How to use customer demographics and segmentation in business

Customer demographics provide key insights into your company’s customer base to help you figure out your target market.

With that knowledge, everyone on your team can serve customers better and sell more effectively.

In this article, you’ll learn what customer demographics are and how to leverage them to benefit your business and sales prospects. You’ll also discover what tools can help you do just that.

What is a customer demographic?

Customer demographics are data that businesses use to understand different audience groups and make better decisions.

There are many categories of customer demographic groups. Here are a few examples:

• Age group

• Level of education

• Income level

• Ethnicity

• Marital status

• Geographical location

Demographic characteristics are only one piece of the puzzle.

Psychographic characteristics like personal interests and lifestyle choices also play a part. These subjective traits help companies know more about potential customers and their preferences, which is important for things like brand partnerships and sales conversations.

Behavioral segmentation is another way to group customers. It uses market research to understand consumer behaviors, like when your target customers typically buy from you and what motivates them to buy – important when choosing who to focus on in a campaign.

Sales and marketing teams use all of these types of demographics in an activity called customer segmentation to target different groups of people with more relevant messaging.

Here’s an example of a minivan campaign targeting the millennial parent demographic:

Honda digs into what motivates parents with young children and what they’re looking for in a family vehicle.

By partnering with Disney, this Honda Odyssey campaign has parents dreaming up all the possibilities for family adventures inside a new minivan.

The Honda campaign below targets a different demographic: individuals who enjoy trail sports.

The messaging in each post is unique to the intended audience. “Flex some muscle” and “tough terrains” speak to those who enjoy off-roading or other challenging outdoor adventures. The minivan post describes family fun and comfort.

This messaging is made possible by understanding the different elements that make up their target customers.

Why does customer demographic information matter in business?

Customer demographic information enables businesses to target interested segments directly and send the right message to the right audience.

When you understand your customer base, you can better define target markets for your products and services. You work more efficiently and avoid wasting the resources at your disposal.

Uncovering the best target audience for each product also helps your company achieve a strong product-market fit. Your teams can then ensure greater personalization throughout the customer journey.

There are many rewards for personalization in business, specifically in marketing success. McKinsey’s research found that companies focused on personalization generate 40% more revenue from tailored marketing activities.

There are other benefits to targeting and personalization beyond company profits.

Targeted campaigns help consumers quickly find new products, enhancing customer satisfaction right from the start.

Imagine you’re shopping for dorm bedroom furniture for your soon-to-be college student son or daughter. If a supplier clearly targets parents of children graduating high school in its messaging, you’re more likely to find what you’re looking for.

In addition, PwC’s 2022 Customer Loyalty Survey found that 82% of American respondents are willing to share personal data to have a better customer experience.

Collecting customer demographic information can further help your business in these ways:

• Product viability. Knowing the size of your target market can tell you whether your new product has enough interested buyers (particularly important for local businesses).

• Supporting product or brand positioning. Crafting your value proposition and positioning your brand is easier when you understand what matters most to your audience.

• Ensure better ad spend and preserve your budget. Designing ads that speak to specific needs means you can spend your money on messages that will land with your target audience.

Using customer demographic information for segmentation and personalization helps your company drive more of the consumer behaviors it wants to see – gaining new customers and increasing retention.

Customer demographic tools to consider

Customer demographic information is only as valuable as what you do with the data. There are tools to help you collect the information, others support its application and some bring it all together so you can do both.

Here are three tools to consider when compiling and implementing customer demographic data.

Customer relationship management (CRM) software

CRM software helps you organize your customer information – from demographic data to purchase history and communication preferences.

More advanced CRM solutions offer additional sales and marketing features like prospecting, lead nurturing and email functions that help you build more fruitful relationships.

Consider Pipedrive’s sales CRM, as well as our lead generation and email marketing software that make prospecting and contacting different segments simple.

You can set customizable filters to target contacts that meet specific criteria within their deals, activities, products and campaign data.

With Pipedrive’s email tracking and CRM analytics, your team can easily assess which actions work best to maximize efficiency.

Beyond supporting your data collection, Pipedrive helps you make better business decisions with detailed sales and customer insights.

With its variety of features, add-ons and integration capabilities, Pipedrive is a scalable and customizable CRM solution for companies of all sizes.

Start a free trial to see how Pipedrive can meet your sales and marketing needs.

