Segmentation plays a key role in the success of marketing campaigns. Grouping audiences into smaller segments based on their interests, actions, needs, and other attributes confirms that you can solve their queries and sell more products.
Everyone is familiar with the fact that a buyer’s age, gender, and geo-location are crucial points to start addressing those demands. However, this is not sufficient to boost customer acquisition.
As a company, the use of extra customer data, including behavioral data is crucial as it provides an overview of your customers’ interactions with your products or brands.
What is Behavioral Segmentation?
Behavioral segmentation is an effective approach for grouping audiences into segments based on behavioral patterns.
This data provides reports containing the number of times a customer visited your website before making a purchase and which promotional ad or message forced him to buy a product.
Behavioral segmentation is the only answer to the following questions:
- How long did visitors spend on your website?
- How fast did they leave your website?
- Are they fresh or returning customers?
- What type of products were added to the cart?
- How often do they abandon their cart?
Let’s look at behavioral segmentation examples in the food industry.
Seafood dishes are preferred by customers from coastal regions, and vegetarian options are opted by inland regions.
Product managers use this type of segmentation to re-engage churned customers and run personalized ads to attract fresh customers.
They can use behavioral customer segmentation to understand the requirements and motivations of various audience groups to build targeted experiences and discover chances of product growth.
You can divide audiences according to their brand interactions, buying behavior, and usage behavior.
This can assist you in finding regions where product improvement is required to drive product implementation and enhance consumer loyalty to meet consumers’ expectations.
What are 4 Types of Behavioral Segmentation?
Behavioral segmentation in marketing is all about focusing on the individual’s actions. A marketing professional should focus on the customer lifecycle of the organization’s target audience.
In simple words, it provides marketers with a detailed understanding of their consumers, helping them to customize products to particular consumer needs.
It is all about four types of customer behavior, let’s discuss them individually:
Occasion-based or timing-based segmentation is used to indicate global occasions.
Global occasions such as Christmas, Good Friday, and New Year’s. Personal occasions including anniversaries, and birthdays have been indicated by timing-based or occasion based segmentation.
It is again categorized into three types according to the user’s purchasing habits.
This indicates the buying habits of your niche users.
Seasonal events or holidays celebrated by your niche industry are included under these occasions.
Regular personal occasion:
This consists of occasions where users replicate their buyer habits over a specific period.
The occasion might be according to their personal lives, such as birthdays or anniversaries.
Rare personal occasions:
It’s not easy to forecast rare personal occasions.
Here, buyer behavior can be spontaneous and not regular. This may involve weddings, road trips, and vacations.
It is based on the characteristics of services or products that the users recognize as perfect for the occasion.
It is a marketing strategy used by marketers to develop user-oriented segments and discover what benefits entice a specific segment.
3. User-status based:
User status segmentation is also called product usage segmentation.
It audits behavior and consumer usage rates associated with a product to create user segments according to their usage patterns.
This segmentation helps you discover the least or most adopted features and take action accordingly.
It is all about dividing users according to brand loyalty. Discover what forces them to stay loyal and engage with your brand.
What is the Difference between Demographic and Behavioral Segmentation?
Demographic segmentation leverages traditional variables associated with users and behavioral segmentation is associated with actions taken by users.
Both are equally important, but demographic segmentation is gradually losing its value. With the advancement of the market, professionals require fast techniques for their work.
To grab users’ attention or achieve higher conversion rates, marketing professionals need the best and most recent techniques.
Behavioral segmentation separates audiences into sub-clusters based on their interaction with the product or brand. It provides businesses with a higher conversion rate.
Behavioral vs. Psychographic Segmentation in Marketing
The major difference between behavioral and psychographic segmentation is that behavioral segmentation divides users according to their actions, whereas psychographic segmentation focuses on dividing users according to their lifestyles, opinions, values, and attributes.
Behavioral segmentation ignores psychological data but psychographic segmentation frequently considers behavioral data.
