24 March 2023
Understanding Behavioral Segmentation: Definition, Examples, and Best Practices
Do you ever feel bombarded by irrelevant ads and online promotions that have nothing to do with your interests? As a customer, you probably understand how frustrating it can be to sift through all the noise to find something that you really need. That's where the use of behavioral segmentation might be the right solution. By understanding your customer's behavior and preferences, you’ll get a superb chance to create more personalized marketing campaigns that actually resonate with them. However, if you are a newbie in this area, it may be challenging to understand how it works, how to deal with user status groups, and how to identify and group users.
In this all-encompassing post, we'll look closer at behavioral segmentation and explore its definition, examples, and some of the most effective practices. So if you're tired of spending money on ineffective marketing campaigns, keep reading to learn how to leverage behavioral segmentation to get the most out of your marketing strategy.
What is Behavioral Segmentation?
Let’s begin with the basics and provide the behavioral segmentation definition first. This term is widely used for grouping your audience based on their behaviors instead of just their age, gender, and other demographics. It's like looking under your vehicle's hood to see what makes it run. Behavioral segments are built from first-party data — customer information collected from your platforms and channels.
By learning more about your customers' habits, preferences, and actions, you can find out how to cater to their needs. Look at it as a secret weapon in your marketing arsenal that allows you to target your audience with laser-like precision. As a result, behavioral segmentation leads to improved ROI, more loyal customers, and, ultimately, more money in your pocket. Overall, if you're tired of playing guessing games with your marketing, try behavioral segmentation and see what it can do for your business!
Why is Behavioral Segmentation Important?
Behavioral segmentation is critical for modern businesses looking to remain competitive in their respective markets. However, if it’s your first rodeo with this powerful marketing weapon, you need to spend some time learning more about its benefits and how it works. First, let’s examine several advantages of using this approach to deep customer segmentation.
It goes without saying that personalization is essential for building long-term relationships with your customers. Behavioral segmentation in marketing allows you to personalize your marketing efforts to each customer segment, ensuring that they receive messaging that resonates with their specific needs and preferences. This is where you can use dynamic content to deliver personalized experiences across all possible touchpoints, ranging from website content to social media ads or email campaigns. This creates a sense of connection and loyalty, leading to increased revenue.
Moreover, product recommendations are a key benefit of implementing a behavioral segmentation strategy in digital marketing, as they allow for more personalized and relevant suggestions for customers based on their previous behavior and preferences.
Budget allocation is another significant benefit of behavioral segmentation. When you finally understand your customers' behaviors, you’ll be able to find the most profitable segments and allocate your marketing resources accordingly. As a result, you’ll surely optimize your budget. In other words, you’ll stop spending money on marketing efforts that don’t work in your case.
Lastly, forecasting is essential for any business looking to plan for the future. Behavioral segmentation allows you to predict future behavior based on past actions, making forecasting demand and planning for future growth easier. This can drastically speed up the decision-making process and allows you to stay ahead of the competition.
4 Types of Behavioral Segmentation
As you can see, behavioral segmentation is an effective way to tailor your marketing efforts to various groups of customers, allowing you to achieve much better results. However, you also need to ensure you use the right type of behavioral segmentation, as there are five of them, and each has its pros and cons. Let's take a closer look at the most common types of behavioral segmentation:
Segmentation based on usage frequency
This type of segmentation groups customers based on how often they use a product or service. This can help you identify loyal customers who use your product frequently and target them with special offers or rewards to encourage continued usage. According to this criterion, customers can be divided into the following groups:
- Ideal users (regular users/customers that buy the products or services on a regular basis)
- Medium users (regular customers who use the products or services less frequently)
- Light users (customers that use the products or services not often)
- Non-users (these people don’t use the product or services but show that they are interested in this company, and something stops them from making a purchase).
It categorizes customers based on their purchase behavior during specific events or occasions, such as holidays or promotion weeks. This can help you create targeted campaigns that appeal to customers during these specific times. The main goal of segmentation by events is to identify the actual emotional state of a customer at the right moment.
Segmentation based on benefits sought
Its main objective is to group customers based on the benefits they seek from a product or service. We all know that different customers search for different value propositions. And modern companies use it to tailor their marketing efforts to meet the specific needs of their customers. As a result, this approach helps enhance lead generation and customer retention.
The best example is how smartphone manufacturers apply benefit segmentation to their customers. In this case, customer segments include:
- Work-oriented users (customers that prefer inexpensive, durable smartphones)
- Highly-social users (customers that like easy-to-use mobile devices that include the latest features)
- Status-oriented users (customers that buy expensive and stylish phones).
When you know the main reason people choose this particular device, you can tailor your marketing campaign to meet the requirements of each segment.
Segmentation based on brand loyalty
You know that loyalty means a lot to your business. This segmentation type groups customers based on their loyalty to a particular brand. This allows you to find your most loyal customers and target them with loyalty programs or exclusive offers.
How to Start with Behavioral Segmentation and What Tools to Use
So, you've heard about the power of customer segmentation, and you're ready to give it a try. That’s a commendable ambition! Implementing this strategy in your digital marketing efforts can be a game changer for your business. Let’s run over the main strategies that might help you get started:
Retarget desired behaviors
The analysis of past behavior using web tracking helps predict the future behavior of customers. Retargeting desired behaviors is a chance to encourage customers to take action. For instance, if a customer adds a product to their cart but then forgets about it and doesn't complete the purchase, you can retarget them with catchy ads or emails that will surely make them complete the purchase.
