What is Behavioral Segmentation?
In marketing, important information is how and when consumers spend their money on a product or service. Data is collected on a consumer’s shopping behavior, how they decide to purchase a product, why they choose one product over the others in the market, and how they feel about products, companies, or services.
The behavior patterns of a consumer when they interact with a business lead to their division into categories called segments.
It is called behavioral segmentation to group customers into segments based on their behavior, such as purchase patterns/habits and using services.
Categories of Behavioral Segmentation
In order to fully understand what behavioral segmentation is all about, we need to focus on its subcategories. These will help you develop a grasp of your customer’s buying journey.
Let’s talk about them here:
Purchase Behavior Segmentation
Why do consumers make certain purchases? What drives them to do so? Why does an older woman buy flowers for herself every week? Is it a force of habit? Why does a teenager purchase sugary drinks by looking at the bottle and not the label? Why do children prefer one toy over the other?
Purchase behavior segmentation differs from customer to customer and can be tough to quantify. Customer surveys are your best friend here. They help gather this information.Understanding customer-survey data can lend valuable insights into what motivates customers to make purchase decisions.
Purchase behavior segmentation helps in understanding:
- The role a customer plays in the purchasing process and how purchase decisions are approached by different customers.
- What are the barriers a customer faces along the path to purchase.
- Which purchase behaviors are most and least predictive of a customer while making a purchase.
This subcategory focuses on the ‘when’ of the issue at hand. When do customers make a purchase? Take the example of a candy store. It surely sells out during Valentine’s Day, but it would also benefit the store owner to know a customer’s birthday and anniversary.
Keeping the obvious occasions aside, when do consumers feel compelled to make a purchase? Does the sale of water coolers go up only during the summer, or is a music festival also the time when consumers buy water coolers? Getting ahead of seasonal trends can help you acquire better results.
This segment focuses on the number of times a customer makes a certain purchase. Depending on the frequency of their purchases, customers may be divided into three categories: heavy, medium, and light.
- Heavy customers are those who spend the most time with your products and regularly use them. Compared to others, they are the most loyal to your brand and are most likely to make repeat purchases from you. They require special attention.
- Medium customers are the ones that use your products or services occasionally, not regularly. They make purchases during special promotions.
- Light customers rarely use your products or services. They may be special-occasion buyers, one-time purchasers, or those seeking variety. They are usually encouraged to purchase first-time discounts.
This category of customers is based on the ‘why’ of it all. It answers the question of why customers purchase from you. Are they receiving any benefits from your product? What can you give them that your competitors cannot? Let’s go back to the example of the candy store. Are customers purchasing from you because the benefit they receive is exceptional candy? Are they buying your products because your store is conveniently located? Is it well within walking distance from their homes? What are their true motivations for purchasing your candy?
A/B testing can help you find an answer, enabling you to consider advertising targeting these segments specifically.
You’re not going to want to advertise gourmet chocolate to teens who buy sour candy from you or sour candy to someone purchasing on their 20th anniversary.
Did you know that 20% of the customers bring in 80% of the business? This is known as the 80/20 rule in marketing.
The loyalty gauge helps you identify your loyal customers and give them special treatment. This might be the most important behavioral segment to focus on, and you must give it most of your attention. Marketing to loyal customers is different from marketing to the rest. Understanding their buying habits will help you target them in a way that will keep them engaged.
This is where customer retention comes into play. Using automated retention-based marketing tools like ShopAgain will help you retain your loyal customers.
Learn how to divide your customers into segments here.
The customer’s status in the buying process is what we consider here. This category covers the ‘where’ of behavioral segmentation. Are they a lead? Are they interested in your product? Maybe they are, but they cannot afford to purchase it at the price you are selling it.
They may be placed in certain buying stages:
- Non-users who have never heard of your brand,
- Prospects who are interested but are unsure of what to buy,
- First-time buyers who have made a purchase and may have something to look forward to when it comes to your brand,
- Regulars who are keeping your ship afloat,
- Former customers who are now purchasing from a competitor.
The manner in which one communicates with customers from these stages differs. Speaking with non-users requires educating them on your brand and products, whereas a potential buyer needs just that small nudge that sends them over the edge to finish a purchase.
The Significance of Behavioral Segmentation
Knowing the buyer persona of your market is crucial in targeting your marketing efforts toward the right recipients. Behavioral segmentation enables you to learn about your customer base and deliver exactly what they need when they need it.
With all the customer data that enterprises have been gathering about buying behavior, loyalty, engagement, and segmentation, powerful behavioral marketing is a new way forward. In order to succeed in such a competitive market, it a necessity to build marketing strategies for these segments.
FREQUENTLY ASKED QUESTIONS
What is an important element of behavioral segmentation?
Behavioral segmentation is an important way to club the people together who are showing similar buying behavior. It helps businesses to promote their product in a seamless way and target customers based on their needs. Important elements of behavioral segmentation are-
- Customer Usage
- Occasion Purchasing
- Loyalty Gauge
- Buying Stage
Why is it important to segment the audience?
Simply put, segmenting the audience brings better results and does away with being just average. It helps personalize the content you show your audience.
How do audience segments work?
Identifying subgroups within your target audience in order to deliver more personalized messages is what audience segments are all about. Segments are categories such as purchasing patterns, frequency, demographics, etc.