Impressive product innovations are supported by psychographic segmentation.
On the other hand, behavioral segmentation produces awareness in the shopper’s mind so that they can stick to the brand.
How is Behavioral Marketing Different?
Behavioral marketing is a collection of activities intended to promote and sell products according to user behavior with your website, chatbots, social media pages, ads, and emails.
It establishes stronger connections with your customers.
There are various reasons to monitor behavior based marketing. Let’s see them here:
Both Facebook ads and Google ads are designed to promote your website and its services or products.
These companies gather a wide range of personal and behavioral information so that you can customize ads for users interested in your services.
Attract more leads:
Behavioral data can provide details related to the customer’s phase in the purchasing journey, their interests, and their preferences.
On the other hand, you can attract warm leads or potential leads, as it doesn’t require much investment and effort.
It lets you present your products or services in front of a user who has shown interest in them.
This encourages your sales team to work systematically and reach expected outcomes when they use consumer behavior patterns.
Strengthens relationships with customers:
Behavioral marketing helps you offer your consumers more accurate content.
Consumer behavior shows who your client is, what they are expecting from you, and what you can give them.
The working mechanism of behavioral marketing involves three steps, as described below:
Data gathering and analysis:
Data can come from different sources, such as search engines, websites, emails, chatbots, and social media.
At present, social media channels, large online retail companies, and mobile applications gather behavioral data from audiences.
So, this data is used by businesses to serve more accurate content and targeted offers without spending money and time to collect behavioral data.
This method involves splitting audiences into groups that exhibit common behavioral and demographic characteristics.
You can send the message to the whole audience if you don’t segment them.
You can effortlessly split your audiences according to their engagement in email campaigns.
You can send emails to those who have purchased goods in the previous month and deliver various messages to such audiences or particularly to audiences who haven’t purchased any product from your website.
Implementing the data:
In this stage, you have to run ads, emails, and SMS campaigns according to the insights received from your customers.
Behavioral Segmentation Strategies in 2023
Brands use different segmentation strategies to segment their customers with the right message. Let’s explore them in detail:
Retarget preferred behaviors:
It is the most productive approach to reaching your business goals.
By monitoring the likes and preferences of audiences, marketing professionals can find audiences with the preferred behaviors and retarget marketing campaigns to them to enhance conversions.
Customer opinion and data-driven behavioral segmentation are the foundations for retargeting audiences.
Marketers can rely on previous audience behavior to send customized marketing drafts that are suitable for the whole audience profile.
By developing segmented efforts according to user data, marketers can target users with personalized content and messages.
Use location-specific segmentation:
Local behavioral market segmentation is an effective approach to targeting users in particular geo-locations.
Location-specific segmentation is used by marketing professionals to discover and target users in particular regions, including cities or states.
This can be implemented to achieve business targets by sending out specific messages, flash emails on festivals or specific days, coupons, etc.
By using user data from numerous touchpoints, marketing experts can tailor messages according to the geolocation of every user.
Furthermore, AI-based tools can be used to study user behaviors, and user journeys and discover trends and patterns to forecast user purchases.
Recommend complementary products or features:
According to the study, shoppers are more likely to purchase from brands that provide tailored segmentation.
The best approach to user engagement and loyalty is to recommend complementary products or features.
Marketers rely on user data from different touchpoints to understand potential customers who might show interest in your products or services.
By looking at the customer base and their interactions with your product or app, marketers can build a thorough profile of their users and customize messages.
You can use surveys to analyze why occasional consumers won’t make any purchases.
Why Behavioral Segmentation is Important for Personalization?
For marketers, it is challenging to differentiate between behavioral segmentation and personalization. These two are not the same but are correlative techniques.
They don’t require behavioral segmentation to address customers by their first name, but a welcoming or customized subject is often not sufficient.
Actual personalization requires a more complex and active interaction.
In short, personalization is the answer to how a business can solve the queries of customers and match their requirements.
