amples of Defining Behavioral Segmentation //

Most brands rely on traditional methods for marketing segmentation, such as demographic and geographical segmentation.

It’s obvious that it is important to know your customer’s age, gender, and location in order to address their needs. But understanding their individuality is not enough. It is not enough to understand who they are. You also need to know their activities. This is why leveraging customer data such as behavioral data is so important. This will make any segmentation data you have collected useless.

Demographic segmentation is an essential marketing strategy that your team should have in its arsenal.

What is behavioral segmentation?

Behavioral segmentation is a way to divide consumers based on their behavior when they interact with companies. This category of segmentation, as the name implies, studies consumers’ behavioral characteristics. It examines their knowledge, attitudes towards, use of and response to products, services, promotions, brands, or other items.

The goal of behavioral segmentation in is:

• Learn how to meet the needs and wants of specific customer groups
• You can tailor your product or service to these needs and wants
• Find ways to optimize the buyer journey
• Determine their potential value for your business
• To increase and expand your customer base, you need a marketing strategy that works.

It is important to remember that segmentation does not exist in isolation from other types. Many characteristics such as the age, gender, location and income of a customer correlate with behavioral data. This allows behavioral data to be used to confirm other segmentation data.

What makes behavioral segmentation so important

The ability to divide the market into smaller segments with a common variable allows brands to make better use of their time and resources. It would not be effective if all consumers were exposed to the same marketing strategy. To ensure that your customers are satisfied, it is important to understand your market and divide them.

Behavioral targeting offers four major advantages:

1. Personalization Knowing how to target different customer groups with unique offers at the right times and through their preferred channels allows you to increase personalization, which will allow you to nurture them along their buying journey.
2. Predictive insights: Historical behavior patterns can help predict future customer behaviors.
3. Prioritization Identifying high value prospects with the highest potential business impact allows you to make better decisions about how to allocate your time, budget, or resources.
4. Performance Tracking business performance against goals and monitoring growth patterns over time can help gauge company health.

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Different types of behavioral segmentation

1. Purchasing behavior

Segmentation based on purchase behavior looks at the different actions of customers during the buying process. It allows businesses to understand:

• How customers approach the purchase decision
• Complexity of the buying process
• Customer’s role in the purchase process
• There are many obstacles on the way to purchasing
• Which behavior is most predictive of purchase-making?

The main categories of purchasing behavior can be broken down.

1. Complex: Customers are involved in the buying and decision-making process. There is a substantial difference between the brands being looked at. If someone has to decide between buying a Mercedes or a BMW, it is likely that there are many factors at play.
2. Variety-seeking: A customer may not be involved in the purchase process but still wants to know the differences in the products offered by different brands. A customer of TRESemme shampoo might try Suave shampoo. It’s possible she will like it and continue using it. If not, it’s insignificant.
3. Harmony-reducing: A customer makes a major purchase decision but doesn’t know much about the products offered by different brands. A customer may decide to buy a bedroom set based on the price, rather than the product’s quality.
4. Habitual A purchase that doesn’t require a lot of involvement doesn’t mean the product isn’t much different across brands. It’s mostly a personal preference. To an impartial customer, Lays may be the same as Ruffles. Some people will choose one over another.

Each of these categories is covered by most customers at one time or another. While their buying behavior is a major factor in their classification, so is the product they purchased. Understanding how these entities relate can help you determine the best marketing strategy for your product or service.

2. You are looking for benefits

When customers research a product or service they can use their behavior to determine which features, benefits, or problems are most relevant. These primary benefits are what customers value most.

Let’s look at the shampoo example. There are many reasons why people might purchase different shampoos.

• Volumizing
• Oil reduction
• Dry scalp
• Hair damaged
• Scent
• Price

These prospects could look the same in terms of their demographic makeup but have different values about the features and benefits that are most important.

Two VPs of marketing could have different focus areas depending on the brand.

