Customers are complex.
They have different wants, needs, habits, and behaviors.
Whether they like to accept it or not, their wants, emotions, needs, backgrounds, and habits play a massive role in their purchasing behavior.
Most of the customers have habits that they do every day without thinking. Some of them might start their day with a cup of espresso, some might start the day by checking game results, or others finish their day with quick jogging.
Businesses want to understand different customer groups based on their behaviors and patterns. That's why they use behavioral segmentation.
However, behavioral segmentation is NOT only about understanding people's patterns and motives behind their actions. It's also about optimizing and tailoring their messages for each specific group to match these patterns.
This article covers the basics of behavioral segmentation and how businesses can use these strategies to reach their business goals.
What Is Behavioral Segmentation?
Behavioral segmentation is the process of dividing customers into categories with similar behavior. These behaviors are customers' attitudes towards a product or service, their usage rate of it, whether they like or dislike it, and many other behavioral patterns.
These behaviors are then used to target specific audiences with appropriate messages and offers.
The idea behind behavioral segmentation is to take advantage of what companies know about consumers by targeting them with the right message at the right place at the right time, which leads to more persuasive messaging and higher conversions.
What Are the Types of Behavioral Segmentation?
Behavioral segmentation is a powerful tool that can help you form a complete customer profile and understand their buying journey. By understanding the different types of behavioral segmentation, you can develop actionable insights that can be used across a variety of marketing channels.
There are seven main types of behavioral segmentation:
Behavioral Segmentation Based on a Purchase
Behavioral segmentation based on a purchase is a marketing technique that involves dividing consumers into groups based on their purchasing behaviors. This type of segmentation can be used to target specific groups of consumers with tailored marketing messages.
There are a number of different ways to segment your customers based on their purchase behavior. Some common methods include segmenting by frequency of purchase, type of product purchased, or channels used to make purchases.
Segmenting your customers by purchase frequency can help you identify your most loyal customers and target them with special offers or loyalty programs. Segmenting by type of product purchased can help you target customers with specific needs or interests. And finally, segmenting by channels used to make purchases can help you reach customers through the channels they prefer.
Behavioral Segmentation Based on Occasion (Time-Based Behavioral Segmentation)
One type of behavioral segmentation is based on the occasion. This means looking at when and why people purchase certain products or services. This can help understand seasonal trends and predict when customers are most likely to make a purchase.
For example, a business might segment its customers based on occasions such as birthdays, holidays, or special events.
By targeting its marketing efforts toward these occasions, the business can increase its chances of making sales.
Behavioral Segmentation Based on Benefits Sought
Behavioral segmentation based on benefits sought involves dividing your audience into groups based on the benefits they are looking for from your product or service.
For example, if you sell health insurance, you might have one group of people who are looking for the cheapest possible plan, and another group who is more concerned with getting the best coverage. By understanding the needs of each group, you can create marketing materials that are more likely to resonate with them.
There are a number of ways to go about conducting benefits-sought segmentation. One is to survey your target audience and ask them directly what they are looking for in a product or service like yours.
Another option is to look at customer data, such as purchase history, to see what types of products or services they have gravitated towards in the past. This can give you insights into their needs and preferences.
Once you have a good understanding of the benefits your target audience is seeking, you can start creating more targeted content that speaks to those needs.
Behavioral Segmentation Based on Customer Loyalty
People often shop based on loyalty to a certain brand or store. Behavioral segmentation based on customer loyalty helps to identify and target specific groups of shoppers. By understanding the behavior of loyal customers, businesses can more effectively market to them and encourage them to continue shopping with the company.
Businesses can segment their customers based on loyalty in a few different ways:
One common method is to look at how often customers make purchases. Customers who buy frequently are often considered more loyal than those who only purchase occasionally.
Businesses can also segment their customers based on how much they spend each time they shop. Customers who spend a lot of money per purchase are typically considered to be more loyal than those who spend less.
Another way to segment customers based on loyalty is to look at how long they have been shopping with the company. Customers who have been shopping for a longer time are typically considered more loyal than those who are newer to the company. This is because they have shown a commitment to shopping with the company over an extended period.
Once businesses have identified their loyal customers, they can begin targeting them with specific marketing campaigns. This might include offering discounts or coupons to loyal customers or creating loyalty programs that offer rewards for continued business. By understanding the behavior of their loyal customers, businesses can more effectively encourage them to keep shopping with the company.
