Easy Ways to Increase Conversions with Behavioral Segmentation

Behavioral segmentation can be particularly effective in today’s digital age, where customers leave behind a wealth of data every time they interact with a brand. 

What is Behavioral Segmentation? 

Behavioral segmentation is a marketing strategy that involves dividing the customers in a market into different groups based on their behaviors and actions. This approach is based on the idea that customers with similar behavior patterns are likely to have common needs and preferences.

By grouping customers based on behavior, marketers can create targeted marketing campaigns that are more relevant to the specific needs and interests of each group.

What are 4 Types of Behavioral Segmentation?

Behavioral segmentation is typically based on four categories of customer behavior: occasion-based behavior, benefit-based behavior, user status-based behavior, and loyalty-based behavior.

Occasion-based segmentation: This type of segmentation groups customers based on their response to occasions or events. For example, some customers may only shop during the holiday season, while others may only shop during specific promotional events. By understanding which occasions or events are important to each group of customers, marketers can develop targeted marketing campaigns to meet their specific needs.

Benefit-based segmentation: This type of segmentation divides customers based on the benefits they seek from a product or service. For example, some customers may be more interested in products that are convenient, while others may be more interested in products that are low in cost or high in quality.

By understanding the benefits that are most important to different groups of customers, marketers can develop products and services that meet those specific needs.

User status-based segmentation: This type of segmentation divides customers based on their frequency and usage patterns of a product or service. For example, some customers may be heavy users of a product or service, while others may only use it occasionally.

By understanding the usage patterns of different groups of customers, marketers can develop targeted marketing campaigns to encourage increased usage or retention of their product or service.

Loyalty-based segmentation: This type of segmentation divides customers based on their level of loyalty to a brand or product. For example, some customers may be loyal to a brand and consistently purchase products or services from that brand, while others may switch between different brands.

By understanding the level of loyalty of different groups of customers, marketers can develop targeted marketing campaigns to increase customer loyalty and retention.

Regardless of the segmentation strategy employed, customer segmentation can help improve customer engagement and ultimately drive sales and revenue for the business.

Overall, behavioral customer segmentation is a powerful marketing strategy that allows businesses to target specific groups of customers based on their behavior and preferences. By tailoring marketing messages and offers to these groups, businesses can improve their chances of success and better serve the needs of their customers.

How is Behavioral Marketing Different?

Behavioral marketing is a marketing approach that focuses on understanding and leveraging the behavior of customers and potential customers in order to create targeted marketing campaigns.

It is different from traditional marketing in several ways:

1. Focus on customer behavior: Behavioral marketing focuses on analyzing and understanding customer behavior, such as their browsing history, search queries, purchase history, and social media activity. This allows marketers to create targeted marketing campaigns that are more relevant to the customer’s interests and needs.
2. Personalization: Behavioral marketing relies heavily on personalization. By analyzing customer behavior, marketers can create targeted messages and offers that are tailored to the individual customer’s preferences.
3. Automation: Behavioral marketing often involves the use of automated systems to analyze customer behavior and deliver targeted messages. This allows marketers to scale their campaigns more effectively and deliver personalized messages at scale.
4. Data-driven: Behavioral marketing is data-driven, relying on data analytics and machine learning algorithms to identify patterns in customer behavior and deliver targeted messages. This allows marketers to make data-driven decisions and optimize their campaigns for better results.
5. Customer-centric: Behavioral marketing is customer-centric, focusing on the needs and preferences of the customer rather than the needs of the business. This can improve customer engagement and build brand loyalty.

Behavioral Segmentation Strategies in 2023

There are several strategies that businesses can use to segment their customers based on their behavior.

Segmenting based on usage rate

This consists of grouping customers based on how frequently they use a product or service. For example, a company that sells monthly subscriptions to an online streaming service could segment their customers based on how often they watch videos on the platform.

Customers who watch videos daily would be placed in a high-usage segment, while those who only watch videos once a week would be placed in a low-usage segment.

Segmenting by purchase history

This strategy involves grouping customers based on their past purchases. For example, a company that sells clothing could segment their customers based on the type of clothing they buy, such as casual wear, formal wear, or sportswear.

This information could be used to create targeted marketing campaigns that promote specific types of clothing to each segment.

Segmenting by brand loyalty

This includes grouping customers based on how loyal they are to a particular brand. For example, a company that sells smartphones could segment their customers based on whether they have purchased a product from their brand before or whether they are first-time customers.

This information could be used to create marketing campaigns that focus on retaining existing customers or attracting new ones.

Segmenting by psychographics

This strategy involves grouping customers based on their attitudes, beliefs, and values. For example, a company that sells environmentally friendly products could segment their customers based on their level of concern for the environment.

This information could be used to create marketing campaigns that appeal to customers who are passionate about environmental issues.

Why Behavioral Segmentation is Important for Personalization?

