What Is Customer Segmentation? Segments on Shopify

Quick Definition

Customer segmentation, often just called segmentation, is splitting your customers into smaller groups (segments, or audience segments) that share something, like what they buy, how often they order or where they live. Each group then gets messages and offers that fit it, instead of one message for everyone.

Common Ways to Group Your Customers

A segment is just a group with a clear rule. Most stores start simple:

Buying history: first-time buyers, repeat buyers, or people who bought from one product line.
Spend: your top spenders versus people with one small order.
Recency: bought last month versus no order in a year.
Profile: country, or whether they agreed to get marketing emails.

A classic way to combine these is RFM. It scores each customer on recency (how recently they bought), frequency (how often) and monetary value (how much they spend).

Who Actually Needs the Discount?

Different groups need different things. A first-time buyer may need a reason to trust you, while a regular may only need to hear what's new. Send everyone the same code and part of that discount goes to people who'd have bought anyway.

Example: Say you have 1,200 past customers, and 300 of them have ordered three or more times. You plan a 15% off email.

If it goes to everyone, your regulars get the code too. Suppose 60 of them would have placed a $50 order anyway. Each one saves $7.50, so you give away 60 × $7.50 = $450 on sales you already had.

Split the list instead. Send the 300 regulars a new-arrivals email with no code, and send the 15% code to the other 900.

Segmentation doesn't create sales by itself. It decides who sees which message, and that decides how much discount you hand out.

Customer Segments in Your Shopify Admin

Shopify has this built in. Go to Customers and open Segments. You build one with filters like how much someone has spent, how many orders they've placed, their customer tags, or whether they accept email marketing.

Shopify Email can then send a campaign to a segment. And when you create a discount code, you can limit who can use it to specific customer segments. For the full setup, see our guide to customer segmentation for Shopify discounts.

The Mix-Up: Customers Aren't Visitors

Many owners assume a segment can reach anyone on the site. It can't. Shopify builds segments from customer records, so they only hold people your store already knows, like past buyers and email subscribers. A stranger who looks around and leaves, without buying or signing up, isn't in any of them.

Grouping those unknown shoppers by what they do during a visit is visitor segmentation. Customer segmentation mostly looks back at people you know. Visitor segmentation reads live behavior. Growth Suite, our app, groups store visitors by behavior, such as cart abandoners, return visitors and device type.