What is Behavioral Segmentation?
Behavioral segmentation is a way of grouping customers based on how they act when shopping.
In the past, companies only grouped customers using basic information like age or location.
However, with new tools to analyze data, we can now group customers based on their actions and why they choose to buy certain things.
For Instance:
In gaming, players are often categorized as "Whales" (who spend a lot) and "Minnows" (who spend little).
The idea is to tailor marketing strategies to each group's habits: offering exclusive, high-value items to entice Whales (who spend a lot), and more affordable options or incentives for Minnows (who spend little) to spend.
This segmentation based on purchasing behavior, one of the types of behavioral segmentation. Apart from this, there are 6 different types of behavior segmentation, let's take a look at them.
6 Types of Behavioral Segmentation
Behavioral segmentation in marketing classifies customers based on their actions and decisions, and it's typically divided into these categories:
1. Purchasing Behavior Segmentation
This segmentation helps identify patterns such as impulse buyers, value-driven buyers, or brand loyalists.
It considers factors like the customer's decision-making process, the frequency of purchases, and the type of products bought.
2. Usage-Based Segmentation
Different customers use products at different rates and frequencies. This segmentation defines categories such as heavy, medium, and light users.
Heavy users might be targeted with bulk offers or loyalty programs, while strategies for light users could focus on increasing their usage through trials or discounts.
3. Occasion and Timing-Based Segmentation
This focuses on identifying specific times or occasions when customers are more likely to purchase or use your product.
For example, offer special holiday promotions or create anniversary reminders for repeat purchases. You may want to remember the marketing holiday calendar for seasonal campaigns.
4. Benefit Segmentation:
Customers often have different expectations or desired benefits from the same product.
This can be convenience, status, quality, or cost-effectiveness.
5. Customer Loyalty Segmentation
Customers are grouped here based on their level of loyalty, from passionate advocates of the company to infrequent buyers.
6. Engagement Level Segmentation
Understanding how customers interact with your brand –whether they're active on social media, respond to surveys, or participate in loyalty programs.
12 Real-World Behavioral Segmentation Examples
1. Goodfair Popup for First-Time Buyers
Welcome Popup: Use a welcome popup on your website that offers a first-time discount for new customers and encourages them to complete their first purchase.
What makes it good: 🌟
Goodfair has integrated behavioral segmentation strategies into every element of this type of popup to increase first-time buyer conversion rates.
2. Rothy’s Cross-Selling Strategy for Impulse Buyers
Recommended Products: Implement a recommendation system on your website that suggests related products to customers based on their past purchases.
What makes it good? 🌟
With its "Pair it With" section, Rothy's offers a classic example of cross-selling based on purchase behavior segmentation.
It encourages an increase in basket size by suggesting complementary products that go well with those usually purchased or viewed together.
3. Starbucks Reward Programs for High-Value Customers
Reward Programs: Offer exclusive rewards and benefits in your loyalty programs to encourage frequent purchases.
What makes it good? 🌟
By offering free coffee as a reward, Starbucks capitalizes on common consumer behavior that seeks value and reward for their purchases.
4. Skillshare Re-Engagement Campaigns for Inactive Customers
Re-engagement Emails: Send personalized 'We Miss You' emails with special offers to your customers who haven't made a purchase within a specific period.
What makes it good? 🌟
Skillshare's "We Miss You!" headline is a direct and personal approach to rekindling the relationship with recently inactive users.
Also, "Hurry - this offer ends soon!" creates a sense of urgency, encouraging the user to take advantage of the opportunity quickly.
5. Sephora’s Bulk Purchase for Heavy Users
Upsell Section: Offer bulk purchase discounts directly on your product page, targeted at heavy users.
What makes it good? 🌟
Sephora's shopping cart page with an upsell section titled "Add These Under $15" cleverly uses behavioral segmentation.
In addition, the limited number of curated options reduces shopper decision fatigue, increasing the likelihood of selecting an additional product.
6. Terre Blue UGC Integration for Low-Volume Users
UGC Integration: Encourage your buyers to share their experiences with your product on social media and offer a hashtag to collect their content.
What makes it good? 🌟
Terre Blue's inclusion of a positive customer testimonial directly on its homepage as social proof affects the purchasing behavior of potential customers.
7. Lifesum Progress Tracker Email for New Users
Progress Tracker: Add a progress tracker to your emails that visually motivates your new users to complete engagement actions by leveraging behavioral trends for goal completion and satisfaction.
What makes it good? 🌟
Lifesum's progress bar visually indicates a journey's start, incentivizing action and appealing to the user's desire for achievement and completion.
8. Native’s Congratulations Email for Existing Users
Customer Milestone Email: Give your users a reward by congratulating them when they purchase.
What makes it good? 🌟
By acknowledging the customer's status, Native rewards and recognizes customer loyalty, which is key to retaining valuable customers.
9. Birkenstock’s Seasonal Popup for Timing-Based Marketing
Seasonal Popup: Display popups or banners on your website during holidays or special events, offering seasonal products or discounts.
What makes it good? 🌟
Birkenstock creates a sense of urgency by indicating this is a limited-time offer. This taps into the fear of missing out (FOMO), prompting quicker decision-making.
10. Starbucks Social Media Strategy for Routine-Based Engagement
Routine Post: Send emails aligning with daily or weekly routines, like morning coffee discounts or weekend fun announcements.
