Have you ever heard of behavioral segmentation? This is the principle of grouping customers according to their behavior when making purchasing decisions.
Incorporating this approach into your marketing strategy can pay off. In fact, segmenting your customers will give you valuable information to focus your efforts and budget on the right audience, considering their buying and decision-making behavior.
After reading this article, behavioral segmentation will hold no secrets for you. We will see what it is, why it is important to implement it in your marketing strategy, and the advantages and disadvantages. Finally, we will give you some examples of what behavioral segmentation can do for your business.
Behavioral segmentation: definition
The main objective of behavioral segmentation is to understand consumers’ needs and wishes so as to offer them a service or product that meets their needs, based on their purchasing behavior.
It, therefore, allows companies to market personalized products that are specifically targeted to consumers.
Behavioral segmentation is based on understanding the history of consumer attitudes. In fact, knowing past habits allows you to better identify future purchase decisions and how to influence consumers to choose your product or service.
The principle of behavioral segmentation is to identify comparable consumer behaviors, then group them and focus your marketing efforts on a defined group according to the following categories:
- Demographic: age, occupation, the standard of living, gender, etc.
- Geographic: where do consumers buy a product or service (physical shop, internet).
- Psychographic: lifestyle, social class, and how a person wants to see themselves.
- Behavioral: how and when a consumer decides to purchase a product or service.
Identifying these four areas will give you the keys to segmenting your consumers and providing them with strategic marketing campaigns to build brand loyalty.
What are the benefits of using behavioral segmentation?
Using behavioral segmentation will certainly save you time and money. For example, you can:
- Define segments based on the behaviors that customers demonstrate.
- Understand whether your product or service matches the specific needs of your customers.
- Make improvements to your product or service so that it exactly meets your customers’ needs.
- Create tailored marketing campaigns for each identified segment.
- Identify which competitive brands your customers buy.
Here are some questions that behavioral segmentation will help you answer:
- When are customers most likely to buy your product or service? Is it for a special occasion? Is it during a sale?
- What are the selection criteria that make customers choose your product or service?
- Who are the customers who spend the most on your product or brand?
- How often do your customers buy?
- What benefits do customers see in purchasing your product or brand?
- How do your consumers rate you in relation to your competitors?
- Where are consumers in the buying funnel?
What are the benefits of implementing behavioral segmentation?
There is no doubt that applying behavioral segmentation to your business has several advantages. Let’s explore some of them:
1. Anticipating customer behavior
Being able to understand in advance how a customer is going to behave, what his buying intentions are, identifying at what stage of the customer’s journey he is, evaluating future actions. This is useful information to be able to provide them with marketing campaigns that will reach them and then offer them exactly the product or service they need at the right time!
2. Offer a personalized customer experience
Behavioral segmentation allows you to offer an individualized marketing approach and a personalized customer experience. You can offer highly personalized promotions or suggest products that you think they might like. This tactic improves conversion rates, increases the average value of the shopping cart, and decreases the chances of cart abandonment.
3. Better targeting of your prospects and customers
The more precise your targeting, the more effective your marketing strategy! By using behavioral segmentation, you can eliminate all those who are not likely to become customers. This will allow you to better allocate your budget to those segments that have a high return on investment.
4. Optimize the customer journey
By implementing a behavioral segmentation strategy, you can understand where each customer falls in their journey, and how to appeal to them so that they continue to progress favorably towards becoming loyal to your product or service.
5. Towards customer loyalty
With behavioral segmentation, you can identify your most important customers and develop a special relationship through programs, content, and special offers to thank them for their loyalty and keep them engaged with your product or service.
Do you want to effectively implement a Behavioral Segmentation Strategy and achieve your business objectives?
What are the disadvantages of implementing behavioral segmentation?
There are some disadvantages to implementing a behavioral segmentation strategy:
- Consumers’ behavior evolves and it is not always easy to anticipate it.
- The data collected is qualitative, so you have to rely on your instincts when it comes to budget spending.
Examples of successful behavioral segmentation
Here are some examples of concrete marketing actions you can implement by applying a behavioral segmentation strategy:
1. Analyse the way customers buy and use a product or service
You have launched a scooter rental application where the renter only pays when he/she uses it. You notice that your customer X uses his scooter from Monday to Friday to travel between his home and office. However, he never uses it on weekends.
With this information, you can target him with special discounts during the weekend to encourage him to use his scooter.
2. Occasional purchases
In this approach to behavioral segmentation, we take into account the time in a customer’s life, year or day when they make a purchase.
A bathing suit, a ski suit, a piece of jewelry, a pain au chocolat, a coffee, etc. are all examples of occasional purchases.
For example, a café owner could use the results of a behavioral segmentation to send a marketing email or push notification in the mobile app to inform regular customers of an after-work event. It would encourage loyal customers to come back at a different time that is not in their habit.
3. Understand what the consumer wants
Some customers like to order online and have it delivered to their home, some like to go to a physical shop, some prefer to look online first and then go to the shop, and some prefer to order from the app.
All of these behaviors are indicators of how best to improve the customer experience, depending on their preferred mode of purchase.
4. Reward customers based on their level of loyalty
Building customer loyalty is one of the most important aspects of behavioral segmentation. One of the most effective ways to do this is to establish a reward program. For example, you can give a card to be stamped on each visit, with a free product or X% discount at the end.
5. Location-based behavioral segmentation
Another behavioral strategy is to leverage location data to better target users based on their location or travel. With geofencing, you can send push notifications to your app users when they are active within a certain radius of your business.
Another example is: taxi apps can use neighborhood-based behavioral segmentation to predict demand. This way, drivers will know that they need to be in a certain area at a certain time because restaurants are closing.
6. Suggesting complementary products
You can use behavioral segmentation to create recommendation engines that can predict which products a customer might be interested in, based on the behavior of similar shoppers or on past purchases. Note that by suggesting similar products or products that might be of interest to them, you are likely to increase your sales by up to 35%!
Are you interested in adopting a Behavioral Segmentation approach?
As we have just seen, behavioral segmentation is used to group together people who share the same behavioral patterns, in order to focus the marketing team’s efforts on the most promising group(s).
All stages of the buying funnel can benefit from implementing a behavioral segmentation strategy. Companies can promote and market their product or service more efficiently if they include behavioral segmentation in their marketing strategy.