Sending uniform messages to all of your customers is outdated. If you want customers to react to your marketing campaigns, you need to make them targeted and personalised.
This is where behavioural segmentation comes in.
Segmentation is nothing new to marketers. However, marketing segmentation traditionally involved simple things like demographics and geographical location. Now – with behavioural segmentation – marketers can divide customers into groups based on the way they behave too.
Let’s find out more.
What is Behavioural Segmentation?
Behavioural segmentation is a tool used by marketers to divide customers into groups. Each group has specific behavioural patterns, which make it easier to send targeted marketing materials to them.
Here’s an example of how it might work if you were selling health supplements. One group of customers buy cod liver oil tablets because they’re good for eye health. Another group buys them because they’re the cheapest on the market. These customers can be divided and marketed separately, with the focus put on what matters to each of them.
The main examples of behavioural segmentation include usage and purchase behaviour, time-based and occasion, benefit-driven, and customer loyalty. This guide will take an in-depth look at each of these behavioural segments and how they work. Plus, you’ll learn about the benefits of using behavioural segmentation in your marketing campaigns.
The Four Types of Behavioural Segmentation
This section will look at the four main types of behavioural segmentation. You’ll be able to divide most of your customers into these groups.
1. Usage and Purchase Behaviour
Usage and purchase behaviour relates to how customers use a product and how they behave during the decision-making process. This is one of the most important types of behavioural segmentation because it allows businesses to improve the purchasing process.
There are four main categories of purchasing behaviour:
- Complex. This is when a purchasing decision is complex and the customer considers a lot of different factors. For example, if a customer is buying a new laptop, there are several things they’ll think about, such as RAM, screen resolution, brand, storage, etc.
- Habitual. Every consumer makes habitual purchases. They’re normally small purchases you buy regularly. For example, some customers buy Jif Peanut Butter and would never buy Skippy Peanut Butter. There isn’t much difference between the two – they do so out of habit.
- Dissonance reducing: When a customer is making a large purchasing decision, they might look for one factor that separates two products. For example, if two cars have similar specs, they might go for the cheaper option.
- Variety seeking. Sometimes, customers will try a new product to see how it stacks up. For example, if they normally drink Nescafe instant coffee, they might try Starbucks for a change.
Understanding which category of purchasing behaviour a customer falls into can help you deliver targeted messages. For example, if a customer belongs in the complex category, you need to drive home the benefits of your product over its competitors. If they fall into the habitual category, you just need to send a gentle reminder. Identifying this should form part of your processes mapping.
2. Time-Based and Occasion
Time-based segmentation is about the timing of when a customer purchases. You can divide customers into three different groups based on when they buy:
- Promotional buyers. These are customers who make purchase decisions according to special offers and discounts. They’re a great opportunity for businesses to increase sales with limited investment by driving traffic during key times.
- Seasonal. These are customers who buy products based on the season. During the summer, they’re more likely to purchase beachwear. In the winter, they might look for sweaters and coats. For example, in America, you’ll see Christmas-related goods appearing in stores as early as October/November.
- Occasion-based. These are customers who choose to make a purchase based on an event or occasion. For example, Valentine’s Day or Mother’s Day.
Understanding this type of behavioural segmentation allows you to optimise sales at different times of the year.
3. Benefit Driven
Benefits are important to all customers. However, the reasons they’re important can differ greatly. Two companies might want a piece of content management software for two completely different reasons. One could wish to create a content marketing strategy for SaaS while the other wanted to build a website.
Understanding what benefits your customer is interested in will help you market your products to them.
4. Customer Loyalty
Loyal customers are like gold dust for a business. Here’s why:
- They continually buy your product or service.
- It’s cheaper to retain them than to acquire new customers.
- They have the highest lifetime value of all customers.
Understanding loyal customers is the real secret to business. It’s important to recognise why your customers stay true to you. This information can be gained from customer questionnaires. Then you can optimise these customers via loyalty schemes and other marketing campaigns.
Other Types of Behavioural Segmentation
In addition to the four main types of behavioural segmentation, there are a few other ways to divide customers.
1. Customer Lifecycle Stages
The five customer lifecycle stages are reach, acquisition, conversion, retention, and loyalty. Knowing where a customer falls on this path can help you deliver targeted messages. For example, if they’ve already bought a product from you, thank them for their purchase and encourage them to buy again with a personalised offer.
2. Customer Engagement Level
This relates to how much a customer engages with your brand. Your brand is more than just visual aspects. Even if you use the best logo maker and create an appealing brand image, there’s still some work to do to engage customers This is most useful for service-based businesses. There are three levels of user engagement:
- Occasional. A customer’s engagement with your brand is sporadic. They only connect with you when they need to and ignore marketing messages.
- Regular. A customer engages with your brand regularly but doesn’t use every product or service.
- Intensive. A customer uses your service daily and it’s important to their life and/or work. This is a good reason to provide them with special treatment.