Behavioral Segmentation Based on Customer Journey Stage
Behavioral segmentation based on the customer journey stage is a type of market segmentation that looks at how customers behave during different stages of their journey. This helps businesses better understand what motivates customers and how to best reach them.
There are typically four stages in a customer's journey:
Awareness: The customer becomes aware of a problem or need that they have.
Consideration: The customer begins to research potential solutions to their problem or need.
Decision: The customer makes a decision on which solution to choose.
Loyalty: The customer continues to use the chosen solution and may become a brand advocate.
Behavioral segmentation based on the customer journey stage can help businesses in a number of ways. For example, it can help businesses:
Identify what motivates customers at each stage of their journey
Develop marketing campaigns that are better targeted to customer needs
Improve the overall customer experience
Behavioral Segmentation Based on Engagement
Behavioral segmentation based on customer engagement is a marketing technique that involves dividing customers into groups based on their patterns of engagement with a company's products or services.
Engagement can be measured in many ways, including frequency of purchase, level of interaction with a company's website or social media accounts, and whether or not a customer recommends a company's products or services to others.
Behavioral segmentation based on customer engagement can be an effective way to improve customer loyalty and increase sales. It is important to remember, however, that not all customers can be categorized into neat groups; some will fall into multiple categories, and some may even change categories over time. As such, it is important to continually monitor customer engagement patterns and adjust segmentation strategies as needed.
Behavioral Segmentation Based on Customer Satisfaction
Behavioral segmentation based on customer satisfaction is a powerful marketing tool that can help businesses identify and target customers who are most likely to be satisfied with their products or services.
This type of segmentation involves dividing customers into groups based on their past behavior, such as purchase history, complaint history, and other factors.
By understanding how customers behave, businesses can tailor their marketing campaigns to appeal to each group's specific needs and wants.
When segmenting customers based on satisfaction, it is important to consider both qualitative and quantitative data. Qualitative data, such as customer surveys, can provide valuable insights into why customers are satisfied or dissatisfied with a product or service. Quantitative data, such as purchase history, can help businesses identify patterns in customer behavior.
By using both types of data, businesses can develop a well-rounded understanding of customer satisfaction and create more effective marketing campaigns.
Why Is Behavioral Segmentation So Important?
Most businesses segment their customers based on demographics like age, gender, income, etc. However, this approach doesn't always give the most accurate picture of who your ideal customer is. That's where behavioral segmentation comes in.
Behavioral segmentation looks at how customers interact with your product or service. This can include things like how often they use it, what features they're interested in, and even why they decided to buy it in the first place.
This information can be incredibly valuable when it comes to marketing and sales strategies. For example, if you know that a certain group of customers is only interested in using your product for a specific purpose, you can tailor your messaging to them accordingly.
In short, behavioral segmentation can help you better understand your customers and what motivates them. This, in turn, can lead to more successful marketing campaigns and higher sales.
Behavioral Segmentation Improves Targeting Accuracy
There are many benefits to using behavioral segmentation, including the ability to target specific messages and offers to each group, improved understanding of customer needs and preferences, and increased sales and marketing efficiency. Additionally, this approach can help companies better identify and understand customer segments that are most valuable to them.
Behavioral segmentation can be used to improve targeting accuracy in a number of ways.
First, it can help companies identify groups of consumers with similar behavior patterns. This information can then be used to target specific messages and offers to each group.
Second, behavioral segmentation can help companies better understand customer needs and preferences. This understanding can be used to develop more effective marketing and sales strategies.
Finally, behavioral segmentation can help companies increase their sales and marketing efficiency. By targeting specific groups of consumers, companies can reduce the amount of time and money spent on marketing and sales activities that are not likely to be successful.
Overall, behavioral segmentation is a powerful tool that can be used to improve targeting accuracy.
Behavioral Segmentation Helps Provide Better Personalized Experiences
Behavioral segmentation is a powerful tool that businesses can use to provide more personalized experiences for their customers.
By grouping customers based on their behavior, businesses can better understand what each customer wants and needs. This understanding can then be used to create tailored experiences that are more likely to result in a sale or positive customer interaction.
In many cases, behavioral segmentation can be used to identify potential upsell and cross-sell opportunities. For example, if customers frequently buy products from a certain category, they may be interested in purchasing related items that they are unaware of. By showing these related items to the customer, businesses can increase the chances of making a sale.