Behavioral segmentation is important for personalization because it allows businesses to tailor their marketing efforts to the specific needs and preferences of individual customers. By understanding a customer’s behavior towards a product or service, businesses can create targeted marketing campaigns that are more likely to resonate with that customer. This results in higher engagement, increased customer satisfaction, and ultimately, higher sales.

How is Behavioral Segmentation Implemented?

Implementing behavioral segmentation can be challenging, especially for businesses that are new to the strategy.

Here are some tips to help businesses successfully implement behavioral segmentation:

1. Define your target audience: Before you can implement this concept, you need to define your target audience. Who are your customers? What are their needs and preferences? What motivates them to make a purchase? By answering these questions, you can create targeted marketing campaigns that are tailored to the specific needs and preferences of your customers.
2. Collect data: The key to successful behavioral segmentation is data collection. You need to collect data on your customers’ behavior, such as their purchase history, usage rate, brand loyalty, and psychographics. There are many tools available to help you collect this data, such as customer surveys, website analytics, and social media monitoring.
3. Analyze the data: Once you have collected the data, you need to analyze it to identify patterns and trends. This will help you create customer segments based on behavior, which you can use to create targeted marketing campaigns. You can use data analysis tools such as Excel, Google Analytics, and Tableau to help you analyze the data.
4. Create targeted marketing campaigns: Once you have identified customer segments based on behavior, you can create targeted marketing campaigns that are tailored to the specific needs and preferences of each segment. For example, you could create a marketing campaign that promotes high-usage products to customers who use your product frequently, or a campaign that focuses on retaining existing customers for customers who are loyal to your brand.
5. Monitor and adjust: This technique is not a one-time event. You need to continuously monitor and adjust your marketing campaigns based on customer feedback and changes in customer behavior.

By monitoring and adjusting your campaigns, you can ensure that they remain effective and continue to deliver results.

How Behavioral Segmentation in Marketing Increases Conversions?

Here are a few ways behavioral segmentation can help increase conversions:

Improved targeting: By segmenting customers based on their behavior, businesses can create targeted campaigns that speak directly to their needs and interests. For example, if a customer has previously purchased a specific type of product, a business can tailor promotions or messaging to that customer to encourage repeat purchases.

This type of personalized approach can lead to higher engagement and, ultimately, increased conversions.

More effective messaging: This technique allows businesses to create messaging that speaks directly to the customer’s behavior patterns. For example, if a customer has been browsing a particular category of products on a website, a business can use that behavior to create targeted messaging or promotions that encourage a purchase.

This type of messaging can be more effective in driving conversions than generic messaging that doesn’t speak to the customer’s interests or behavior.

Improved customer retention: By segmenting customers based on their behavior, businesses can identify loyal customers and create targeted campaigns that encourage repeat purchases. This can help to improve customer retention and create a loyal customer base that is more likely to convert in the future.

Reduced waste: By targeting specific customer groups with tailored messaging and promotions, businesses can reduce the amount of marketing spend that is wasted on customers who are unlikely to convert. This can lead to a more efficient marketing strategy and a higher return on investment.

Mistakes Brands Should Avoid in Behavioral Segmentation

There are several common mistakes that brands should avoid when using behavioral segmentation. Here are some of the key mistakes to watch out for:

Don’t Rely on limited data: To create effective behavioral segments, brands need to collect and analyze a wide range of data points. One of the most common mistakes is relying on a limited data set, which can lead to incomplete or inaccurate segmentation.

Brands should aim to collect data from multiple sources, including website analytics, customer surveys, and purchase history data.

Remember to update segments: Customer behavior is constantly evolving, which means that brands need to be proactive about updating their behavioral segments. Failing to update segments regularly can result in outdated data, which can lead to ineffective marketing campaigns.

Brands should regularly review and update their segments to ensure that they are aligned with the latest customer behavior patterns.

Don’t Over-segment: While segmentation is a powerful strategy, over-segmentation can be counterproductive. Brands that create too many segments can end up with small, niche groups that are difficult to target effectively.

Instead, brands should focus on creating a few broad, relevant segments that can be used to deliver effective campaigns.

Remember to personalize campaigns: This concept should be used to create more personalized campaigns that speak directly to the needs and interests of each customer group.

Brands that fail to personalize their campaigns can miss out on the benefits of segmentation, including increased engagement and conversion rates.

Don’t neglect other segmentation methods: While behavioral segmentation is an important strategy, it should not be used in isolation. Brands should also use other segmentation methods, such as demographic, geographic, and psychographic segmentation, to create a comprehensive understanding of their customers.

Conclusion:

Behavioral segmentation in marketing is a customer-focused, data-driven, and personalized approach to marketing that relies on the analysis of customer behavior to create targeted marketing campaigns. By leveraging customer behavior data, marketers can create more relevant and engaging marketing campaigns that are more likely to drive sales and build brand loyalty.