Marketers leverage behavioral segmentation to share awareness-driven content with customers and personalization to provide more decision-making content to potential audiences.
How can Marketers Use Behavioral Segmentation in Consumer Markets?
The behavioral targeting process involves 4 advantages for marketing professionals: personalization, forecasting, prioritization, and monitoring performance.
Personalization integrates a consumer’s attributes and stores them into a sub-segment for one-to-one messaging.
Forecasting is determined by patterns readily discovered by both ML and AI models and helps marketers with notifications on whether the user is interested in buying or not and delivers suitable actions to enhance conversions.
Prioritization reveals high-value audiences with higher ROI, empowering data-based decisions around the allotment of budget, time, and resources for that audience.
Finally, monitoring performance growth alterations and patterns in groups over some time will simplify outcomes.
Here’s how marketers leverage behavioral segmentation in consumer markets:
Groups according to the frequency of usage:
Users who spend more time on your product or app can make recurrent purchases.
Users that semi-regularly or irregularly purchase are categorized as event-based. Users who purchase a product only once.
Usage-based segments are crucial for examining why some groups of users purchase frequently, irregularly, or once.
This segmentation helps businesses test numerous methods and actions to enhance usage from present users and attract fresh users that have similar usage behavior patterns as frequent purchasers.
Occasion or timing:
These segments indicate personal or universal occasions.
Universal occasions involve seasonal and holiday events where audiences are probably interested in making purchases according to the duration or time of the year.
Weddings or anniversaries are often considered personal occasions. Marketing for personal occasions needs more data than marketing for universal occasions.
A report from McKinsey states that audiences expect more personalized content and experiences, which leads to a 50% reduction in customer acquisition costs.
If marketers have a clear understanding of who their loyal visitors are, they can increase their value and identify more visitors like them.
Loyal visitors are highly valuable as they don’t cost much to retain and can act as valuable assets for a brand.
Understanding user interests is important for personalization, engagement, and delivering the best value.
Brands such as Netflix and Amazon leverage recommendation engines to recommend content according to the interests of users.
The added advantage of dividing users by interest is the capability to match particular preferences with other likely associated items.
Once marketers find that their audiences are not satisfied or engaging, they can immediately take the necessary actions to retain them.
Customized offers or emails can help them re-engage with apps or products.
How is Behavioral Segmentation Implemented?
Retail and eCommerce companies follow the below-mentioned processes to implement behavioral segmentation:
Finding the relevant behaviors you wish to monitor:
The basic step is to find suitable behaviors for businesses and goals.
Marketers can monitor KPIs such as purchase times, purchase amounts, brand loyalty, CLV, and replies to marketing campaigns.
Gathering behavioral information:
After finding the behaviors, marketers need to gather all the information demonstrating the already explained behaviors.
Leverage different sources, including sales data, social media activities, and customer surveys.
Apart from data collection, it is also important to conduct QA analysis.
Once the data has gone through a quality test, they have to analyze it, find out both trends and patterns and build audience groups.
Creating and distributing the groups:
According to past analysis, marketers have to distribute audiences to respective sub-groups according to shared behaviors.
Create customer profiles:
Soon after distributing audiences, the next stage is to create profiles for all groups.
Add preferences, demographics, and behavior patterns to know all groups better and customize marketing efforts perfectly.
Adapt marketing strategies:
The process is intended to produce more suitable marketing efforts and extract relevant value from the customer base.
The marketing strategies may involve personalized messages, targeted advertising campaigns, and customized offers.
Test and filter:
Launch marketing campaigns and evaluate their productiveness.
Track the response of all groups of audiences and filter the strategies according to the feedback and outcomes received.
How Behavioral Segmentation in Marketing Increases Conversions?
Behavioral segmentation focuses more on relevancy, highlighting information and offers that will resonate with customers.
But how do you create such advanced customer behavior segmentation profitably? That’s where Express Analytics behavioral segmentation solutions can make a huge impact.