Behavioral segmentation can also be used to improve customer support. For example, if customers frequently contact customer support, they may have difficulty using a product or understanding how to complete a task. By segmenting these customers, businesses can provide them with more personalized support that is tailored to their needs. This can help reduce the number of support requests and improve customer satisfaction.
Overall, behavioral segmentation is a powerful tool that can be used to improve the customer experience. By grouping customers together based on their behavior, businesses can better understand their needs and create more personalized experiences. This can lead to increased sales and improved customer satisfaction.
Behavioral Segmentation Helps Differentiate Engaged Users from Uninterested
Behavioral segmentation is a powerful tool that can help marketers identify engaged users and uninterested prospects.
By tracking user behavior, marketers can see which prospects are actively engaging with their brand and which ones are not. This information can then be used to create targeted marketing campaigns that focus on engaged users.
Behavioral segmentation can also help marketers understand why some prospects are not interested in their brand. By understanding the behavior of uninterested prospects, marketers can tailor their campaigns to better appeal to these individuals.
Overall, behavioral segmentation is a valuable tool that can help marketers improve their engagement with both interested and uninterested users.
Behavioral Segmentation Helps Build Loyalty to Your Brand
Behavioral segmentation is a powerful marketing tool that can help you build loyalty to your brand. By understanding and targeting the different segments of your customer base, you can create tailored campaigns that resonate with their specific needs and preferences.
This type of segmentation allows you to focus your marketing efforts on those who are most likely to become loyal, long-term customers. By understanding their behavior patterns, you can craft messages and offers that appeal directly to them.
Behavioral segmentation can also help you identify potential problems before they arise. By monitoring customer behavior, you can spot trends and issues early on, and take steps to address them before they cause any damage to your brand.
Overall, behavioral segmentation is a powerful tool that can help you build loyalty to your brand.
Data Is at the Foundation of Behavioral Segmentation
As digital marketers, we are constantly striving to segment our audiences in order to deliver more personalized and relevant content. And while there are a number of different ways to segment your audience, behavioral segmentation is often seen as the most effective.
But what is behavioral segmentation? And why is data so important to it?
As we defined earlier in this post, behavioral segmentation is the process of dividing your audience into groups based on their behavior. This can include things like purchase history, web browsing habits, and even social media activity.
The reason data is so important to behavioral segmentation is that it allows you to track the behavior of your audience over time. This means that you can see how they interact with your brand and what types of content they prefer.
Armed with this information, you can then create targeted content and campaigns that are specifically designed to appeal to each segment of your audience at the right time. As a result, this helps to create a more personalized and relevant experience for your customers, which can ultimately lead to more conversions, sales, and customer loyalty.
6 Tactics to Boost Businesses With Behavioral Segmentation
Here are six ways companies can use behavioral segmentation to build better, more cost-effective business strategies:
1. Increase Sales Amount With Upselling and Cross-Selling
Perhaps the most basic usage form of behavioral segmentation is targeting the customers who had completed a purchase.
Based on customers' previous purchase behavior, companies can segment them and offer related or complementary products after the purchase.
For example, suppose a customer purchased a holiday package with a safari last year and wants to purchase a holiday package this year as well. In that case, the company can offer these customers a safari or similar leisure activities during their checkout process or after they complete their purchase.
This upselling and cross-selling strategy allows companies to capitalize on consumers' previous behavior in their online or offline stores.
2. Retarget Customers Based on Where They Left
E-commerce companies know that not every customer who adds products to their cart completes the purchase. Some customers leave the website:
after adding a product to the cart
after visiting their cart
on the customer information page
during shipping page
before/after entering the payment information
during the order review page
and so on.
For e-commerce companies, identifying all these (and many more) behaviors is very crucial.
By knowing where the customer is left, companies can apply better targeted retargeting campaigns and tailored messages for each one of their customer's behaviors.
Alternatively, companies can use retargeting campaigns based on visitors' page visit behavior to show visitors what content or product they viewed on the website or related popular products other customers also purchased.
3. Make Better Product Recommendations
Behavioral segmentation helps develop recommendation engines that can accurately forecast which items or features each customer would be interested in their next session.
Amazon, Netflix, YouTube, Spotify, or any other company that comes to your mind uses past behavior (pages visited, links clicked, liked/disliked, etc.) to segment its customers with similar behaviors. So that these companies can recommend similar products based on these behaviors.
