Behavioral Segmentation Definition with 9 Examples & Strategies
Behavioral market segmentation is a meaningful way to analyze the target audience. With it, you can take your business to a new level for more effective interaction with potential customers.
In this article, we will explain what behavioral segmentation is, consider its types and analyze examples, explore data enrichment tools, and understand how it can affect your marketing strategy and sales growth.
What is behavioral segmentation?
Behavioral segmentation is a type of market segmentation that involves dividing consumers into different groups based on their behavior or actions.
This segmentation focuses on buyers' attitudes, purchase decisions, and activities, such as spending habits, usage frequency, loyalty, and other behavioral characteristics. Through behavioral segmentation, marketers can better understand their target market and tailor their marketing strategies to meet their needs.
The most common criteria for behavioral segmentation:
- place and frequency of purchase;
- frequency of product consumption;
- consumer benefits (service, quality, speed, etc.);
- attitude towards the product and expectations;
- reason to buy;
- involvement level.
You should not be limited only to these parameters — you can adjust them to the needs of your business and add your behavioral market segmentation.
For example, in email marketing, you can analyze the behavior of subscribers by the degree of activity (actively reads letters, sometimes reads, does not read at all) and adjust the marketing strategy following the data received to work with the database more efficiently.
A classic example is also RFM segmentation when all subscribers are divided into groups according to three criteria:
- R (Recency) — prescription of the purchase period;
- F (frequency) — frequency of orders;
- M (Monetary) — purchase amount.
Then, those who ordered a long time ago can send a valuable offer to interest and return the client. If there were several orders, and the client stopped contacting the company, it is crucial to find out why the matter may be in the service. Then the additional discount will not become an incentive for a new purchase. In this case, a survey of segment representatives will help clarify the situation.
Here are some examples of brands' behavioral segmentation:
- Clothing Retailers: segmenting customers by age, gender, and style preferences.
- Automobile Companies: segmenting customers by vehicle type, budget, and brand loyalty.
- Food Brands: segmenting customers by dietary needs, taste preferences, and purchasing habits.
- Financial Services: segmenting customers by income level, risk tolerance, and investing goals.
- Technology Companies: segmenting customers by device type, usage patterns, and support needs.
Why Should You Start Using Behavioral Segmentation?
The benefits of behavioral segmentation are the following:
Behavioral market segmentation makes it possible to respond correctly to the client's actions. We form a relevant offer for each segment, which arrives at the right time, through the proper channels, and most effectively leads the client through the sales funnel.
Based on the data received, we make forecasts for future purchases and learn how to stir up interest to increase sales if necessary.
3. Saving resources
We think over a marketing strategy considering our capabilities to save the budget on a non-target audience.
It is easier to evaluate the actions within each segment and adjust campaigns based on this.
5. Quality audience
We weed out those who do not fit in and create a community with a high level of loyalty.
An analysis of the behavioral segmentation of the market makes it possible to assess the effectiveness of the business as a whole: whether brand loyalty and the intensity of purchases are increasing, which segments are growing in quantitative terms — “positive” or “negative.” So, it is visible whether we have achieved our goals or it is worth reconsidering the strategy.
Behavioral Segmentation Examples
It helps to analyze customers' behavior when they buy services and products of the brand.
Analyze how long it takes users to make a purchase decision and if there are obstacles. Answering questions like these help make the purchase process more manageable.
Let's look at what most often pushes users to convert:
- Discounts. This is an essential factor influencing the decision of the buyer. If you identify people who hesitate in anticipation of the best price, you will significantly increase the chances of selling during promotions or holiday sales.
- Social proof. Users are interested in the product, but whether others are happy with the purchase. Place customer reviews on your website or your email newsletter to dispel doubts.
- Limited time offers. Sometimes interested users are in no hurry to buy brand products. Stimulate sales to push them to action, emphasizing the offer's urgency. Add a countdown timer to your email or provide a time-limited discount.
2. Occasion Purchasing
It involves using newsbreaks that are best suited for delivering brand advertising messages.
Depending on the country of residence and the user's interests, this may be Black Friday, Cyber Monday, and other holidays. Take advantage of special dates such as birthdays or anniversaries. Consider the days of the week and times of the day that are most convenient for communication.