If you have multiple customers who are looking for the same product with different primary benefits, and you message them all about the same benefit, you could be missing the mark with the majority of your customers and wasting your time.

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3. Buyer journey stage

Segmenting customers by their behavior and according to their customer journey stage will allow you to personalize communications and increase conversions. This allows you to identify where customers aren’t progressing so that you can improve your marketing efforts.

It is not always easy to segment customers by journey stage. Customers at different stages interact with and engage with content on other channels and at different times. It is impossible to determine which stage a customer is in by looking at one interaction or customer behavior.

You must use all their behavioral data across multiple touchpoints and channels to improve accuracy. This will allow you to build weighted algorithms that are based on patterns in behavior over time.

The prospect is in the consideration stage. However, their behavior changes from one stage to another in a random fashion. It is easy to make a mistake when you try to determine a customer’s buyer stage from just a few of their actions. This is a more realistic picture of customer behavior. If you consider all their actions, your current journey stage will become clearer.

4. Use

This category can be used to predict loyalty and churn, and therefore customer lifetime value. It considers:

• What your customers think about your product or service
• How often they use it
• How much time they spend on it
• What features do they use?
• What number of users can use the account?

Segments based on usage include:

• Super users — These are your most loyal and engaged customers who spend the most time using and purchasing your product or services.
• Medium users — These customers use and purchase your products semi-regularly but not very often (often based on an event or time).
• Light customers — Customers who use or buy less than others, sometimes only once

Segmenting customers by their usage allows brands to understand why some customers are heavy or light users. This allows them to test various marketing strategies to increase usage among lower-use customers, and possibly attract new heavy users.

5. Timing or occasion

Occasion- and timing-based behavioral segments often refer to both personal and universal occasions.

• Universal events — Purchase patterns that are applicable to the majority your customers or target audience in a particular demographic (holidays and seasonal events, etc.).
• Recurring personal occasions — Purchase patterns that repeat over time for an individual customer based on their personal lives (birthdays and anniversaries, monthly purchases, etc.).
• Personal and rare occasions — Purchase patterns that are more unpredictable, spontaneous, or difficult to predict for an individual customer (weddings/road trips, etc.).

6. Customer loyalty

Customer loyalty is closely linked to other behavioral segments such as buying behavior, usage, timing, and purchasing behavior. However, loyal customers continue to purchase your product or services, whereas habitual customers will need it all the time.

Segmenting by customer loyalty is vital because they generate the majority of your revenue, are less expensive to retain than new customers and offer the greatest lifetime value. You must maximize their value by finding more customers who are like them.

Segmentation of customer loyalty may provide valuable insights to important questions like:

• What are the key behaviours that will lead to loyalty along the customer journey?
• Which customers are the most suitable for loyalty/advocate programmes?
• How can you make your loyal customers happy?
• How can you maximise the loyalty of your customers?

7. User status

Another way to segment customers behaviorally is through user status. The most popular are:
• Non-users – May need to be made aware of the problem.
• Prospects – Want to find out why your product/service is the best?
• First-time customers – You might need additional instruction on how to use your product
• For regular users — Introduce supplemental products and services to your customers
• Defectors – Former customers who switched to a competitor might return to your brand if they have fixed the problem that caused them to move on.

Examples of behavioral marketing

For being a loyal customer, Ladles will offer a $2 discount on any future purchase

Other industries which use customer segmentation often include hospitality (preferred hotel guest), travel (frequent flyer programs), and finance(platinum credit cards members).

Alignable is another example in behavioral segmentation. The brand sends this email regularly to users who are alignable

Customers who have already signed up for Alignable may be ready to upgrade.

You have the option to create additional user statuses beyond those listed. Remember that customers are largely dependent on their current user status. The more users you have the greater chance of keeping them.

Online behavior is important

Like the other forms of marketing segmentation behavioral segmentation gives you a better understanding about your target customers. You can make your value proposition more personal and convincing by getting to know your customer better.

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Author: Stephanie Mialki