Behavioral segmentation: types and examples

Even though many of us might not admit this, we are slaves to our emotions. Our attitudes, motivations, emotions, etc. have a huge bearing on who we are, what we do and how we behave. No wonder marketers crave to have information about customer behaviors to use it to create effective marketing campaigns. After all, reaching the right customer with your message is as important as making the perfect product.

What is behavioral segmentation?

It is a type of marketing segmentation which divides people into various groups based on common behavioral patterns. Behavioral data helps businesses find out how customers interact with them.

They will be able to find out answers to questions like “How many interactions does someone need before they become a customer” or “What is the kind of messaging that someone from a particular behavior cohort will be attracted to?” or “Which is the best perk to offer customers during the holiday season?” The answer to these questions allows businesses to strategically offer their customers exactly what they are looking for.

Importance of behavioral segmentation

#1 Helps identify your most engaged users

Knowing who are your most profitable customers and what makes them tick can help you refine everything from your operations to your marketing strategies. Your most engaged users are the ones who regularly open your emails, click on your social media posts, and are the first ones to show interest in your latest products. All of this helps businesses to make decisions that will impact their budget and resources directly.

#2 Provide personalized experiences

When you know the needs, desires, wants, and demands of your target market, you are more likely to hit the right spot when you make a product or come up with a marketing campaign. By segmenting your customers based on their behavior patterns, you will be able to reduce abandonment instances, fasten the purchasing process, and also reduce the bounce rate.

#3 Helps you save money

With behavioral segmentation, you will end up sending the right campaign to your target market. This will reduce the cost of your marketing campaigns as you do not have to reach a wide range of audience and only stick to one that is closest to your target market. There is no need to spend frivolously on an audience that was never yours in the first place, isn’t it?

#4 Builds brand loyalty

Customers who are not bombarded with irrelevant ads or messages will feel good about your brand because you are different from the others. By carefully sending them content that is closest to their needs, they are more likely to engage with the ones that are closest to their preferences. Customers who get personalized attention are more likely to become advocates of your brand.

#5 Helps predict patterns

With the help of behavioral data, it becomes easy to predict how they will purchase (or behave) in the future. Historical behavioral patterns collected from customers can also be used effectively to influence the future behaviors and outcomes.

#6 Monitors performance

By monitoring the behavior patterns of customers and change in the segments over time, businesses can predict their health and track their performance against the goals they have set for themselves.

Different types of behavioral segmentation

#1 Based on benefits:

You can divide the customers based on the benefits they are looking for. When a customer buys clothes, there are many reasons for it. Some might be looking for comfort, while some are just hoping to get their size and fit right while some are looking for a particular color. You need to identify the benefits that drive a particular customer and customize the offering accordingly.

#2 Based on customer loyalty:

When you use loyalty-based behavioral segmentation, you want to find out who your repeat customers are, understand their needs and behaviors. Apart from getting their business over a long period of time, repeat customers are also extra useful because they give you referrals and help spread a few good words about you to their friends and family.

One of the most common examples of behavioral segmentation is the frequent fliers programs that airlines promote. Loyalty programs are popular among customers because they know that they are getting rewarded for being loyal. It almost acts like a vindication for having given you their business for so long.

#3 Timing-based segmentation:

In this, your customers are more likely to interact with your brand during certain occasions or specific times. These occasions could include holidays like Thanksgiving or Christmas or during life occasions like weddings, anniversaries, etc.

Grouping customers such as this involves monitoring their purchasing behavior over a period of time. For example, if your ecommerce store has customers who buy from you only during a major holiday like Christmas but nothing throughout the rest of the year, then you need to take this information into account and create marketing campaigns for them accordingly.

#4 Based on purchasing behavior:

In this type of segmentation, the business should notice the user’s behavior when they are trying to make a purchase. If they are in two minds when they are about to make the payment, it means that price is an issue for them. At this juncture, you will be able to identify that these customers are price conscious and target them accordingly when there is a sale going on.

There are customers who like a product, but are not sure if it will give them the benefits that are promised. To validate the choice of customers like this, you need to show customer reviews.

How to use behavioral segmentation for your business?