Buyer personas and ideal customer profiles (ICPs)

Buyer personas and ICPs help sales teams conceptualize their customers and prospects effectively. Customer demographic data is the foundation for both.

An ideal customer profile is a high-level overview of a company’s most valuable customer. It’s mostly useful in a B2B scenario.

A typical ICP outlines valuable data such as geographic location, industry, company type and size, plus product-relevant pain points.

Download Pipedrive’s ideal customer profile template to ensure your sales team reaches the right prospects.

On the other hand, a buyer persona is an imagined buyer who embodies what you look for in a potential customer.

Beyond demographic information, personas often include job titles, challenges, motivations, goals and personal preferences.

After collecting your customer data, use the information to build your ICPs or buyer personas to help your team visualize exactly who they are speaking with, helping and selling to.

Social media platforms

Social media platforms natively collect a great deal of information about consumers. Businesses can use this publicly available data to build well-targeted marketing campaigns that generate quality leads, build brand awareness and improve conversion rates.

You can put that data to use with your CRM. For example, by connecting your CRM to your social profiles, you can:

• Automatically populate contact profiles (e.g., with LinkedIn information)

• Perform personalized monitoring and outreach

• Evaluate and act on the data you capture

Pipedrive offers many direct integrations with social media channels.

For instance, the Surfe app connects with Pipedrive to speed up your LinkedIn prospecting. The integration lets you quickly import LinkedIn contacts, refresh their data and source prospects’ email addresses.

With Surfe you can also auto-sync LinkedIn chats, manage your deals and pipelines, personalize message templates and get analytics on response rates.

Pipedrive has similar integrations for other channels, like Facebook and Instagram. Alternatively, you can use the Zapier app to create new connections.

On top of customer demographic data, social media provides valuable insights into subjective information about your prospects.

Thanks to recent improvements in natural language processing and machine learning, new tools can now analyze social interactions and activity at scale. You can even connect social media listening apps like Hootsuite and SproutSocial to your CRM.

Your sales and marketing teams can use these tools to review consumer sentiments and pain points. This will give you a more nuanced picture of how individuals feel about their problems, available solutions and different brands.

The insights gleaned can help salespeople adapt their communication styles, uncover frustrations about similar solutions and understand what features matter most to their audience.

Using customer demographics to sell more (with examples)

Obtaining customer demographic data isn’t challenging. The real skill lies in knowing what to do with it to grow your company.

Here are ways to improve various business and sales activities using customer demographics.

How to improve prospecting with customer demographics

Customer demographics and psychographics help you target the right prospects with better sales pitches that match their needs and preferences.

For example, use the geographic location customer demographic to reach consumers more likely to purchase your product based on where they live.

Say your company manufactures and distributes surfboards to small outdoor recreation shops. Geographic demographics can help you target coastal shops or areas of the country within a short distance of the ocean.

If you want to use customer demographics to improve your prospecting, start by creating your ICPs and buyer personas.

In the B2B sales example above, your ICPs would provide in-depth information on the right outdoor recreation shops to contact. Your buyer personas would detail the individuals most likely to purchase your surfboards from those shops.

Once you define your ICPs and buyer personas, use a CRM to segment your audience and send tailored emails to different groups.

Online tour booking software company TrekkSoft experienced the value of CRM-enabled customer segmentation first-hand.

Initially, the company struggled to keep up with the manual transfer of prospect data from spreadsheets into its email marketing software. By implementing the Pipedrive CRM, the team could seamlessly target different segments based on geography and vertical markets.

Pipedrive also offers lead generation software capabilities with its LeadBooster add-on. LeadBooster’s Prospector allows you to build personas of your target customers directly in Pipedrive.

The sales prospecting tool also grants you access to 400 million profiles and 10 million companies. This database lets you define your ICP criteria to search for relevant leads.

How to use customer demographics in your marketing efforts

Your team can convert leads into customers more successfully by tailoring marketing campaigns to specific demographic groups.

Use email marketing tools like Campaigns by Pipedrive to segment audiences by demographic criteria such as company size or revenue. That way you ensure you’re sending messages that resonate with the audience you’re targeting.

Take outdoor clothing designer Patagonia as an example.

Patagonia uses psychographics to target individuals who lead an active lifestyle, enjoy nature and care about the environment.

The company also uses demographic segmentation to zero in on people with disposable household incomes who can afford its high-end products.

Patagonia combines these data sources to craft marketing messages that speak to customers who both have a use for its products and see the value of investing in quality sustainable clothing.