Use location-based segmentation
That’s another powerful tool allowing you to reach customers in specific geographic areas. By using location data, you can create targeted campaigns that appeal to customers in a specific region or city.
Geofencing is one of the best techniques that allows business owners to send push notifications to mobile app users when they are not far from the office of your company.
Segment your audience to make relevant offers
Price by device
Currently, it’s one of the most popular strategies used by well-known brands like Apple or Orbitz. It involves offering different prices to customers based on the device they use to access your website or app. This can help you optimize your pricing strategy and increase conversions.
Suggest complementary features or products
If you are looking for the most effective ways to improve customer engagement and encourage repeat purchases, why not add complementary products? By analyzing customer information, business owners can identify products that are frequently purchased together and attune their product recommendations to this data.
Use CDP (Customer Data Platforms)
Now, many goal-oriented marketers use customer data platforms (CDP) because their potential is fantastic. With these tools, you can collect and analyze customer data across multiple channels - (push, in-app, website widgets, app inbox, emails, SMS etc), creating more effective behavioral segments. The key objective of CDPs is to help you monitor customer behavior, preferences, and interactions, providing you with more detailed information about your target audience. Overall, these are great tools that can help you make a detailed customer data analysis.
Yespo Omnichannel CDP is one of such powerful solutions that can help you get the most precise customer data analysis. With an array of advanced features, Yespo Omnichannel CDP can help you collect and unify customer data from various online sources, including online and offline channels, and create a 360-degree view of your customers.
When you know everything about your users, you can create effective and highly personalized marketing campaigns that undoubtedly resonate with your targeted audience. You can use the data gathered by Yespo Omnichannel CDP to create behavioral segments that are tailored to each customer's preferences and behaviors, leading to a more effective and efficient marketing strategy.
Behavioral Segmentation: Examples & Use Cases
Let’s run over a few successful behavioral segmentation examples and cases.
Multiplex is the biggest cinema chain in Ukraine. As the cinema network grew and expanded geographically, new services and bonuses were introduced for visitors. As a result, the company required more personalized communication with its customers.
The company collects data when first entering their app, when first visiting their site, during premier mobile subscription, and after a client buys a ticket. We demonstrated that using contact data for segmented communication is easy and effective. By analyzing the collected data, the company created targeted campaigns and personalized messaging based on customer preferences and behaviors.
This national network of electronics and household appliances in Ukraine contacted our team with the request to improve the effectiveness of email newsletters and other channels. Currently, it’s one of the most successful examples of behavioral segmentation. Our team worked closely with this company to implement a behavioral segmentation strategy that would improve the effectiveness of their email newsletters and other marketing channels. We used advanced segmentation and web tracking to help the company achieve that goal. Thanks to this, we can keep track of customer behavior on the website and convert website visitors into loyal customers.
It’s a stout Irish manufacturer that used occasion-based purchasing segmentation to diversify its marketing strategy. It divided its target audience into different groups based on their consumption occasions. For instance, the company found that some customers enjoyed their stout during social occasions, such as St. Patrick's Day celebrations or other cultural events. They developed targeted marketing campaigns to reach these customers during these specific occasions. They used creative advertisements, social media campaigns, and special promotions to attract and retain them.
Common Mistakes to Avoid
Behavioral segmentation is a powerful and effective tool that can help you get the most out of your marketing campaign. But unfortunately, even the most experienced marketers make mistakes. Learning from others is always better, so let’s examine the most typical mistakes businesses make when implementing behavioral segmentation.
Only analyzing past behaviors
That’s a wrong approach, as it doesn't account for changes in consumer behavior or preferences. Instead, you have to regularly update and analyze customer data to be doubly sure that your segmentation is accurate and up-to-date.
Misusing behavioral data
Data is a fantastic tool, but it can also be used incorrectly, leading to inaccurate or ineffective segmentation. That’s why you must understand how to collect and analyze customer data properly. To overcome this problem, you need to collect data in a way that engages your targeted audience. For example, you can use online surveys, polls, etc.
Stopping at segmentation
Segmenting your audience is only the first step; next goes testing. You need to be sure you understand how to use the insights gained from segmentation to inform your marketing efforts. So, create targeted campaigns and personalized messaging based on your research to ensure that your marketing strategy is effective.
It’s time to wrap up what has been said about behavioral segmentation. Overall, we can see that it means a lot for a successful marketing campaign. Many businesses use it to improve retention, customer acquisition, product development, CRM, cross-selling, and more. Simply put, it’s a powerful tool that allows you to understand the behavioral patterns of your target audience and their user journey. Based on this data, you can build an intelligent marketing campaign.
If you're looking for a comprehensive solution to help you with behavioral segmentation and creating personalized marketing campaigns, Yespo Omnichannel CDP might be the place to go. With our advanced features and capabilities, we can help you gather and analyze customer data, build customer profiles, and create personalized marketing campaigns across multiple channels. Don't wait any longer to take advantage of the power of behavioral segmentation. Try the Yespo Omnichannel marketing platform today and take your marketing campaigns to the next level.