What Is Behavioral Segmentation?

Marketing segmentation is a typical fixture of many businesses’ marketing strategies. Since customers respond better to specificity, behavioral segmentation can give companies a better understanding of the customers who buy their product.

Many businesses rely solely on the most common types of marketing segmentation, grouping the market by location or demographics. They may have a vague idea of the market’s needs, but it could be better. A customer is more than their age or gender, after all. Behavioral segmentation can help fill these knowledge gaps.

Behavioral segmentation divides the market into segments based on customers’ purchasing behaviors. Just as important as knowing who your clients are — their demographics or location or interests — is knowing their purchasing behavior. How and why do people buy your products?

What Is Behavioral Segmentation?

Behavioral segmentation is a form of marketing segmentation based on customer buying behavior. This technique divides up customers based on how they use a product or service, what they know about, their opinion about it and related factors.

The practice’s goal is to help you understand how and why customers use your product. You can then use that information to more effectively market based on behavioral groups.

Behavioral segmentation can also coexist with other forms of market segmentation. This strategy allows you to detect subtle differences between individuals in the same geographic or demographic segments. You may also find existing segments based on demographic information like age, gender or income level correlate with the behavioral segments.

Ways to Create Behavioral Segments

You can approach behavioral segmentation a few different ways, including:

By use:

• This segmentation centers around how much a given customer uses a product. Divide into two purchasing levels, like high usage versus low usage. Segmenting by use is a common behavioral segmentation technique, especially in industries where most of the revenue comes from a small portion of customers.

By occasion:

• Use this approach when a customer only purchases a product for certain occasions or at specific times of the year. These occurrences can be rare, like weddings, or annual seasonal events, like holidays. You can also market based on recurring events in a customer’s life, like vacations or birthdays.

By familiarity:

• You can market your product to a customer based on where they are in the buyer’s journey, which visualizes how customers move from being totally unaware of your product to purchasing it. Familiarity segmentation can include techniques like remarketing or retargeting. A business targets customers who have already seen one of their advertisements. This form of targeting is pretty effective compared to more standard marketing techniques. In online marketing, a retargeted ad’s click-through rate (CTR) is 10 times higher than a non-retargeted ad’s.

By benefits:

• Segment your customers based on what kind of benefits they look for in your product. Not everyone who buys your product wants to get the same benefit out of it. Knowing what they value in your product can let you more precisely target them. This form of behavioral segmentation is also considered a form of market segmentation in its own right and is sometimes called Benefit Segmentation.

By user type:

• Businesses that provide a service commonly use this form of behavioral segmentation, which groups the customer base into distinct user types. For example, if a business offers a free plan as well as several different paid plans, you can target users based on what plan they currently have and the features they’d enjoy if they would upgrade.

Behavioral Segmentation’s Advantages and Disadvantages

Behavioral segmentation can provide your business with a greater understanding of your customer base. You can also use it in concert with other segmentation methods. This combination of tactics can help you discover new correlations between buying behaviors and other factors, like age, gender, occupation and location.

Ideally, behavioral segmentation will help you build a marketing strategy that more precisely targets the different needs of your customer base.

However, human behavior is not always consistent. People’s spending habits change with major events in their life, or from season to season, or sometimes for no good reason at all. Some elements of behavioral segmentation — like segmenting by benefits or familiarity — are hard to back up with data.

Further, it can be difficult to get the data you need to describe different segments. Without good data, a behavioral segmentation strategy can end up relying on qualitative factors and, in the worst-case scenario, more guesswork than hard facts.

Examples of Behavioral Segmentation

A good place to see behavioral segmentation in action is at the grocery store. Several versions of any given product target customers who want specific benefits — such as organic, sugar-free or sustainable. Most shampoos target different consumers — such as those with dry, damaged or color-treated hair. You can see these differences in most products offered as well — including goods as diverse as toothpaste, sodas and eggs.

Seasonal displays also swap out products based on the time of year and any upcoming holiday. Hallmark cards consider the wide range of circumstances that might lead someone to buy a card.

Some retailers use unique marketing techniques like close-range marketing to target customers based on their proximity to the store. This type of marketing includes sending a push notification to a customer who has already installed that business’s app as they walk past the store. These businesses can then use this information along with a behavioral segmentation strategy to capture customers who are further along than others on their buyer’s journey.

Applying Behavioral Segmentation to Your Business

Behavioral segmentation can give you a better understanding of your customers and what they think about your business. Knowing what kind of consumers are purchasing your product and what sort of benefits they expect to receive can be a game-changer for your marketing strategy.

By applying some of the techniques listed above, you can gain a better understanding of what your customers want and need — and what they’re looking for in the products you sell.