How to use customer demographics to upsell

By understanding more about consumers, you can be more relevant when upselling to current customers or leads.

Say your company sells a B2B software-as-a-service (SaaS) product. You can upsell using the B2B equivalent of demographics, known as firmographics, by collecting insights into a company’s size and revenue.

If you know your prospect is a large business, you can upsell them to a higher plan. If you’re dealing with a smaller enterprise, you won’t waste time upselling features they don’t need nor have the budget for.

Your CRM can store customer demographic information, including revenue data. After creating your ICP, use the CRM’s email software or integrations to personalize emails to different customer segments.

Pipedrive’s Campaigns add-on lets you easily apply filters to send tailored messages across different contact groups.

How to use demographics to improve customer service

You can use customer demographic data to enhance pre-sale and post-sale customer service by providing personalized messaging and services.

One way to tailor your communication is to anticipate customers’ needs and provide more relevant product recommendations based on what you know about the demographic.

Another way is to offer customer service or sales support through your audience’s preferred channels. Often, this means ensuring your teams can respond to queries on social messengers where your customers are most active.

For example, beauty and skincare brand Sephora uses Facebook Messenger to quickly respond to those who reach out through that channel.

Potential customers can interact with an automated chatbot or get more complex support from a live customer service rep.

Pipedrive offers a Facebook CRM integration called Messaging Inbox. The software lets you sync your chats with Pipedrive to centralize communications and speed up your closing time.

There’s also the option to add chatbots and live chat functionality to your website through your CRM. Pipedrive provides both features as part of the LeadBooster add-on. You simply set up automated responses to common questions or route the conversation to a sales rep if it requires custom support.

You can collect data like name and organization or even add custom notes while chatting with a website visitor in Pipedrive’s web chat. If you determine that it’s a qualified lead, you can start a new deal directly from the chat.

What are consumer demographics?

Consumer demographics refer to the statistical characteristics of a population that help businesses understand their customers. These characteristics include age, gender, income, education level, marital status, occupation and more.

Demographics are crucial in market segmentation, enabling businesses to tailor products, services and marketing strategies to meet the specific needs of different consumer groups.

Which of these is a consumer market demographic segmentation variable?

In consumer market segmentation, demographic variables are essential for defining and understanding target audiences. Common demographic segmentation variables include age, gender, income, education level, marital status, occupation and family size.

Each of these variables helps businesses tailor their products, services and marketing efforts to meet the specific needs of different groups. For instance, age can influence product preference and communication styles, while income can affect purchasing power and spending behavior. By segmenting the market based on these demographics, companies can more effectively connect with their ideal customer base and deliver more personalized experiences.

Do changing demographics have no impact on consumer behavior?

The notion that changing demographics have no impact on consumer behavior is largely a misconception. Demographic shifts – such as aging populations, increased urbanization and shifts in income levels – significantly influence consumer preferences and purchasing patterns.

As demographics change, so do the needs, values and consumer expectations. Ignoring these shifts could result in outdated marketing strategies that fail to resonate with evolving consumer bases.

Customer demographics FAQs

The role of customer demographics in small business

Understanding customer demographics is critical for small businesses seeking to tailor their products and services effectively. By analyzing demographic data such as age, gender, income and education level, small businesses can identify their target market’s specific needs and preferences.

This targeted approach helps in creating personalized marketing strategies that resonate more with potential customers, ultimately driving higher engagement and sales.

Customer demographics also play a significant role in product development and inventory management. Small businesses can use demographic insights to determine which products are likely to be popular among different customer segments. Doing so optimizes stock levels, reduces waste and ensures that products align closely with customer demands.

Understanding customer demographics can additionally improve customer service and support efforts. Small businesses can train their staff to address common questions and concerns specific to their target audience by knowing who their customers are.

This leads to improved customer satisfaction and loyalty, as customers feel valued by businesses that cater to their unique demographic profile.

Final thoughts

When you’re ready to build systems for more personalized experiences, demographic data collection is a great place to start. Yet the data on its own isn’t enough.

If your ultimate goal is to increase sales, a dedicated sales CRM can help you interpret the data and apply it meaningfully across your marketing strategy, sales processes and customer service.

Pipedrive makes it easy to understand your customer base, filter contacts and send personalized emails that truly resonate with your audience. It’s one of the best CRMs for efficiently reaching the right prospects and leads through relevant messaging.