Following are a few ways advanced behavior segmentation in marketing increases conversions:
Better allocation of budget:
Finding and dividing the shoppers who are most likely to invest money in the brand enables marketers to allocate their budget fruitfully.
Enhanced product development:
Behavioral segmentation tools can help marketers discover and prioritize regions to focus on and fill in the gaps for product development.
Analyzing segments of each audience’s patterns helps marketing professionals pinpoint trends and efficiently plan marketing, audience retention, and outreach campaigns.
Streamlining B2B behavioral segmentation:
The use of AI in automating the process of data gathering and analysis can streamline the activity of B2B behavioral segmentation.
AI leverages predictive analytics to extend the level of audience segmentation.
It enables marketers and sales teams to invest less time in expensive, and time-consuming processes such as manual segmentation and data entry, so they can move ahead towards productive work.
Both retail and eCommerce businesses know the truth: all visitors who add items to their cart won’t buy a product.
Few visitors leave the app or website:
- during the payment stage
- during shipping page
- after adding their favorite items to their cart
- after visiting their cart
- and so on.
For retail and eCommerce organizations, discovering all the above-mentioned behaviors is very important.
By monitoring where the visitor is left, organizations can implement powerful customized retargeting messages and campaigns for their visitors’ behaviors.
Mistakes Brands Should Avoid in Behavioral Segmentation
There are several common mistakes that brands should avoid when using behavior-based marketing.
Creating too few or too many segments:
The creation of countless or many segments leads to irrelevant, overlapped, or too small segments that can dilute whole marketing campaigns and resources.
The creation of too few segments results in fewer chances of connection with specific categories and ends up with fewer conversions.
Not updating or validating segments:
Customer segmentation is a recurring process that requires regular attention to make sure it is still accurate, aligned, and relevant to your marketing goals.
You can validate segments by comparing and testing them with various marketing campaigns and tracking their performance.
Update segments by gathering and inspecting fresh information from customers, like their interests, feedback, and behavior.
Also, keep an eye on the latest changes in the industry, market, and audience expectations that might impact your segments.
Not using segments properly:
The goal of properly segmenting shoppers is to create and deliver personalized, accurate, engaging, and promotional messages and offers to shoppers.
You have to align your groups with your marketing channels, tactics, and goals and leverage them to optimize your marketing budget and ROI.
You have to interact closely and clearly with your segments and marketing team to make sure that everyone is familiar with your offerings.
Using inaccurate, duplicate, and erroneous data from segmentation:
The use of duplicate, erroneous, inaccurate, and outdated data will impact your segments and result in incorrect campaign outcomes.
Thus, after collecting data from many sources, you have to update the list, check it perfectly for errors, inaccuracies, and duplicates, and spend some time validating lists.
Relying on limited data and segmenting according to the limited data:
The most common mistake marketers make is that they use incomplete and restricted data to create user segments, which is not a good practice.
Research from Google says that around 61% of marketers never get accurate data.
Marketers overlook gathering unfiltered data that could drive particular insights and depend on surface-level attributes to add to their strategies.
This leads to unpredicted and disappointing results because of partial data points.
Instead, they have to use a comprehensive database of consumers to reach campaign goals.
Not considering favored communication platforms:
Not all audiences read their emails regularly, not all are familiar with chatbots, not all are active on social platforms, and not all are interested in interacting with them via a call.
The missing point here is that understanding the favored platform of communication by your audience is a crucial criterion for grouping them.
Like this, you can reach out to specific audiences via their favored channel and thus expect a higher possibility of engagement.
Today, behavioral data in marketing is a key asset to amplify the productivity of marketing and sales campaigns. Behavioral segmentation helps you get a clearer, and more accurate view of your customers and organization objectives.
To understand your prospects even better, use surveys, polls, and website analytics frequently. Obtain the relevant data and make timely decisions to drive better results.
You can also take a look at RFM analysis to get clear knowledge on creating effective segmentation.
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