What is Behavioral Segmentation and How Does It Improve Marketing

Behavioral segmentation is necessary for modern marketers to understand

Behavioral segmentation is necessary for modern marketers to understand to lead capture and conversion better. Learn how to use behavioral data to improve conversion, retention, and revenue.

Market segmentation divides customers into groups to achieve better sales, marketing, and customer service outcomes. There are four basic types of market segmentation, each defined by its principle of segmentation. These are:

• demographic segmentation
• psychographic segmentation
• geographic segmentation
• behavioral segmentation

In marketing, behavioral segmentation is usually overlooked in favor of one of the other three methods. This has more to do with established marketing industry habits and less with the method’s effectiveness. 

When behavioral segmentation to its full extent, it can improve marketing outcomes to the same degree as these other methods. 

According to a recent sales study by Really Simple Systems, behavioral segmentation is also becoming an increasingly important factor in sales performance in both B2B and B2C sectors.

To help you understand what behavioral segmentation is, how it works, and why it’s useful for marketing, we wrote a short primer on the topic, which you can find in the paragraphs below.

The Definition of Behavioral Segmentation

Behavior segmentation organizes prospects, leads, and customers into groups based on concrete actions they take, offline and online, and broader behavioral patterns that these actions generate over more extended periods. 

Behavioral segmentation is a form of marketing segmentation that divides people into different groups with specific behavioral patterns. Users may share the same lifecycle stage, previously purchase particular products, or have similar reactions to your messages.

An easy way to think about it is to say that where the other three types of segmentation are concerned with who the customers are, behavioral segmentation is concerned with what the customers do.

The Value of Behavioral Segmentation

Behavioral segmentation can help businesses elevate their marketing efforts in various ways.

The main advantage comes from using behavioral data to craft personalized marketing experiences for customers based on their activity patterns before, during, and after purchase.

More specifically, behavior segmentation allows you to:

• determine which products customers are more likely to buy based on their past purchasing behavior
• rank customers based on their propensity to buy
• map customer buying habits on a temporal axis
• create marketing content that matches customer buying habits
• measure how customer buying behavior changes over time
• discover and capitalize on emerging trends in customer behavior

In short, behavioral segmentation helps businesses understand what the customers are doing and why they’re doing it, based on their past behavior. This insight is essential for marketing campaigns matching customer needs, wants, and desires. 

For example, if you are trying to engage your customers more by creating a quiz, all of the data gathered can help you create perfect questions for them.

Behavioral segmentation is also essential for providing supplemental data for other segmentation types. Demographic, psychographic, and geographic segmentation is useless since it can’t provide actionable insights into how customers are likely to behave. 

The 6 Main Categories of Behavioral Segmentation

In practice, behavioral segmentation is used to describe 6 different kinds of behavioral analysis. Each of these forms of analysis can be used to support a variety of marketing strategies and methods. 

The 6 main categories include:

• Purchasing habit analysis
• Customer journey mapping
• Benefits sought analysis
• Product usage tracking
• Brand interactions breakdown
• Spending habit investigation

Purchasing Habit Analysis

Purchasing habit analysis looks at how individual purchasing decisions form buying patterns. Purchasing habit analysis has yielded at least 4 types of purchasing behavior patterns, but other classifications are possible. 

These 4 main patterns include:

• The comprehensive researcher pattern. This pattern describes customers that like to take their time doing the research before committing to a purchase. They compare and contrast different products, consult different sources of information, and look at available customer feedback to find the product that perfectly matches their needs.
• The novelty seeker pattern. This pattern describes customers with a safe fallback option for a product they want to buy but is willing to consider other options for variety’s sake. They are not in a rush to purchase, so they tend to focus more on each product’s unique features.
• The conflict resolver. This pattern describes customers who are somewhat satisfied with their current product choices but feel they could do better. Their purchasing habits are defined by a dilemma between sticking with what they know or taking risks and trying something new.
• The habitual buyer. This pattern describes customers that like to make a buying decision once and then never think about it later. Once they find a product that meets their needs sufficiently, they will stick with it unless some external circumstance prevents them from indulging in their habit.

Customer Journey Mapping

Customer journey mapping is a behavior segmentation approach that looks at customers’ decisions during each buying process stage.

Customer journey mapping is a part of the customer lifecycle approach to marketing. Marketing messages are tailored to fit customers based on where they currently find themselves within the buyer’s journey. 

