Have you ever wished you could understand your audience better? Brand segmentation is one method to get to the bottom of your target customer and understand each one as an individual.
This method might be beneficial to your marketing plan. As segmenting clients will provide you with vital information that will allow you to focus your efforts and money on the correct audience, taking into account their purchasing and decision-making behavior.
Let’s go through the meaning of behavioral segmentation and how you can utilize it to boost brand loyalty. Finally, we will show you behavioral segmentation examples and how it can benefit your organization.
Definition of Behavioral Segmentation
The primary goal of behavioral segmentation is to understand consumers’ wants and desires in order to provide them with a service or product that satisfies their requirements depending on their purchasing behavior.
Marketing segmentation, in essence, divides your audience and consumers into multiple categories in order to better understand their purchase habits.
Some segments of your audience may respond differently based on their demography, such as age, geography, and if they have previously purchased from you.
Customers on e-commerce websites may be readily segmented depending on their site activity, which can be obtained from most metrics-tracking programs, including Google Analytics.
Benefits of Using Behavioral Segmentation
There are several advantages to behavioral segmentation:
- For starters, your marketing initiatives will be more accurate. You may target specific subsections and focus your branding messaging on them, increasing the likelihood of a sale. You may, for example, use freebies and initial offers to target new purchases, but these approaches are less likely to succeed with your most loyal clients.
- Customers nowadays also want greater authenticity. Consumers want a more personal, pleasant approach in the age of social media and influencer marketing. A generic commercial email is unlikely to elicit a reaction, but one with a personal touch could just do the trick. You can make a sale more successfully if you understand the buyer’s reasons.
- Behavioral segmentation is also cost-effective. You can determine which segments of your audience are the most engaged, allowing you to direct the majority of your spending there. It is a low-cost marketing method for increasing conversion rates.
- Finally, segmentation can boost brand loyalty while decreasing turnover. Customers are more inclined to return if they feel unique and respected.
What are the drawbacks of using behavioral segmentation?
Implementing a behavioral segmentation technique has certain drawbacks:
- Consumer behavior changes, and it is not always possible to predict it.
- Because the data gathered is qualitative, you must rely on your intuition when it comes to budget expenditures.
Types of Behavioral Segmentation With Examples
There are several types of behavioral segmentation since there are several ways for a customer to connect with a brand. Let’s look at the many forms of behavioral segmentation and how they function.
- Purchasing behavior
Purchasing behavior segmentation delves into the process of individuals’ decision-making during a purchase, and the associated trends, customs, and actions that influence this selection. Understanding your customers’ purchase behavior has obvious advantages: it helps you to reduce roadblocks and sell more things faster.
Zappos, an online shoe shop, demonstrated this by making returns free after realizing that return costs discouraged some customers from purchasing new shoes. Since delivering a $300 pair of boots costs the same as sending a $30 pair of sandals, the shift increased profit margins and helped them become a customer loyalty leader.
- Occasion or timing-based segmentation
Occasion-based segmentation implies dividing your customers depending on their daily schedule or specific moments within the day. Purchasing coffee or breakfast in the morning, for example, or dropping by the grocery store after work.
Starbucks, for example, has done an excellent job of using event-based behavioral data to boost sales and satisfy consumers. Their signature Pumpkin Spice Latte has nearly become a symbol of autumn. Starbucks holiday cups have become a source of passion and controversy during the last two decades.
- Customer loyalty
Measuring a client’s loyalty to your business reveals what inspires loyalty and what forms of rewards boost customer lifetime value and promote repeat purchases. In other words, segmentation based on customer loyalty allows you to direct your resources to the areas most likely to yield a return on investment.
LEGO is an excellent example of how to use consumer data to create and improve loyalty programs. The popular toymaker has revamped its loyalty program to encompass a larger audience group (rather than simply big spenders) and to provide reward members with additional options for the types of prizes they may claim.
- Buyer’s journey
Observing your client to determine where they are and how they go through each step allows you to better match your messaging, tailor the customer experience, and enhance conversions. It may also indicate stages when clients drop off or languish, allowing you to investigate why and offer remedies.
For example, someone in the market for a new smartphone may benefit the most from information such as a comparison checklist or user reviews. They may respond best to a coupon code or promotional offer when they get closer to making a purchase.
- Benefits-sought segmentation
We buy items most of the time because they solve a problem or give a benefit. Benefits-sought segmentation aims to analyze the target audiences based on why they purchase in relation to the perceived advantages of your product.
For example, one consumer may be attracted by a car’s gas mileage while another is swayed by its safety features. Another buyer may acquire an identical automobile just because a friend has and enjoys it.
Implementing a behavioral segmentation approach may assist all phases of the purchase funnel. Companies that include behavioral segmentation in their marketing plan can promote and sell their product or service more effectively.