tool that easily integrates with your existing customer data sources, such as CRM, support, VOC and billing systems. Ideally, the segmentation tool should have pre-built point-and-click integrations for these applications to avoid having to over-leverage IT resources. In B2B SaaS, you will also want to ensure you can segment by platform usage, this will require you to leverage a segmentation tool’s API/HTML tracking tools (or that you and the vendor both integrate with a customer data platform like Segment.com).
• Scalability
  • Look for a future-proofed tool that can scale with your rocketship! If you plan on managing and tracking a serious volume of customers, be sure to understand any data processing limitations a solution might have, or the potential cost implications of increasing your data load or going over pre-set limits. The process of accurately integrating your customer data can be a laborious one (no matter what is said in pre-sales) so you don’t want to have to continuously switch solutions.
• Ease of Use
  • By their nature, audience segmentation tools can have an element of complexity to them. For this reason, it’s important to choose a platform that is as intuitive as possible, particularly if you expect your regular, non-technical business users to extract the requisite value.
• Advanced Analytics Capabilities
  • Depending on your requirements, you may need to opt for a tool that offers predictive modelling and/or machine learning capabilities. These capabilities allow you to uncover deeper insights from your customer data and make more informed business decisions. 
• Customisation Options
  • The whole point of segmenting your customers is so that you can apply customized engagement strategies to relevant audiences, so look for a tool that has the most flexibility in its filtering, the most options when it comes to selecting and combining filters, and the ability to create custom attributes ‘in-app’. You may want to go for a tool with automated monitoring, so the segmentation tool alerts you (or triggers a playbook) when customers enter or leave a segment.
• Affordability
  • This type of technology can get expensive, and fast. With many options, you are paying for a solution that can do more than just customer segmentation, so expect to pay for additional features you may or may not need. You could, of course, use your own IT resources to build something yourself or even leverage APIs to build a solution in a non-specific tool, but then, IT resources are expensive and you will need to support this solution. Comprehensive solutions with pre-built integrations and powerful tools range from a few hundred dollars per month to tens of thousands (or more).
• Customer Support
  • Don’t plan on being able to manage your own onboarding and implementation. No matter how many technical resources you have or how savvy you are, when it comes to integrating data, questions arise. It’s best to plan on having some technical assistance upfront, responsive support going forward, comprehensive technical documentation for your IT team, and a self-service knowledge base for your users.

Top 8 SaaS Customer Segmentation Software Solutions

Now, let’s explore some of the top customer segmentation tools available in 2024:

1. Akita
2. UserGuiding
3. Customer.io
4. Totango
5. Segment.com
6. Mailchimp
7. Hubspot
8. Google Analytics

Akita

Akita is a customer success platform that excels at integrating data and segmenting customers. With over 100 available data sources and the ability to create super-granular segments, Akita is a popular choice among SaaS startups looking to improve customer retention, health, and ultimately growth rates. It has an attractively low entry cost (from $200/month).

UserGuiding

This user onboarding and engagement platform in its set of features includes also the capacity to segment users based on onboarding progress, feature usage, and feedback. This enables businesses to tailor their onboarding journeys and drive higher user adoption and retention rates.

Customer.io

Customer.io is a stand-out platform when it comes to creating customer segments for targeted email, SMS, and push notification campaigns. It’s a segment marketing tool that caters to marketers looking to deliver personalized messaging at scale. 

Totango

Totango offers advanced segmentation and analytics capabilities to help subscription businesses maximise retention and growth. Totango enables segmentation based on product usage, customer health, and lifecycle stages, allowing for targeted strategies to maximise customer lifetime value.

Segment.com

Segment is a customer data platform (CDP) that helps businesses unify and measure customer data from multiple sources. With Segment, businesses can segment customers based on a range of data points. Companies often use this tool to share key metrics with line-of-business applications like customer relationship management and customer success platforms.

MailChimp

Email marketing platform, Mailchimp, specifically offers segmentation features designed to help optimise email marketing campaigns. It facilitates segmentation based on subscriber data such as location, engagement history, and purchase behaviour. Its intuitive interface and simple integration with e-commerce platforms makes it a favourite marketing segmentation tool among small to medium-sized businesses. 

HubSpot

HubSpot offers the kind of basic segmentation features that help companies organise and target their contacts. Attributes related to lifecycle stage, contact properties, and engagement history can be utilized in segmentation, facilitating personalized communication and targeted marketing campaigns.

Google Analytics

You all know GA! It offers basic segmentation capabilities to help analyse your website traffic. GA’s segmentation capabilities, with filters relating to demographic data, traffic sources, and user interactions help inform Go-to-Market strategies and website optimisation efforts

Most Crucial Features of Customer Segmentation Tools

While the features of customer segmentation solutions may vary depending on the vendor and the specific solution, several key features are crucial for effective customer segmentation:

1. Advanced Segmentation Criteria
   • As it says, this feature set enables companies to segment users based on a wide variety of attributes and criteria. If you’re looking to query multiple data sources within one segment, this kind of power is essential. 
2. Real-time Data Processing
   • Real-time data processing capabilities facilitate the analysis of customer data as it’s collected, which is essential for time-sensitive actions and interventions.
3. Predictive Analytics
   • If you want to get in front of problems before they happen, this technology is designed to parse customer data and facilitate the creation of segments that can anticipate customer needs and proactively address them.
4. Integration with Third-party Systems
   • There is no segmentation without good data! You will need access to as much customer data as possible. The easiest way to achieve this is through the use of pre-built integrations with the apps you already use. This will remove or reduce the requirement to involve expensive IT resources in the integration process.
5. Automation and Personalization
   • These features enable businesses to automate segmentation processes and deliver personalized experiences. This significantly increases efficiency and enhances customer engagement.
6. Reporting and Analytics
   • Leveraging customer segmentation analytics is essential if you want to understand how your segments perform against your key metrics. A solution that has the power of user segmentation analysis, out of the box will ensure you can apply any appropriate actions in a timely fashion. It also removes the requirement to engage further technical resources to apply your KPIs to your segments.
7. Security and Compliance
   • Where customer data is involved, security and compliance are factors. Make sure the tool you select complies with any pre-existing requirements you may have in this respect, such as SOC2, GDPR, etc.

Conclusion

Customer and market segmentation are essential elements to both finding and converting new customers and managing the customer experience for your existing customer base. There are lots of customer and marketing segmentation tools available, so having a clear understanding of your goals, the type of data you have available, and your budget is going to be essential before starting your search for a solution. 

When choosing a customer segmentation software for your business, consider factors such as data integration capabilities, scalability, ease of use, advanced analytics features, customisation options, integration with marketing automation, affordability, and customer support. By selecting the right tool and implementing effective segmentation strategies, businesses can drive customer engagement, increase loyalty, and ultimately achieve sustainable growth in 2024 and beyond.