In marketing, understanding your customers is key. Market segmentation splits your audience into groups to target them more effectively. While there are several types such as demographic, geographic, firmographic, and psychographic, behavioral segmentation focuses on customers’ actions like their buying habits and product usage.
Put simply, this approach helps you to optimize products and marketing campaigns to meet specific customer needs.
What Is Behavioral Segmentation: Definition
To start, let’s define behavioral segmentation.
Behavioral segmentation is a marketing strategy that divides customers into groups based on their observed behaviors.
This could include how they interact with your brand, their purchasing habits, the frequency and timing of their purchases, and their responses to your marketing efforts.
By understanding these behaviors, you can personalize your marketing messages and offers to match the specific needs and preferences of different customer segments and cohorts.
Here’s an example.
Let’s say you own an online store. You might notice that some customers regularly buy products as soon as they go on sale. This group could be segmented based on their sensitivity to pricing. Knowing this, you can specifically target them with promotions and discounts, thus increasing the likelihood of purchases.
Simple, right?
What Are Four Types of Behavioral Segmentation?
Let’s break down the four common types of behavioral segmentation. These behavioral segmentation characteristics will give you a clearer picture of how to use this approach effectively.
Purchase Behavior
This behavioral characteristic looks at how customers behave when making purchasing decisions.
Do they buy on impulse or do they take their time researching?
Segmenting customers based on their purchase behavior can help you improve your sales strategies and marketing messages to fit the way they prefer to buy. For example, you might offer more detailed product information and comparisons to those who research extensively.
Customer Loyalty
Segmenting your customers based on loyalty can be incredibly beneficial. You can identify which customers are your most loyal and offer them rewards, while also developing strategies to improve loyalty among other segments.
Loyal customers often provide the most value over time, so understanding and nurturing this group is crucial.
Usage Rate
This type of behavioral segmentation divides customers by how frequently they use your product or service.
High-frequency users might benefit from loyalty programs or bulk-buy discounts, while infrequent users may need reminders and incentives to engage more often.
Adapting your approach based on usage can help optimize your resources and marketing efforts.
Occasion or Timing
Some purchases are driven by specific occasions or timing.
This could include seasonal events, holidays, or even personal events like birthdays.
By recognizing these patterns, you can more effectively target marketing campaigns to coincide with times when customers are more likely to make purchasing decisions.
Behavioral Segmentation Examples
Here are a few examples of how popular brands use behavioral segmentation to enhance their products and advertisements.
Amazon
Amazon uses purchase behavior segmentation extensively.
They track the items you look at and what you buy, then use this data to recommend similar products.
This approach not only personalizes the shopping experience but also increases the likelihood of additional purchases.
Starbucks
Starbucks uses occasion-based segmentation.
For example, they offer special drinks during holidays and seasons (like Pumpkin Spice Latte in fall or Peppermint Mocha in winter) to cater to customers’ desire for unique, seasonal flavors that correspond with specific times of the year.
Netflix
Netflix segments users based on viewing habits. It analyzes the shows and movies you watch to personalize the recommendations you see.
This usage-based user segmentation ensures that users find more content that interests them. That, in turn, improves engagement and user satisfaction.
Sephora
The beauty retailer Sephora segments customers based on loyalty.
Through their Beauty Insider program, they offer different levels of rewards based on how much a customer spends annually. This encourages more frequent purchases and larger transactions from their most loyal customers.
Spotify
Spotify segments users by listening habits. It tracks the genres and artists people listen to most and uses this information to create personalized playlists like Discover Weekly or Daily Mix.
This usage rate segmentation keeps users engaged by consistently delivering music tailored to their tastes.
Apple
Apple uses customer loyalty segmentation for its product launches and upgrades. They target existing customers with notifications about new products and updates, knowing that brand loyalty increases the likelihood of these customers upgrading to the latest device.
Nike
Nike segments customers based on purchase behavior, particularly focusing on customers who have shown an interest in specific sports.
For example, if you buy running shoes and apparel, Nike will target you with ads and promotions for running events or new running gear. This approach makes ads more relevant.
American Airlines
American Airlines segments its customers based on the frequency of travel.
Their loyalty program, AAdvantage, offers different levels of benefits based on how often a customer flies.
This program encourages more frequent bookings by offering tiered rewards like upgrades and free checked bags.
Target
Target uses occasion-based behavioral segmentation around back-to-school season.
They market specific school supplies, clothing, and dorm essentials to parents and college students starting in late summer, aligning their promotions with the timing of school preparations.
How to Do Behavioral Segmentation?
Here’s a step-by-step process to help you get started.
Step 1: Define Your Objectives
Start by clarifying what you want to achieve with behavioral segmentation.
Are you looking to increase sales, improve customer retention, or enhance customer engagement?
Your goals will guide the types of behaviors you need to focus on.
Step 2: Collect Data
Next, gather data related to customer behaviors.
This can include purchase history, website analytics (like page visits and time spent on site), app analytics, engagement with marketing campaigns (email open rates, click-through rates, conversions), and product usage information.
The more data you can collect, the more accurate your segmentation will be.
Step 3: Analyze the Data
Use analytics tools to examine the data you’ve collected. Look for patterns or common behaviors that emerge.
This might involve statistical analysis or machine learning techniques, depending on the complexity and volume of your data.
Step 4: Segment Your Customers
Based on your analysis, group your customers into segments according to their behaviors.
As I’ve mentioned before, common behavioral segments include:
- Purchase behavior: g., frequent buyers vs. occasional shoppers.
- Usage rate: g., heavy users vs. light users.
- Loyalty:g., brand loyalists vs. brand switchers.
- Occasion or timing:g., holiday shoppers vs. regular purchasers.
Step 5: Develop Targeted Strategies
Create marketing strategies tailored to each behavioral segment.
For example, send loyalty program offers to frequent buyers, or promote special deals to those who purchase during specific occasions.
Step 6: Implement and Monitor
Roll out your targeted marketing campaigns to the relevant segments. Carefully monitor how each segment responds to the strategies you’ve implemented.
This might involve tracking sales increases, changes in customer engagement levels, or other relevant metrics.
Step 7: Refine and Iterate
Based on the outcomes of your campaigns, refine your segments and strategies.
Behavioral patterns can shift over time, so it’s important to continually analyze customer data and update your segments and tactics accordingly.
Final Thoughts on Behavioral Segmentation
Need help with behavioral segmentation?
As an experienced mobile advertising agency, we can help you with segmenting customers or users based on their behavior and creating customized marketing campaigns that produce tangible results.
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