3. Value-centric customer segmentation
This is a strategic approach that involves dividing a customer base into distinct groups based on their potential value to the business. This method focuses on identifying and categorising customers according to the economic benefit they provide, such as their profitability, revenue generation, or overall lifetime value. Here are some key aspects of value-centric customer segmentation:
- Economic Value Assessment: Customers are analyzed based on the economic value they contribute. This can include factors like purchase frequency, average order value, and customer lifetime value. High-value customers may generate more revenue per transaction or show higher loyalty, while lower-value customers might have minimal interactions or lower spending.
- Tailored Marketing Strategies: Once customers are segmented based on their value, businesses can develop targeted marketing strategies suited to each segment. For instance, high-value customers might receive exclusive offers and premium service to enhance their loyalty and spending, whereas strategies for lower-value customers might focus on increasing their engagement and purchase frequency to move them up the value chain.
- Resource Allocation: This segmentation helps businesses allocate their marketing and operational resources more effectively. More resources can be directed towards retaining high-value customers and less towards those who contribute less economically.
- Personalisation and Customer Experience: By understanding the value of different customer segments, companies can tailor their services, communications, and offers to meet the specific needs and preferences of each segment, improving overall customer satisfaction and retention.
- Data-Driven Insights: Value-centric segmentation relies heavily on data analytics to accurately classify customers. This involves analysing transactional data, customer behaviour data, and other relevant metrics to ascertain each customer’s value.
Overall, value-centric customer segmentation is about prioritising and optimising interactions based on the economic value customers bring to the organisation, enabling more strategic decision-making and effective marketing efforts.
4. Customer Satisfaction
This segment relates to customer feedback. You adjust your message based on how the customer feels about your product or service. For example, if a customer is dissatisfied, you don’t want to send them a message telling them how great your product is.
The Benefits of Behavioural Segmentation
So, what are the benefits of behavioural segmentation and why should you apply it to your business? Behavioural segmentation offers numerous benefits for businesses, particularly in tailoring marketing strategies to meet the nuanced preferences and behaviours of different customer groups. Here’s a detailed look at the advantages of using behavioural segmentation:
1. Enhanced Personalisation
Behavioural segmentation allows businesses to craft personalised marketing messages based on the specific actions and behaviours of customers. By understanding how different groups engage with products or services, companies can create targeted communications that resonate more deeply with each segment, leading to increased engagement and customer satisfaction.
2. Improved Customer Experience
When you know your customers’ behaviours, you can design experiences that are more aligned with their expectations and needs. For example, if data shows that a segment of customers frequently purchases products for specific occasions, businesses can optimize their marketing efforts to these times, enhancing the overall customer experience and increasing relevance.
3. Increased Efficiency in Marketing Spend
By targeting only those segments that are most likely to respond to specific offers or messages, businesses can allocate their marketing budgets more effectively. This targeted approach reduces waste on broad campaigns that do not resonate with a large portion of the audience, thereby optimising marketing spend.
4. Higher Conversion Rates
Marketing campaigns that are based on behavioural segmentation are generally more effective in converting prospects into customers. When customers receive offers and messages that are aligned with their previous behaviours, they are more likely to find the content relevant and take the desired action, whether it’s making a purchase, signing up for a newsletter, or participating in a loyalty program.
5. Better Customer Retention
By continually meeting the needs and expectations of each customer segment, businesses can improve customer loyalty and retention. Loyal customers are more profitable in the long run, as they tend to purchase more over time and are cheaper to retain than acquiring new customers.
6. Deeper Insights into Customer Preferences and Trends
Behavioural segmentation also provides valuable insights into evolving customer preferences and market trends. Businesses can use this data to innovate or improve products and services, ensuring they stay competitive and relevant in their market.
7. Ability to Predict Future Behaviours
With a robust understanding of past customer behaviours, companies can better predict future actions. This predictive capability enables proactive campaign planning and product development, anticipating customer needs before they even arise.
8. Increased Customer Lifetime Value
Customers who receive highly personalised and relevant content are more likely to continue engaging with a brand over time. This ongoing engagement increases the lifetime value of customers, as they continue to make purchases and interact with the brand.
Behavioural segmentation transforms generic marketing efforts into highly focused and effective strategies that significantly boost customer engagement, satisfaction, and profitability.
9. Improved customer service
The key to excellent service is understanding the customer. With behavioural segmentation, it’s possible to adjust service messages based on the type of customer. To do this effectively, adopt intelligent automation in your customer service process.
In Using Behavioural Segmentation, Keep This in Mind
Behavioural segmentation could be the key that unlocks your business’s success. However, it’s not the only tool you’ll need to employ. Along with strong competitor keyword analysis, excellent copywriting, and an agile approach to marketing, you’ll be able to increase conversions and drive brand loyalty.
Remember, behavioural segmentation provides a framework for communicating directly with your customers. However, you still need to decide what to say.