These companies are using this type of data to build more accurate recommendation engines that provide individuals with what they crave when it's most convenient!
For the very same reason, according to research by McKinsey, 35% of Amazon's sales come from such recommendations.
4. Create Better Timing for the Messages
Everyone has a different schedule. Some people have a tighter schedule while others have more flexible. For this reason, it's very important for companies to understand when their customers are engaging with their products.
Understanding their usage preferences and segmenting customers based on this data may help companies send timely and better-tailored emails, push notifications, or any other messages.
Imagine the following scenario. A company has localized an app for Brazil and realizes that many users use the app during midnight. Instead of sending notifications right after people wake up to get their attention, this company could send one push notification just before midnight, right before most people engage with the app.
5. Find the Most Loyal Customers
Another tactic of using behavioral segmentation is finding the most loyal customers.
To define their customers' loyalty, companies can use a combination of two:
Brand Love: How likely customers are to recommend the brand to family and friends. Or, how likely are they to switch the brand given the price difference?
Purchase Behavior: the total number of items they bought and the total amount they spent
Once companies combine these two data, they can create customer segments based on loyalty.
Understanding customer loyalty level is very important because most loyal customers usually have a higher lifetime value, and it's more profitable to retain them than to acquire a new customer.
6. Find Where the Customers Are Coming From
Where are the customers coming from? What is the traffic source?
It's important to know where the customers are coming from. It can help companies decide how much marketing should be focused on the different sources.
It also helps companies understand what types of products or content resonate best with those audiences. It can give them ideas for new products and content that might not yet exist in their product catalog, blog, or social media channels.
Segmenting this type of customer behavior enables companies to understand:
Do visitors from certain websites convert more than visitors from other websites?
Do visitors from certain websites spend more money than visitors from other websites?
Do visitors from certain websites spend more time than visitors from other websites?
All of these insights can help companies optimize their user experiences to meet their business and marketing objectives.
Tips to Implement Behavioral Segmentation
When implemented correctly, behavioral segmentation can be an extremely powerful tool for businesses of all sizes. Here are a few tips to help you get started:
1. Clearly Define Your Segments
The first step in any successful behavioral segmentation campaign is to define your segments clearly.
What behaviors do you want to track?
What are the characteristics of your ideal customer?
Answering these questions will help you better understand who you should be targeting with your marketing efforts.
2. Use Multiple Data Sources
In order to get a complete picture of your customer's behavior, you should use multiple data sources. This may include website analytics, customer surveys, and even social media data. By collecting data from multiple sources, you’ll be able to identify patterns and trends more accurately.
3. Test and Experiment
As with any marketing campaign, testing and experimenting with your behavioral segmentation efforts is important. Try different approaches and see what works best for your business. Only through trial and error will you be able to fine-tune your strategy and achieve the best results possible.
By following these tips, you can set your business up for success with behavioral segmentation. Implementing this marketing technique can be extremely beneficial, so long as it’s done correctly. By taking the time to plan and execute your strategy carefully, you can achieve great things.
Importance of Behavioral Segmentation for Personalization
Behavioral segmentation is a powerful tool for personalization because it allows businesses to target their communications more effectively.
By understanding how customers behave, businesses can customize their messages and offers to appeal to specific segments. This helps to ensure that the right people are seeing the right content at the right time and that communications are more likely to be effective.
Behavioral segmentation can also help businesses to understand why customers behave the way they do. This information can be used to improve the digital customer experience and make it more likely that customers will continue to do business with the company.
Overall, behavioral segmentation is a key part of personalization because it allows businesses to target their communications more effectively and improve the customer experience. By understanding how customers behave, businesses can make sure that they are providing the best possible service.
The Bottom Line
Behavioral segmentation is a powerful marketing tool that can help companies reach their business goals. It can increase sales, retarget customers who left and make better product recommendations resulting in higher-value conversions for companies.
With these six ways, marketers have the tactics to create better, more cost-effective strategies for their company:
Upselling and cross-selling with the right offers
Retargeting campaigns based on past user behavior
Product recommendations based on similar activities and past behavior
Better timing for the messages, emails, and notifications
Targeting higher lifetime value customers by understanding more about customers' loyalty levels and previous purchasing behavior
Identifying the most valuable traffic sources