This article defines behavioural segmentation, outlines its benefits, and explains how to use it to enhance your segmentation efforts.
Demographic profiles are only one building block of segmentation and are not enough on their own to create meaningful segments that inform effective product marketing and development decisions. Behavioural segmentation builds upon the who consumes a product (demographics) and looks at how they consume a product throughout their entire customer journey. It can be used with the other two main types of segmentation – geographic and psychographic – to build a more robust consumer profile.
What is behavioural segmentation?
Behavioural segmentation involves grouping consumers on the basis of their behaviours during all touchpoints of the customer journey, including how they make their purchasing decisions.
Using behavioural segmentation, consumers are grouped by product knowledge, preference, brand loyalty, attitudes, usage, and interaction.
Behavioural segmentation main benefits
Behavioural segmentation has many unique benefits which allow for more informed, strategic, and efficient decision-making in terms of product marketing and development. It is most effective when combined with other forms of segmentation data such as demographics and psychographics. Some of the main benefits of behavioural segmentation include:
Enables predictive analytics
Behavioural segmentation uses historical behavioural patterns to predict and influence future customer behaviours and outcomes. By understanding how consumers have previously engaged with product messaging and interact with a brand for similar products, businesses can pinpoint which touchpoints are most crucial for influencing buying decisions.
For example, if consumers are likely to purchase a particular product in conjunction with another product, similar future products could be offered in a bundle or in a special offer.
Improves targeting accuracy
Allowing businesses to take advantage of behavioural differences, behavioural segmentation helps to optimise marketing messages based on such data.
For example, it can be used to determine the right approach for different consumer profiles, such as loyal customers or newly subscribed users. It also complements demographic, psychographic, and geographic data to help identify the different groups that comprise a brand’s audience, e.g. adults from 20-34, sports enthusiasts, avid travellers, etc.
Prioritises high-value consumers
Businesses can use behavioural segmentation to make smarter decisions surrounding time, budget, and resources by identifying high-value customer segments and initiatives with the greatest potential business impact.
By identifying different consumers’ levels of engagement with certain products, businesses can filter their messaging and target markets, increasing the chances that products will be found by the audiences most likely to purchase them.
Personalises the customer journey
Using behavioural data helps businesses to understand how different groups of customers should be targeted and personalise experiences.
For example, it can identify which promotional offers work best for certain groups and what their preferred channels of communication are to streamline the customer journey and positively influence buying decisions along the way.
Monitors segment performance
Monitoring growth patterns and changes in key customer segments over time helps businesses to gauge and track performance against product benchmarks. Using behaviour, along with other forms of segmentation data, this allows businesses to quantify the size and value of customer segments to track how ‘positive’ and ‘negative’ segments are growing or shrinking over time.
How to use behavioural segmentation with examples
Behavioural segmentation can be used in a number of ways to identify and target a specific group of consumers, ensuring that they are offered the right products and services.
Using different segmentation approaches enables smarter marketing and product development from businesses, as they can streamline their efforts to the most valuable audiences. Some common behavioural segmentation examples are:
1. Purchasing Behaviour
Segmentation based on purchasing behaviour considers the level of involvement consumers have in their purchasing decisions. This allows businesses to understand the complexity of different customers’ buying behaviour, what barriers may exist, and how the customer interacts during the buying process.
For example, when choosing between two similar brands of shampoos, a habitual customer will likely base their decision on brand loyalty.
2. Usage Frequency
Customer usage considers how much consumers are spending with a business and how frequently. This helps businesses personalise marketing efforts and target their products to the right audiences. Customers can be categorised as ‘light’, ‘medium’, or ‘heavy’ and segmented accordingly to receive the appropriate amount of attention.
For example, a high-spending customer would be considered a heavy user and require more marketing attention than an infrequent buyer (light user).
3. Customer Loyalty
Identifying loyal customers allows businesses to nurture and retain them to ensure ongoing purchases. Segmenting these consumers helps to understand and fulfil their specific needs through incentives and other enticing features. For example, by pinpointing that loyal customers like to be acknowledged with special offers, a marketing campaign for an exclusive sale could be targeted specifically at this group.
4. Purchase Reasoning
There are many motivating factors which influence consumers’ buying decisions and identifying these through behavioural data helps businesses to cater for different purchasing patterns.
For example, businesses can create specific product messaging that aligns with different purchasing reasons (e.g. price, quality, convenience) to capture different audiences based on their needs. This can be done through means such as packaging claims, advertisements, and targeted email campaigns.