To implement behavioral segmentation based on events, collect personal data from subscription forms, lead magnets, or surveys. These ideas will help increase email campaign open rates and create a positive brand image.
A holiday is an excellent promotional opportunity.
3. Benefits Sought
It's a way to segment customers based on the benefits they're looking for to motivate them to buy.
For example, there are many reasons to buy chewing gum: clean teeth, fresh breath, and anti-stress effect. Find out what benefits motivate your customers to purchase the product and highlight them.
See how Starbucks does it. In its mailing list, the company tries to determine what prevents the customer from using the services and provides possible solutions and bonuses.
4. Customer Loyalty
It helps to identify customers who should be the focus of loyalty programs and those who may need more suitable offers.
Loyal customers are the most profitable customers for any business, they have the highest LTV. Retaining existing customers is cheaper than attracting new ones. In addition, loyal users are more likely to become brand advocates by promoting your company in their social circles.
See how the Duolingo education platform keeps subscribers engaged. Such mailings arouse the interest of users and motivate them to move on.
5. Buyer Journey Stage
This behavioral segmentation works great for brands with a long customer life cycle.
Defining a user lifecycle stage based on a single interaction point takes time. To see the whole picture, collect data from all the channels you use: email, SMM, SEO, and chatbots.
Once you've identified a buyer's lifecycle stage, move them to step by step toward the purchase. Send relevant and personalized content to nurture a lead.
The company demonstrates its expertise through emails, shares educational materials or creative ideas, and moves subscribers down the sales funnel.
6. Usage Behavior
How often (and for how long) do customers use your product or service? How do they do it?
Product/service usage is another common way to segment customers by behavior based on the frequency with which the customer makes purchases or interacts with the product/service.
How often do customers travel with one airline or another? How often do customers buy goods in an online store?
How often do B2B clients register and use your software? How much time do they spend? How do they use it? What features do they use? How many users from one account or company use it?
7. User Status
User status is another way of behaviorally classifying customers by how they relate to a product/company.
The following are some of the more common examples:
- Not a user.
- Potential client.
- Bought for the first time.
- Permanent user.
- A former client who switched to a competitor.
You can name some possible statuses, which are classified depending on the specifics of the business.
For example, a company that offers customers a free trial of something might have a category of users with the status "free trial user".
This behavioral segmentation can be based on the number of orders or how often a customer logs into a personal account on the site. Analyze user engagement metrics, improve ad campaigns, and encourage your audience to interact. This behavioral segmentation helps reduce customer churn and improve the sender's reputation.
You should benefit from recommendations for relevant, personalized content, goods, or services.
This type of behavioral segmentation is based on user reviews. On the one hand, it allows you to resolve negative situations with dissatisfied customers before they start spreading negative feedback about the brand on the network. On the other hand, this kind of segmentation helps you improve and strengthen relationships with those users who like your brand.
See how ForeSee motivates users to take part in improving the company's services.
Behavioral Segmentation Strategies
- Geographical Segmentation: segmenting customers based on their location.
- Demographic Segmentation: segmenting customers based on age, gender, income, occupation, and other demographic characteristics.
- Psychographic Segmentation: segmenting customers based on their personality, interests, lifestyle, and values.
- Behavioral Segmentation: segmenting customers based on their purchase behavior, behaviors related to usage or interaction with a product or service, and attitudes towards a brand or product.
- Benefit Segmentation: segmenting customers based on the benefits they seek and how they use a product or service.
- Loyalty Segmentation: segmenting customers based on their loyalty to a brand or product.
- Occasion Segmentation: segmenting customers based on occasions when they are likely to purchase a product or service.
How to Implement Behavioral Segmentation: 5 Steps
1. Analyze Customer Data
Collect and analyze customer data to identify patterns and behaviors to help distinguish customer segments. This data can include purchase history, web analytics, and demographics.
2. Identify Customer Needs and Goals
Look at customer needs, goals, and preferences to determine where they are in the customer journey and what they want to achieve.
3. Create Segmented Audiences
Once you have identified the different customer segments, create targeted audiences for each segment. This will help you create personalized messaging and content for each customer segment.
4. Test and Optimize
Test strategies and tactics to optimize your segments, such as different messaging and offers, to ensure they perform as expected.
