When you divide your customers into different groups you are able to communicate more effectively with them.  You can divide customers in a logical process that leads to groups that are homogeneous and that will likely react in the same way to your marketing message.

The division can be based on:

• Demographics (gender, age, location and education)
• Product (what products or services they buy and at what levels)
• Recency and frequency (when was the last purchase and how often they buy)
• Any other criteria that makes sense for your business

Once you create segments, you are able to customize your message so that it is more relevant to the segment.  For example, your message to new customers would be quite different from customers who've made several purchases.  Or your message to an elderly person would be different than the one addressed to a teenager.

The more relevant your message to segments, the more customers will feel you are speaking to "them" and the likelier they will "listen" to your message.