What makes it good? 🌟
This X post encourages followers to integrate Starbucks into their daily morning routine, which is a powerful way to build customer habits.
11. Rhode Video Guide for Benefit-Seeking Users
Video Guide: Add video tutorials or guides to your homepage to give your users an engaging way to learn about your product and its features, increasing your brand's perceived value.
What makes it good? 🌟
Featuring a celebrity -in this case, the brand owner, the product can create a sense of trust and relatability, which is very important for customers who value authenticity.
12. Mailchimp Feature-Focused Email for Benefit-Seeking Users
Direct Benefit Email: Send out emails that focus on specific features of products tailored to the interests of different customer segments.
What makes it good? 🌟
The email directly states the benefits of using email marketing, which aligns with the pragmatic segment of customers seeking clear and tangible advantages.
Best Practise for Effective Behavioral Segmentation
Implementing efficient behavioral segmentation as a step-by-step process requires a structured strategy.
Here's our best practice for you -marketers wanting to apply behavioral segmentation to their marketing campaigns:
Step 1: Data Collection
- Start collecting data through website analytics, CRM systems, contact center software, social media interactions, and customer feedback.
- Use cookies and tracking pixels responsibly to gather insights into user behavior.
Step 2: Analysis and Insights
- Analyze the data to identify patterns and insights.
- Look for common behaviors like purchase frequency, average spending, content engagement, and product preferences.
Step 3: Segment Creation
- Create segments based on frequently observed behaviors.
- Common segments include new users, repeat customers, cart abandoners, and loyalty program members.
Step 4: Creating Hypothesis and Strategy
- Create predictions about each group's values and create focused ways to address them.
- For instance, you could assume that cart abandoners are price-sensitive and could be convinced by discounts.
Step 5: Implement Campaigns
- Target website visitors and their behaviors, monitor performance in real-time and make adjustments as needed.
Step 6: Testing and Optimization
- Conduct A/B testing for different segments to determine the most effective strategies. Use the results to refine your approach continually.
Step 7: Feedback Loops
- Establish feedback loops through surveys, customer service interactions, and social listening.
- You can easily collect feedback from your customers via survey popups. So, don’t hesitate to use them in your campaigns.
Conclusion
In conclusion, our journey into various aspects of behavioral segmentation in marketing has provided valuable insights into creating more targeted and effective campaigns.
By understanding different types of behavioral segmentation, from purchasing behavior to customer loyalty and from engagement levels to benefits-driven actions, you can create strategies that resonate deeply with your target audience.
As we've reviewed before, personalization and a good understanding of customer habits are critical to implementing successful marketing strategies.
The Benefits of Using Behavioral Segmentation in Marketing
Including behavioral segmentation in your marketing plan opens up a variety of benefits that can greatly boost the effectiveness of your efforts.
Let's have a quick look at these benefits:
Higher ROI on Marketing Campaigns: Upsell promotions for frequent buyers (identified through purchase behavior) lead to increased sales and lower marketing costs. You can use the Email ROI Calculator tool for free.
Improved Customer Retention: Re-engagement campaigns for inactive customers (based on loyalty data) can reignite their interest and loyalty.
Effective Product Positioning: Positioning luxury items for segments that seek premium quality (based on benefit segmentation) ensures a more resonant marketing message.
Enhanced Cross-Selling and Upselling Opportunities: Suggesting complementary products to customers who regularly purchase certain items identified through their usage patterns.
Better Crisis Management: Monitoring customer feedback and interactions to anticipate and respond to negative trends or feedback.
Predictive Analytics for Future Trends: Analyzing past purchase behaviors to predict upcoming trends, aiding businesses in proactive stock management and targeted marketing campaigns.
Frequently Asked Questions
1. What is an Example of Behavioral Segmentation in the Food Industry?
In the food industry, behavioral segmentation involves classifying consumers based on their behavior, preferences, and habits regarding food choices.
For example, fast-food chains use behavioral segmentation by offering lunch offers during peak hours for working professionals.
Additionally, utilizing mobile ordering apps in the food industry appeals to tech-savvy consumers looking for convenience.
Or, coffee shops take advantage of their customers' routines and habits, such as Starbucks, which we saw above, with their "happy hour" discounts.
These strategies increase marketing effectiveness and customer satisfaction by adapting to specific consumer habits.
2. What Tools or Platforms are Used for Behavioral Segmentation?
Numerous tools are available for behavioral segmentation, ranging from CRM platforms like Salesforce and HubSpot to analytics tools like Google Analytics and Adobe Analytics.
Platforms like Popupsmart and Segmentify are also valuable for personalized marketing campaigns.
3. Difference Between Behavioral Segmentation and Psychographic Segmentation?
Behavioral segmentation focuses on how consumers interact with products or services, including their buying habits, brand loyalty, and response to marketing.
Psychographic segmentation, on the other hand, delves into psychological traits like values, attitudes, interests, and lifestyles.
It seeks to understand the motivations and deeper reasons behind consumers' buying decisions.
So, while behavioral segmentation looks at the 'what' and 'how' of consumer actions, psychographic segmentation tries to understand the 'why' behind these actions.
To delve deeper into psychological segmentation, explore our content on "5 Psychographic Segmentation Examples You Need to Know."