Here is the template for a typical customer journey:

1. The awareness stage. The customer becomes the consciousness of their desire to buy.
2. The engagement stage. The customer begins searching for products to buy.
3. The evaluation stage. The customer compares products that meet their criteria.
4. The purchase stage. The customer has decided and is taking action to complete a purchase.
5. The post-purchase stage. The customer seeks support after purchase.

Benefits Sought Analysis

Benefits sought analysis concerns customer purchasing decisions related to the product’s value. It seeks to understand which product features are essential to customers and how they factor into their products choice.

Two examples will serve as an illustration. For instance, it would be reasonable to conclude that a product’s price is the main deciding factor in purchasing customers who always take the cheapest option when comparing different products. 

Suppose a customer tends to browse product pages for 100% organic and vegan-friendly items. In that case, they might be looking for the benefit of helping the environment with their purchase.

Product Usage Tracking and Behavioral Segmentation

Product usage tracking segments customers based on product usage frequency and intensity. This form of segmentation has the next three basic tiers:

• Light users. This segment comprises customers who rarely use products and/or for a limited duration. They represent customers who like to be prepared for all possible use-case scenarios, including those that only crop up occasionally.
• Average users. This segment includes customers that use products on a semi-regular basis. They like to have products available to them at all times, but they don’t necessarily use them frequently.
• Heavy users. This segment comprises customers who regularly use products for work, leisure, or other recurring needs. These customers often have a deep understanding of products and take special care when deciding which product to buy.

Brand Interactions Breakdown

Brand interaction breakdown is a form of segmentation that groups customers based on how they communicate with businesses.

This kind of segmentation is beneficial for marketers, as it closely reflects how they approach marketing content creation. Brand interactions come in various forms, offline and online, depending on the business.

Examples of customer behavior that fall under this segmentation strategy include:

• How often do customers login into their account on your website
• Which channels do they use to ask for customer support?
• Which product pages do they visit on your web store?
• Whether they post comments on social media 
• Which content emails do they reply to

Spending Habit Investigation

Spending habit investigation breaks down customers based on where, when, and how they spend money. This form of segmentation is helpful for directly determining how customers affect your bottom line on average.

Spending habit segmentation often divides customers into pairs of those that:

• prefer buying in-person vs. prefer buying online
• use coupons vs. don’t use coupons
• use store credit vs. don’t use the store credit
• buy during discounts vs. buy irrespective of discounts
• buy in bulk vs. buy in small increments

Using Behavioral Segmentation for Marketing

Now that we’ve covered the basics of behavioral segmentation, it is time to examine its uses in marketing. 

Let’s look at 4 everyday use case scenarios. 

Performing Audience Research

Audience research is an integral part of marketing. Behavioral segmentation makes it substantially easier to figure out who your audience is and what they want in terms of marketing content. 

Behavior is usually a better indicator of who a customer is than the information they provide as part of a purchase or what they claim they want in surveys. Behavioral segmentation also helps you predict how the customers will react to your marketing and not just how they feel about it.

Outlining Buyer Personas

Buyer personas are essential for focusing your marketing efforts and thus improving marketing efficiency. And a buyer persona is not defined just in terms of their likes and dislikes and what behavior they tend to prefer. 

Behavioral segmentation, therefore, gives you a solid foundation for understanding which buyer personas you should be targeting and how to nudge them best to take the actions you want them to take.

This might sound like you want their money, but many people are aimlessly searching and need help. 

Personalizing Customer Journeys

Understanding who your customers are allows you to customize your marketing output to fit their needs precisely. Behavioral segmentation is, therefore, a key element of marketing personalization. 

Not only does it allow you to understand which form of marketing communication is likely to work and which won’t, but it also allows you to predict the likely behavioral response to your messaging, so you can always be one step ahead and create personalized customer journeys that your customers will love.

Running Behavioral Marketing Campaigns

Running large-scale marketing campaigns requires foresight, planning, and consistent execution. But even the best-planned campaign can fail due to some unforeseen quirk of the target audience. 

Behavioral segmentation can help curb this risk by providing concrete, actionable data on customer behavior.

And with successive campaigns, you will have more behavioral data at your disposal, allowing you to create, maintain, and optimize even better marketing campaigns.

Achieving Better Marketing Outcomes Through Behavior Segmentation

Dividing customers into segments based on their previous interactions is a way for businesses to understand how their customers act before, during, and after buying a product. 

Without behavioral segmentation, other methods, such as demographic-based segmentation, will lack the context to create personalized customer experiences.

Behavioral segmentation enables you to take advantage of the buying behavior patterns of your priority customers. You’ll gain the ability to nudge customers into mutually beneficial behavior patterns and spend less money on marketing overall. 

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