5. Monitor Performance
Monitor the performance of each segment to ensure they are meeting your goals. This will also give you insights into better targeting and engaging with each segment.
Behavioral market segmentation will benefit in several ways:
- In email marketing, these would be purchase confirmation emails or abandoned cart notifications. Offer relevant content to subscribers, use upselling or cross-selling.
- In SMS marketing, use promotional codes, short individual promotional offers, announcements of new products, and notifications when they are on sale. Consider the possible reaction of users when creating relevant promo mailings, and try not to be intrusive.
- In SMM, track the behavior of potential customers in the brand's social media accounts. Use the analysis of the target audience's reactions when setting up targets.
- In messenger marketing, chatbots shorten the customer's journey through the sales funnel and lead them to a solution of a problem. At the end of the dialogue, you will define the buyer's life cycle stage and find an approach for further interaction.
Behavioral segmentation tools
For the B2C segment and prominent B2B players, some tools allow you to automate this process as much as possible and save responsible specialists from the routine:
- Website. Web analytics provides enough data about visitors: where they come from, how much time they spend on the page, what they pay attention to, and so on. You need to track behavioral factors if you do not have a website, but an application.
- Surveys. Questionnaires or small surveys can be conducted both offline and online. The results will tell you about the frequency of visits, the level of loyalty, and the main preferences of customers.
- Email services. Conduct A/B testing to separate customers by the level of engagement. Set up automatic mailings that will be tied to the actions of visitors on the site, and add convenient capacious polls to the letters themselves to get to know the audience better.
- Advertising cabinets. They make it possible to set up behavioral targeting to reach a new target audience. Upload lead lists to attract warm customers.
- CRM. The customer relationship management system will save the entire history of the buyer from the first contact. Also, with its help, you can generate reports for different periods, perform analytics and use the received data to prepare personalized offers.
Here are a few additional tips:
- Segment the audience into groups that differ in features and forms of interaction. Use behavioral segmentation for targeted hits.
- Avoid common mistakes in preparing for behavioral market segmentation: clearly define the parameters, do not be a pragmatist, and conduct research systematically.
- Among the types and criteria, choose the most suitable depending on the product's characteristics, market conditions, and goals.
- Use all available channels. So you can develop effective strategies for conducting advertising campaigns.
Powerful Behavioral Segmentation in Marketing
Behavioral market segmentation is a marketing tool that helps divide potential customers into groups for more effective communication. In other words, the more we know about the client and how he acts when choosing and using the product, the more competent communication we can build with him.
To diversify your results, study customer behavior and use it to improve other channels such as email marketing, SMS marketing, social media marketing, and chatbot marketing.
By segmenting your users based on their behavioral data, you can better understand how you can fine-tune your messages, brand, marketing materials, and ultimately products or services to stay ahead of the competition and reduce churn.
Identifying behavioral signs of segmentation for additional target audience characteristics is helpful. For example, when collecting leads, you can immediately segment potential customers and build communication with them in different ways to achieve the goal. And this is an opportunity to save money and time, as well as immediately highlight those with whom work will bring more profit.
Behavioral segmentation has become an increasingly popular practice among businesses. By segmenting customers based on their behavior, businesses can have a better knowledge of their customers, leading to more effective marketing campaigns and better customer service. Behavioral segmentation is a powerful tool for businesses to understand their customer base, target them more effectively, and ultimately increase sales and profits. Additionally, it enables businesses to provide a more personalized experience for their customers, which can increase loyalty and brand awareness.
Behavioral Segmentation FAQs
1. What are the benefits of using behavioral segmentation?
Behavioral segmentation allows marketers to understand their target audience better and create more personalized campaigns, resulting in improved customer engagement and increased sales. It also helps marketers identify customer trends and develop more effective strategies for acquiring and retaining customers.
2. How is behavioral segmentation different from demographic segmentation?
Demographic segmentation is based on demographic factors such as age, gender, location, and income. Behavioral segmentation is based on individual customer behavior and preferences. While demographic segmentation provides a broad, generalized view of the customer base, behavioral segmentation provides a more detailed and nuanced understanding of customer needs and preferences.
3. What are marketing channels involved in behavioral segmentation?
Behavioral segmentation uses all channels to the maximum: email marketing (reactivation, trigger letters, abandoned carts, surveys, and so on), social networks, instant messengers, and others.