If you can get behavioral segmentation right, you will be able to give people exactly what they want. That’s gold.

#1 Audience research

Understand your prospects and customers by conducting interviews, digging into your Google Analytics data, sending surveys, using business data, identifying trends and so on. Gather data about topics that matter the most to your customers.

#2 Create buyer personas

A buyer persona is a fictional representation of your most ideal customers. It describes in detail about their pain points, goals, business information, etc. You can create anywhere from three to seven buyer personas based on the information that you gathered from the previous step.

#3 Map the buyer’s journey

Once you have a clear idea of who your customers are, you can map out the journey that your customer will be taking when they reach out to you. Having a buyer’s journey will tell you what a customer is doing at each stage of the sales funnel. Create content for each stage of the funnel to bring your customer deeper into it until they become a paying one.

#4 Create behavioral marketing campaigns

Group your audiences into different categories so that you can send the right marketing campaign to them. Just to give you an example, segment the customers based on their behavior of buying from you on Mother’s day every year without fail. Send your marketing campaigns with exciting offers that will not only be profitable for them but will also increase the cart value.

Here are a few more examples of how you can use behavioral patterns in your marketing:

1. Develop new email messages to send to customers who buy from you because your product has a unique fragrance when compared with other perfumes.
2. Provide a variety of product variants for customers who are variety-seeking
3. Offer discount to a loyal customer the next time he/she makes a purchase

Examples of businesses using behavioral segmentation

Amazon (Retail)

Amazon, one of the world’s largest retailers, segments its customers based on their actual purchasing behavior. One method used is to focus on prospective customers during the buyer readiness stage where customers are ready to purchase a product. At this stage, it introduces an option called ‘Wish List’ where they can select the product and add it to the cart later. It is an effective strategy as it allows them to use this information to bring the customer closer to buying the product.

Tesco (Supermarket)

Tesco offers a Tesco Clubcard, a loyalty program to its customers which helps them build a knowledge base of their customer’s purchasing behavior. It gives them insights into when and where Tesco’s customers shop, where they spend most of their time in the retail store, their loyalty to certain brands, rate of utilization of products, and how they do not use certain brands at all. It is a goldmine of user behavior patterns which will make Tesco’s marketing strategy all the more powerful.

AirBnB (Hospitality)

They use machine learning to generate insights from user reviews and are displayed prominently on the website so that it is the first thing that a visitor sees while on their home page. They pair hosts and guests based on the consumers’ behavioral data and their preferences. AirBnB has a specialized search algorithm which makes this possible. They also use various tracking technologies, including cookies, to ensure that the right match happens.

Netflix (Entertainment)

The world’s largest entertainment company by market capitalization, Netflix, is one company that leverages user behavior to the hilt. They take note of users’ viewing habits and use specific algorithms to predict their viewing behavior. Their personalization capabilities are so powerful that they can even show you the image that will pique the interest of the viewer.

By showing the viewers content that they are hoping to see, they are able to reduce their churn rate as well as improve the user experience of its subscribers.

Spotify (Music)

One of the world’s most popular music streaming platforms, Spotify is the numero uno choice for music lovers because of its obsession with data, especially user data and behavior. It is able to generate fresh insights with the help of the consumer data that it receives.

They have a ‘Discover Weekly’ playlist that allows you to play with the algorithm and helps you come up with your own. Apart from using intelligent automation for making playlists, Spotify also employs it for behavioral segmentation.

Conclusion

Behavioral segmentation is the process of dividing your customers based on the behavior patterns they exhibit organically when they interact with your business. The Starbucks reward program to Sephora’s loyalty program are all examples of businesses leveraging behavioral data. With the right intent and methodology, businesses can unearth gold by using behavioral segmentation data. If you can add artificial intelligence and machine learning to this mix, your marketing will be even more powerful and you can make your messaging/offer standout as much as possible.

Irrespective of whether you sell to businesses (B2B) or to consumers (B2C), an important part of creating an effective behavioral segmentation strategy is to come up with buyer personas for your business. Create data-driven buyer persons automatically with Live Persona by Delve AI. Results are usually available in minutes, and the deep insights can be used effectively to improve your marketing efforts.