Behavioral Segmentation

What is Behavioral Segmentation?

Behavioral segmentation involves grouping your customers based on how they interact with your brand. This gives you a clearer picture of who they are, what they want, and how you can make them happy.

Unlike traditional marketing methods that focus on basic demographics or where someone lives, behavioral segmentation dives deeper into what your customers actually do — like what they browse on your website, which products they buy, or how they respond to your emails and social media posts. 

The idea behind customer behavior segmentation is that customers who act alike probably want similar things, which helps you create marketing strategies that really speak to them. 

Behavioral segmentation examples

Here are three of the best market segmentation examples:

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• Website interaction: Amazon targets customers who frequently purchase books with recommendations for new releases.
• Purchasing behavior: Nike sends running gear promotions to customers who purchase running shoes.
• Email engagement: Sephora tailors beauty tips and exclusive offers to customers who regularly open the brand’s emails about skincare products.

Key Behavioral Variables

Behavioral segmentation in marketing works by understanding the specific actions and interactions your customers have with your brand. These are called behavioral variables, and they’re the building blocks for creating meaningful customer groups. 

While the exact variables you track will depend on your industry and business, below are some common ones to consider.

• Purchasing behavior. How often do your customers buy? How recently have they made a purchase? How much do they typically spend, what kinds of products do they prefer, and how do they pay? This information helps you spot your big spenders, frequent shoppers, and those who might be tempted by a good deal.
  
  
• Usage patterns. How do customers interact with your website or app? What features do they use most often? How much time do they spend on each page or session? Knowing this helps you figure out what features are hits with your customers and where you might need to make some improvements.
  
  
• Loyalty. Do customers make repeat purchases? Do they engage with your brand on social media? Do they refer friends and family? Loyalty metrics like engagement score can help you identify your most loyal customers and develop strategies to keep them engaged.
  
  
• Benefits sought. This is all about what your customers are really looking for. Is it convenience, top-notch quality, a good price, or something else? Understanding what they value most helps you tailor your marketing messages and even your products to better meet their needs.
  
  
• Customer journey stage. Where are customers in their journey with your brand? Are they new visitors, returning customers, or loyal advocates? Understanding their stage in the journey allows you to send them the right messages and offers at the right time.

Each of these variables offers a unique glimpse into your customers’ behavior — and by looking at them together, you can build a complete picture of who your audience is. For example, you might discover that your big spenders are also active on your social media, or that customers who browse a lot before buying tend to become loyal customers. 

These insights can inform your marketing strategies, product development efforts, and overall business strategy. 

Advantages of Behavioral Segmentation

By recognizing and catering to the unique preferences and actions of different customer groups, you can:

• Hit the bullseye with your marketing. Imagine sending hiking gear deals to outdoor enthusiasts while offering discounts on suits to those shopping for business attire. That’s the power of behavioral segmentation: sending the right message to the right person at the right time.
  
  
• Make your customers feel special. We all love personalized attention, and your customers are no different. By tailoring product recommendations, website content, and even customer service interactions to each segment, you create a VIP experience that keeps them coming back for more.
  
  
• Build long-lasting customer relationships. When you offer targeted deals and personalized experiences, customers feel understood and valued. This leads to repeat purchases, enthusiastic word-of-mouth recommendations, and a legion of loyal brand advocates.
  
  
• Fine-tune your sales approach. Some customers need a little extra nudge to complete a purchase, while others are ready to buy right away. By understanding the behaviors that drive conversions, you can tailor your sales strategies and optimize your sales funnel to each audience segment, guiding them smoothly through the buying process.
  
  
• Make smarter business decisions. Analyzing customer behavior is like having a crystal ball for your business. You gain valuable insights into what motivates your customers, what they like and dislike, and what challenges they face. This customer knowledge helps you make informed decisions about everything from product development and pricing to marketing campaigns and overall business strategy.
  
  
• Anticipate customer behavior. Behavioral segmentation also lets you predict what your customers might do next. By using predictive behavior modeling, you can anticipate their needs and proactively offer solutions before they even ask. This level of personalization delights customers and gives your business a leg up on the competition.

Strategies for Using Behavioral Segmentation with a CRM

Your customer relationship management (CRM) system should be a powerhouse for implementing audience segmentation strategies. It's the central hub where you gather and analyze customer data, giving you the insights you need to create meaningful groups and tailor your marketing efforts accordingly. 

Here are some of the ways to use your CRM to its full potential:

• Rule-based CRM segmentation. Set up specific rules based on how customers behave. For example, you could group customers who've made at least three purchases in the last six months or those who've opened your recent emails. Once the rules are in place, your CRM automatically sorts customers into these groups, making it easy to send them targeted messages.
  
  
• Clustering. Think of this as a built-in customer segmentation tool. Your CRM can use algorithms to analyze customers’ behavior and spot those who act alike. Maybe it’s a group of customers who are really active across all your channels, or perhaps it’s a group who tends to buy during specific times of the year.
  
  
• Predictive modeling. Great CRMs can tell you which customers are most likely to buy, which ones might be thinking of leaving, and which ones are most likely to respond to certain offers. This lets you reach out to them at the perfect time with the right message.
  
  
• Targeted marketing campaigns. Once you've defined your segments, your CRM can help you implement targeted marketing campaigns. You can create personalized email sequences, dynamic website content, and tailored product recommendations for each segment.
  
  
• CRM dashboards and performance monitoring. You can customize your CRM dashboards to visualize and monitor the performance of your behavioral segments. Track metrics such as conversion rates, customer lifetime value, and engagement levels for each segment to identify areas for improvement and optimize your strategies over time.

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