Marketing
Sep 7, 2021

What is Behavioral Segmentation?

Behavioral segmentation is a great way to personalize and target your marketing messages to your customers, and also provides predictive power when trying to understand what customers will do next.

James Uzzalino

One of the first things you learn as a marketer is that segmentation is the cornerstone of an effective marketing strategy. When w e think of market segmentation, we usually first consider demographics and descriptive attributes about our audience, which is certainly important—they help us paint a picture of our ideal customer and buyer personas, which are key to branding and messaging.

But descriptive segmentation in this way isn’t the only option. There’s a way to understand not only who your audience is, but also how they interact with your ecommerce business, which opens doors for highly personalized and targeted marketing opportunities.

This type of segmentation is behavioral segmentation, a unique category of marketing segmentation, which this guide will help you define and apply to your ecommerce business.

Types of Marketing Segmentation

First, to refresh our memories, let’s run through a quick review of the other major types of marketing segmentation.

Geographic Segmentation

Geographic segmentation refers to dividing audiences by their physical locations. This could be as specific as a neighborhood or as broad as a country. You can also segment audiences by cultural preferences based on their locations.

Demographic Segmentation

Demographic segmentation is one of those common ways to concretely segment audiences. Demographic attributes include age, gender identity, income level, and education level.

Psychographic Segmentation

Psychographic segmentation focuses on audiences’ beliefs, motivations, lifestyles, interests, and goals. These qualities are more abstract, but help marketers understand their customers at a more personal level than with geographic or demographic information.

Firmographic Segmentation

If you’re in the realm of B2B or SaaS, you may be familiar with firmographic segmentation. This type of segmentation divides business customers by industry, company size, sales cycle stage, or other company attributes.

What is Behavioral Segmentation?

And here we arrive at behavioral segmentation. Behavioral segmentation is the process of dividing customers into categories based on patterns of interactions (or behaviors) as they make purchasing decisions with a particular brand.

Behavioral segmentation is unique because it relies on what your audiences do rather than who they are. Behavioral segmentation provides the most effective way to target your customers and has the added benefit of being helpful in predicting what they will do in the future. The best indicator of what someone might do in the future is what they’ve done before.

By including behavioral segmentation in your marketing approach, you’ll better understand:

  • Your company’s unique customer journey
  • What your customers know about your brand and its products
  • Customers’ attitudes toward your brand
  • How buyers use your products
  • How your audiences make their purchasing decisions
  • How to best serve your customers and address their needs and wants

Why is Behavioral Segmentation Important?

Now that we know what behavioral segmentation is and how it’s different from other segmentation methods, let’s dive into why your business should be doing it. Basing a marketing strategy around behavioral segmentation:

...Allows for greater personalization

Tailoring marketing messages to a particular audience is key to a successful marketing campaign. Behavioral segmentation increases targeting and message accuracy for your given audience segments. With behavioral segmentation, you’ll better understand your audience’s preferred channels and which messages are more likely to resonate, giving you the opportunity to offer highly-valued personalized experiences to your users.

...Enables predictive planning

Unlike the attributes assigned by other segmentation methods, behavior is, for the most part, predictable. This is a huge advantage for ecommerce marketers because easily accessed historical data can be used to understand and influence outcomes of campaigns. Additionally, knowing the ebbs and flows of your customers’ purchase behavior is important for long-term planning.

...Focuses on engaged users

Marketing dollars spent on disinterested audiences are dollars wasted. Engaged users, like ones who open emails regularly or spend time on your product pages, are more likely to make a purchase. Communicating with those audience members increases the chance that customers who really need your products will be able to find and purchase them.

...Builds loyalty to your brand

Behavioral segmentation improves customer satisfaction and retention, which increases customer lifetime value. Customers who feel like a brand is paying attention to them will become loyal to that brand, and behavioral segmentation enables you to create personalized experiences based on known customer behavior patterns. 

...Saves money on marketing resources

Implementing behavioral segmentation in marketing strategies will help you prioritize and structure campaigns to be more cost effective. Like we said before, marketing dollars spent on disinterested audiences are dollars wasted. Behavioral marketing clearly shows who your most engaged users are so you can use your resources to communicate with receptive audiences.

...Makes it easy to track marketing campaign performance

Because behavioral segmentation relies on actions, it’s perfect for tracking marketing KPIs and benchmarks. With advanced analytics platforms like Apteo, you can track your audience’s movements in response to your messaging. You’ll know exactly how your customers arrived at your site, be it by email marketing, social media, or a search engine. With this data, you can roll information into following campaigns for an ongoing strategy fueled by behavioral segmentation.

5 Types of Behavioral Segmentation and How to Apply Them

It’s clear that behavioral segmentation is valuable to a solid marketing strategy, so it’s time to learn how to apply it to your ecommerce business. Here are five ways to segment customers by behavior and how to apply them in your marketing strategies:

Purchasing Behavior

Segmenting by purchasing behavior entails understanding and applying known behavioral patterns when a user is making a purchase. With this method, you get into the nitty-gritty of a customer’s buying process as they examine factors like pricing, alternatives, and social proof.

