In the modern age, which tactic is the best to use to understand your users and maximize results at every stage of the customer journey?
As nicely said by Jon Miller “ Knowing who your customers are is great, but knowing how they behave is even better”.
Today, Segmentation is a common strategic approach in Modern Marketing.
Dividing consumers into smaller groups based on their needs and actions is precisely what can help you understand their problems and, in turn, sell more.
Segmentation is one of the most commonly pertained marketing models in practice.
With advanced predictive analytics, contemporary brands can dive straight into data insights to shed light on consumer patterns to deliver the right message to the right person at the right time that can help you to enhance revenue.
Such kind of personalization lies in behavioral segmentation.
However, not every enterprise owner emphasizes its efforts on behavioral segmentation.
According to a recent Forrester Research, around 33 percent of businesses who use segmentation say they find it effective.
One of the main reasons is that many businesses depend exclusively on traditional approaches, such as geographical and demographic segmentation. They don’t understand without behavioral segmentation, other segmentation data you’ve gathered may not be that effective.
So in my today’s post, I will discuss why behavioral segmentation is a marketing strategy every savvy marketer requires in its armory.
What is Behavioral Segmentation?
Behavioral Segmentation is one of the forms of customer segmentation, based on patterns of behavior shown by consumers as they communicate with a brand or when they make a purchasing decision.
Behavioral Segmentation enables marketers to divide consumers into smaller groups according to their knowledge of, emotion towards, the purpose of, or response to a product, or the brand.
Behavioral segmentation basically digs into the how and why of consumer purchases.
For example, how consumers prefer to spend their money and when. The objective of this type of segmentation is to comprehend the shopping patterns of the target audience and answer major questions such as:
- How do they arrive at a purchasing decision?
- What propels them to decide Product A over Product B?
- What are their beliefs towards specific brands, or products?
The main aim is to determine customer segments that allow you to understand how to meet the certain needs or desires of a group of consumers, tailor your product or service based on that, discover chances to optimize their consumer journeys, and quantify their potential significance to your business.
Why Segment Customers by Behavior?
Consider the following four main benefits of grouping customers into different segments based on their behaviors:
- Personalization: Understand how different groups of consumers should be targeted with different offers, at the most suitable times via their preferred channels, to effectively help them boost profitable outcomes in their journeys.
- Predictive: Use historical behavioral patterns to predict and influence future customer behaviors and outcomes.
- Prioritization: Make smarter decisions on how to best allocate time, budget, and resources by identifying high-value customer segments and initiatives with the greatest potential business impact.
- Performance: Regulate growth patterns and changes in primary customer segments over time to measure business health and track performance against goals. At a high level, this means quantifying the size and value of customer segments, and tracking how “positive” and “negative” segments are growing or shrinking over time.
Types of Behavioral Segmentation
Dividing your users into smaller groups, each by actions and behaviors, helps companies operate their time and money better.
It even enables you to customize products and services to best meet your consumers’ desires in contrast to what your competitors can offer.
There are plenty of different types of market segmentation around behavior, but I will show you the best four you can begin with.
1. Purchase Behavior
When you group your consumers by purchase behavior, you observe how consumers behave while they plan to buy something from you.
It enables you to comprehend what stage they are in when buying your product, and how you can deliver more related discounts or offers along the way.
Many of the behaviors can be monitored before classifying a consumer, such as:
- How many times a consumer interacts with your brand to purchase.
- The type of concerns a consumer asks.
- What details a consumer yearns before buying maybe through reviews, warranty information, and many others.
Once a consumer is classified by the type of consumer that they are, you can deliver more precise targeted messages based on your standards.
2. Customer Loyalty
For any brand Loyal customers are usually the highest repeat buyers.
And a better market strategy lies in custom retention as it is cheaper and easier to market to consumers you already have with you.
Loyalty-based behavioral segmentation encourages you to concentrate on retaining existing customers rather than acquiring new leads. It functions by monitoring a consumer’s participation in rewards programs.
Loyalty programs can also come in the form of referral programs.
With loyalty programs, any brand can establish healthier connections with return consumers. Also, they can propel new leads with word-of-mouth promotions.
Your rewards program can maintain as many offers as you want, for any product you wish to store.
For example, when an individual begins to receive points, they’ll want to collect more and more until they attain that reward.
All individuals have their own unique buying patterns.
Occasion-based behavioral segments evaluate the psychology behind these patterns and trends. Some occasions can be universal, such as reserving a dinner table for New Year’s Eve, while others are personal, such as purchasing a beer after office at Happy Hour.
