Customer segmentation is the process of dividing a customer or prospect database into groups that share common characteristics, such as industry, company size, purchasing behaviour or value to the business, so that sales and marketing activity can be tailored to each group rather than applied uniformly. Effective segmentation underpins more relevant marketing campaigns, better-targeted sales prioritisation and clearer reporting on which customer types drive the most value. Dynamics 365 Customer Engagement supports both static and dynamic segments built directly from CRM data.
How segmentation works within Dynamics 365 Customer Engagement
Dynamics 365 Customer Engagement allows segments to be built from any combination of stored customer attributes, behavioural data and engagement history, and can keep dynamic segments automatically up to date as underlying data changes rather than requiring manual list maintenance. This means a segment such as customers above a certain account value who have not engaged with marketing in the past quarter can be defined once and will continue to reflect the current state of the database, supporting consistent, relevant targeting without ongoing manual upkeep.
Customer segmentation in practice
- A marketing team builds a dynamic segment of customers nearing contract renewal, automatically triggering a tailored renewal campaign as accounts enter the relevant window.
- A sales team segments its account base by industry to tailor messaging and case studies to the specific challenges each sector faces.
- A business identifies its highest-value customer segment by combining revenue data with engagement history, and directs account management resource toward retaining and growing that group.
- A marketing team tests two different campaign approaches across similar segments to learn which messaging performs better before rolling it out more broadly.
How Advantage configures customer segmentation for clients
Advantage builds static and dynamic customer segments within Dynamics 365 Customer Engagement, helping businesses define the attributes and behaviours that matter most to their own sales and marketing strategy. We help teams move from one-size-fits-all campaigns to targeted activity based on real customer data, with segments that stay current automatically as the database changes.
Frequently Asked Questions
Common questions about customer segmentation in Dynamics 365 Customer Engagement.
What are the most common ways businesses segment their customers?
Common segmentation approaches include demographic or firmographic segmentation, grouping by attributes such as industry, company size or location; behavioural segmentation, grouping by purchasing patterns, product usage or engagement level; value-based segmentation, grouping by revenue contribution or lifetime value; and needs-based segmentation, grouping by the specific problem a customer is trying to solve. Most CRM-driven segmentation in practice combines several of these rather than relying on a single dimension.
How does segmentation improve marketing campaign performance?
Segmented campaigns allow messaging, offers and content to be tailored to what a specific group of customers actually cares about, rather than sending a single generic message to an entire database. This typically improves engagement rates because recipients see content more relevant to their situation, and allows marketing teams to test different approaches across segments to learn what resonates with each group rather than treating all customers as equivalent.
Can customer segments update automatically as data changes?
Yes. Dynamic segments in Dynamics 365 Customer Engagement are built from defined criteria and automatically update their membership as underlying customer data changes, such as a contact moving into a different revenue band or reaching a new engagement threshold. This avoids the maintenance burden of static, manually built lists that quickly become outdated as customer relationships evolve.