Each individual customer exhibits their own unique behaviors, but there are common threads in overall purchasing behavior that you can leverage in your marketing strategy.

For example, consumers will often look at a few options for the product they’re seeking. To draw in customers at this stage, make sure to differentiate your product and share what makes it better than the alternatives.

Buyers also look at social proof when making purchasing decisions. This means researching reviews, asking people they know about a brand or product, or peeking at a brand’s social media mentions. Attract these customers by including testimonials and reviews on your own site so they don’t have to stray far before they make a decision.

Usage

Dividing customers by usage helps predict loyalty and churn, both of which determine a customer’s lifetime value. Usage encompasses how a customer uses a product, how often, and what features they use. 

Of course, this all depends on the type of product or industry. For example, a CRM platform’s usage segments will look different than, say, a business that sells luggage. A CRM platform is intended to be used daily, while luggage is used a few times a year for most people.

There are three segments that define usage:

  • Heavy users - These are your most engaged customers who interact with your messages and use and purchase your product frequently. Keep in mind, though, that heavy users may not be receiving the highest value possible. They may not be using the product effectively or only using some features, or they may be using your product while seeking alternatives.
  • Medium or average users - These users make up the bulk of your customer base. Their purchases are usually time- or event-based and they use your product semi-regularly, but not as much as heavy users.
  • Light users - These users make infrequent purchases and don’t use your product often. Sometimes they only make single purchases before they churn.

Use what you learn about your customers’ usage levels to tailor messages to their specific needs. Make sure your heavy users are getting what they need out of your product, and strive to turn medium users into heavy users if it fits your business goals.

Occasion and Timing

Dividing your audience by occasion and timing allows you to understand which users are more likely to interact with your brand based on special occasions, allowing you to take advantage of when your audience is most receptive.

Relevant occasions differ from industry to industry and product to product. They may be thought of as universal as with seasons, like more electronics being purchased during the holiday season, or more bathing suits being sold as summer approaches. Other industries may find it helpful to focus on holidays that often come with sales, like Labor Day or Cyber Monday.

Occasions may also be personal to the individual customer. Further, there are intermittent personal occasions which don’t happen on a set schedule, like weddings, vacations, or college graduations. Personal occasions may also be recurring, like birthdays and anniversaries.

To apply segmentation based on occasion and timing means planning around your customer’s schedules so they’re receptive to your messaging. Ramp up your campaigns a few weeks in advance of the occasion to keep your brand top-of-mind.

Additionally, you can get a boost in engagement by using metrics about when visitors are on your site or when emails are most likely to be opened.

Customer Loyalty

Customer loyalty is a powerful method for segmenting your audiences. It can be measured with a comprehensive loyalty program, numbers of purchases in a given time, or engagement with your messaging. The best known examples of using loyalty as a marketing strategy are frequent flier programs, rewards programs, platinum credit cards, or exclusive perks at hotels.

Loyal customers are easily retained and, as a result, have a high lifetime value. As an added bonus, they’re likely to use word of mouth to spread awareness of your brand and give referrals to new customers.

To apply a loyalty-based marketing strategy, identify and engage with repeat customers so you can understand their behavior patterns and encourage other segments to mimic those patterns. Further, use the most loyal customer segment to identify key strategies like:

  • What tactics on your end nurtured loyalty
  • What makes a customer ideal for loyalty program
  • What keeps loyal customers happy
  • How to maximize value from loyal customers

Benefits Sought

Understanding why your customers settle on your product is invaluable, and it often is determined by what they’re looking to do and how your product meets the customer’s needs. For example, a person shopping for toothpaste may be looking for something that will whiten their teeth, while another person wants a toothpaste that will soothe their sensitive gums.

Learning about benefits sought as it pertains to your product will give you insight into perception of your brand and why customers are drawn to you. This can help you refine your brand’s messaging by:

  • Honing in on what unique selling points set your product apart
  • Emphasizing what about your product will benefit the customer
  • Using your customer’s motivations to guide them to your product

If you’re unsure about what draws your customers to your product, examine data like the search terms that led them to your site or survey results after completed purchases.

How Apteo Maximizes Behavioral Segmentation

Apteo is a high-powered analytics platform that automates customer segmentation, including behavioral segmentation, with artificial intelligence. Use your personalized behavioral segments to send tailored messages to your audiences so you can improve retention and increase customer lifetime value. To learn more about how Apteo can help you leverage behavioral segmentation for your ecommerce business, try it free today.

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Photo by Scott Graham on Unsplash

About the author
James Uzzalino
Head of Growth at Apteo

James Uzzalino is the Head of Growth at Apteo, where he is responsible for engaging with customers and partners to deliver value and grow Apteo's business.