Mostly they stick to both universal and personal habits, which means evaluating an individual’s needs by only directing on their common patterns can help marketers.
By assessing the occasion-based habits, you can target consumers during less popular times also.
For instance, Starbucks knows that buyers mostly arrive for their morning coffee. So, to draw more individuals in the afternoon they offer to buy one, get one free Frappuccino at noon.
And this strategy generally works.
4. Benefits Needed
When an individual makes purchases, he does it with the notion that the product they purchase will add more value to their life. What triggers them to purchase can be a particular feature that is most relevant to their situation.
Such segmentation is about separating your audience based upon the benefits they receive from your products.
Many brands use benefits segmentation such as furniture, professional services, auto, and apparel.
There are five prime benefit classifications for this type of market segmentation:
- Quality: how good (or bad) your product is in contrast to your competitors.
- Performance: how it boosts them to achieve an action.
- Customer service: how delighted they are with the product.
- Special features: specific things customers like about the product.
- Other benefits: any other advantage or profit customer gains from purchasing your product.
Best Practices for Behavior Segmentation
Now comes another section.
Let’s consider you may be standing on a gold mine of your consumer data and you may even have all the categories of consumers comprehended and all leads are perfectly formed into each category, however, it doesn’t expand your bottom line unless you precisely enforce the findings.
So take into account these four ways you can do that.
To an extent, past attitude predicts future behavior.
This leads to behavior segmentation valuable for any kind of brand forecasting.
Pro Essay Writer, an aggregator that draws together content creators and editors, has to assess the behavior of both freelance editors and consumers to confirm the platform runs in the most productive way.
The firm ’s understanding was that most editors who are half-booked will approve new gigs only if they spend well. As an outcome, the freelancers were getting booked by the promising bidders, and tons of clients were having a difficult time looking for a freelancer.
Recognizing the crisis allowed this firm to grasp the system to serve the price-sensitive consumers first and then move on to the loyal customer base. This unraveled the peak hour difficulties the firm had.
You can Include behavior data to your list of segmentation elements, and then you’ll be able to know your customers even better.
Also, the Open Rates for Emails with Personalized Subject Lines are far higher.
You can also create your personalization more productive with marketing automation software.
Establish personalized emails to be delivered to customers when they do an action or trigger an event.
The next fraction of personalization you could do is to reach out to individuals who rarely respond to your emails. When you plan to reach out make sure to bestow the best offer they can get so they become a repeat consumer.
Make a note to maintain the communication to the minimum so when a message arrives, it’s at the time where the consumer is ready to interact.
For this, you can take a lesson from Amazon, and upsell products to consumers based on their previous buying patterns.
Also, Netflix uses a similar kind of behavioral segmentation for the recommended category. The algorithm looks for patterns in consumer behavior and uses the connectivity chart of their choice series to form the recommended section.
You can pursue the four main types of behavior segments and make recommendations based on what kind the individual falls into. Offer discounts to the benefit-based customers and timely reminders to the occasion-based ones, and you’re ensured to boost deals and sales.
Now lastly, Behavior segmentation enables you to find a correlation between consumers’ actions and conversion rates.
It means everything for your brand if you count on the inflow of leads that matter, rather than on quantities.
The marketing team at CakeHR Software came up with this lead qualification method.
When an eligible lead had many tabs open in their browser and was looking for the price list, the sales agents received a notification in the CRM.
Why? Because having numerous tabs open usually means the individual is surveying the web for the best option to buy right now!
A quick call from the sales agent in this scenario can act as a game-changer.
Behavioral segmentation is a strategy for segmenting customers by their behavior which leads marketers to better understand customers and engage with them in an optimal way along their journeys.
With behavioral segmentation, you can make your marketing campaigns more significant, optimize ROI, advance customer lifetime value, and create a wider knowledge of your customer base.
The substantial steps to getting started with behavioral segmentation are – Set smart goals for your behavioral segmentation strategy, choose the types of behavioral segmentation you want to use based on your goals, then collect data by evaluating customer behavior and finally analyze, and optimize
It is necessary to understand that whatever technique of behavioral segmentation you want to use for your marketing strategy, the objective of segmentation should be connected to your business goals.
If you want to target high-value consumers, Nurture leads, boost customer lifetime value and enhance your customer segmentation to the next level, then try our customer segmentation and Shopify analytic app Audiencefy.io (it is completely free for 6 months).