Why You Need to Use Behavioral Segmentation

We are long past the days when you could just hammer a billboard into the ground and hope consumers somehow found you. Our ability to use technology to identify shared characteristics and track the behavior of consumers has thrown open the doors to personalized marketing.

Whether you own a local candy shop, a national company that sells men’s suits, or an online startup launching a line of high-end sunglasses, marketing segmentation is an absolute must. The four primary marketing segmentation categories are:

• Demographic
• Geographic
• Psychographic
• Behavioral

While each segment can be a powerful way of understanding and communicating with your audience, the most useful is arguably behavioral segmentation. What is behavioral segmentation, and how can it help you tune into exactly which consumers are most likely to buy your products?

Marketing segmentation helps identify the shared traits of different segments of your audience. A company can use that knowledge to communicate to its audience in a personalized and authentic way.

For example, a mom-and-pop candy shop in Albany, New York, doesn’t need to spend money on a national Facebook ad campaign (unless its website has a national or international reach). A national company that sells suits does marketing research and learns that a good portion of its customers are women who purchase suits for their husbands or sons. These are examples of segmenting audiences based on geography and demographics.

Psychographics refers to segmenting audiences based on more esoteric factors: lifestyle, social class, and the way someone wants to see themselves. For example, your online startup sells funky, luxury sunglasses aimed at urban, professional millennials who want to be seen as trendsetters.

Now we need to examine the last type of marketing segment: behavioral segmentation. What makes this particular type of segmentation so valuable?

Behavioral segmentation looks at how and when a consumer decides to spend their money on a product or service. It focuses on consumers’ shopping behavior, how they make their decisions, why they choose one product over the other, and how they feel about a product, company, or service.

Questions that behavioral segmentation can help answer include:

• Who are your most loyal customers?
• When are certain customers most likely to buy your product or service?
• Is your customer buying based on price, or because they prefer your brand?

To really understand behavioral segmentation, we need to dive into the heart of this segmentation category. These are the six subcategories within behavioral segmentation that will help you understand the planning, decision, and buying journey of your customers:

• Purchasing behavior
• Occasion purchasing
• Customer usage
• Benefits
• Loyalty gauge
• Buying stage

At the end of the article, we’ll review how putting in the time to mine this information can help boost your marketing ROI.

What is the thought process a consumer uses before making a specific purchase? For an expensive suit, a consumer may gather lots of information, compare several different labels, and read tailoring and fabric reviews before making a purchase. When buying candy, a teen with $5 may scan the assorted goodies and make an impulse buy based on which treat looks the most tantalizing. Out of sheer habit, another customer may place the same order for a dozen chocolate-covered pretzels every Saturday morning.

Purchasing behavior varies from customer to customer and can be difficult to quantify. It may be best to use customer surveys to learn this information. When you do understand this data, however, it can give you great insight into what motivates consumers and how to support their buying decisions.

When do your customers purchase your products or services? Is it for a specific, external event? Do they buy your products regularly or just every once in a while?

If you’re a candy shop, your most profitable day of the year is most likely Valentine’s Day. This is an obvious occasion that compels many consumers to grab those heart-shaped boxes. However, this isn’t the only occasion to consider. It could also be highly useful for a candy shop to know a consumer’s birthday or wedding anniversary.

Outside of external occasions, consider when else a consumer might purchase your products. Do sales of your company’s funky sunglasses pick up in the summer? Do certain clients purchase a new suit every few months, while others only do so once? Understanding the rise and fall of purchasing behavior over the days, months, and years can help you get ahead of seasonal trends to power up your results.

One of the most important subcategories of behavioral segmentation is customer usage. You need to know who your power customers are: These are the people who are buying most often from your company. They deserve extra attention and the most personalized marketing you can create.

However, be careful with this metric. It’s easy to get dazzled by the numbers. Your most active customers aren’t always your best customers. The teenager who spends $5 in your candy shop every week is a regular customer, but they don’t compare to the party planner who spends $300 every other month when they have a special event.

It’s useful to identify your heavy, medium, and light users so you can effectively market to them. Heavy users need special attention. Medium users can be encouraged with special promotions. You may decide different types of segmentation to advertise to light users, or to use your limited marketing budget in another way.

Why do consumers buy from you? What benefits do they receive from your product? They may desperately need to solve a problem that only your product or service solves. Alternatively, they may want to showcase a posh and fun fashion sense with your funky sunglasses. Or the entire purchase decision may be based solely on price.

This is an important question to answer. If you discover that a majority of your customers only frequent your candy shop because it’s within walking distance of their house, work, or school, then you want to consider an ad campaign that targets this specific audience. You also don’t want to advertise your new, high-end, luxury suit to the segment of customers who buy only when you have sales or other promotions.

Customer surveys and A/B testing can really help you uncover the true motivations of your customers.

How much do your customers actually care about your products or your company versus your competitors? Your most loyal customers are as precious as diamonds.

If you only have the means to focus on one behavioral segmentation subcategory, your best bet may be to identify your most loyal customers and treat them like the royalty they are. It is also useful to identify who aren’t loyal customers. You’ll need to market to them in a different way, especially if a competitor is trying to poach them.

Where is your customer in the buying process? Maybe they’re not even a customer yet and still qualify as a lead. Perhaps they’re a lead; they’ve seen some of their friends wearing your glasses, but they just aren’t ready to invest and get their own pair.

Users can be placed in a variety of buying stages:

• Nonusers have never heard of you.
• Prospects have an inkling but aren’t sure they want to buy.
• First-time buyers have given you their money. Now what?
• Regulars are old friends of your company.
• Former customers jumped ship and are now your competitors’ customers.

The way you speak to each of these consumers will be very different. Nonusers need to be educated about your industry, products, and services. Prospects need a little more guidance to get them over the finish line. First-time buyers have already made the investment, so now it’s time to double down with benefits to inspire their loyalty. Your regulars may be ready to upgrade with additional products and services. Finally, if you’ve improved your product or can offer an incentive, you may be able to win back former customers.

Behavioral segmentation is a harder nut to crack than the other segmentation categories, especially demographics and geography, but the work is worth the reward. After all, understanding why someone chooses to buy your products or services is the holy grail of marketing research.

When you segment your audience by their behavior, your efforts will allow you to:

• Develop key insights into what motivates consumers to buy from you
• Identify your most loyal users and learn how you can keep them happy
• Figure out when certain groups of consumers buy so you can reach them at the right time
• Send the right message to the right consumer depending on where they are in the buying process
• Spend your marketing budget more wisely on consumers who aren’t ready to buy, who have low loyalty, and who won’t be heavy users of your products and services

This is all another way of saying that behavioral segmentation lets you tailor your marketing. It allows you to take advantage of the existing buying behaviors of your key customers. You’ll be able to speak the right language at the right time to the right person. Every marketing dollar will stretch a little further and give you greater returns.

You don’t have unlimited time and energy, and certainly not an unlimited pile of money, for your marketing efforts. Marketing segmentation, especially behavioral segmentation, lets you supercharge every dollar with key insights and knowledge so you can sell to the audience who’s ready to buy.