Why is behavioral segmentation important for marketers?

Marketing strategy has evolved with business studies and today, behavioral segmentation is one of the most successful concepts in marketing.

As businesses expand and their reach extends into markets beyond their immediate vicinity, they grow too big, as it were, for the small pots they were first conceived and launched in.

Like plants, unless they are quickly transplanted into larger containers that give their roots enough room to spread, they remain stunted and unhealthy.

Marketing strategy has evolved with business studies and today, behavioral segmentation is one of the most successful concepts in marketing.

Traditional Marketing Strategy Is History

Today, with the incredible reach of the internet, it’s possible for a business to reach clients/customers oceans away. Conversely, it’s possible for clients in distant locations to feel connected to a company that’s millions of miles away.

The only issue here is that “clients/customers” are not a homogeneous entity. They have widely different backgrounds, socio-economic statuses, needs, preferences and budgets, geographical and demographic differences, attitudes, lifestyle, behaviors and aspirations.

A one-size-fits-all marketing strategy is woefully inadequate in such situations. If your business was a brick-n-mortar, Mom-n-Pop type neighborhood store in the village, you could wait patiently for your customer to walk in, advertise in the local Yellow Pages, send out the occasional flyers, advertise in the annual Christmas fair, etc. But the modern business strategy is a completely different kettle of fish.

Why Should Markets Be Segmented?

Customers are tech-savvy, they have access to information from competing businesses and dislike wasting their time/effort. Shrinking attention spans, rapidly-evolving technology and a dynamic customer profile make it essential that the market is divided up on the basis of certain observed elements. This makes marketing strategy more targeted, efficient, powerful and cost-effective.

There are four primary divisions or segments:

  • Geographic: based purely on location
  • Demographic: people-based differences such as age, gender, marital status, education, income, etc.
  • Psychographic: based on shared psychological characteristics such as beliefs, motivation, attitudes, values
  • Behavioral: based on the customer’s behavior patterns while interacting with your business

To be classified as a segment, each must be substantial, accessible, clearly differentiated and identifiable. When you’re able to give the appropriate message to each segment, it means your marketing message reaches the right target.

The Modern marketing strategy relies more on behavioral segmentation compared to the traditional types such as geographic, demographic etc. It gives them a more complete, in-depth understanding of the individual customer so that products/services can be tailored to sync with such observations.

What Is Behavioral Segmentation?

The term is almost self-explanatory. It means that as a marketing strategist, you can divide your business’s (or brand’s) entire target audience up into distinct, smaller groups based on their purchasing habits and behaviors.

This method can precisely identify the shopper’s spending habits, how they make decisions, how they pick a product over the thousands of others, what they feel about your company, services, products, etc.

Some habits are easy to identify, such as:

  • Online purchasing behavior/habits
  • Behavior on the website
  • How long they stay on the site
  • What content they read: type, length, subject, style
  • Whether they read an article fully
  • What needs are fulfilled
  • What stage of their journey through your site they’re at
  • Whether they’re a regular/heavy, medium, lite user or non-user
  • Whether they have brand loyalty
  • Whether their next behaviors can be predicted

This data is collected via cookies placed on your website, data available via your CRM (customer relationship management) software, third-party data, website analytics, browsing/ search history, social media data, IP address, login data, purchasing history, etc.

Why Behavioral Segmentation Is Important for Marketers

Based on the data collected, marketers can divide the audience into several distinct segments. Modern consumers may visit websites, use services and purchase products for several behavioral reasons. They may be status seekers or aspirants to the “with-it” crowd, social media influencers, conservative/rational purchasers, functional/practical customers, hedonists, impulse buyers, or attracted by innovations and novelty.

Behavioral segmentation is essential because it helps to:

Diagnose your most engaged customers: One of the greatest dilemmas in marketing is how to cater to existing customers as well as reach prospective ones who display interest and engagement. Behavioral segmentation enables marketers to make better decisions on resource allocation, instead of chasing after cold leads.

Enable an integrated market strategy: When you identify each segment accurately, you can target them with advertising, direct marketing, personal selling, sales promotions, social media campaigns and public relations.

Determine pricing: Behavioral data helps you to install the right pricing options for your target audience, while ensuring that you remain profitable as well.

Provide a personalized UX: Gone are the days when you could broadcast a general message for customers. Today, behavioral segmentation helps you analyze and act on a particular segment’s unique requirements, preferences and budget. Statistics show that companies that don’t personalize their marketing messages could lose out to their competitors.

Helps to resolve pain-points: Behavioral segmentation helps to solve customers’ problems or to cross critical decision milestones.

Understand how they arrived at your site: This is an important piece of data because you can gauge whether they arrived there via organic search, keywords, social media, links in blogs, etc.

Evaluate time or event triggers: Behavioral segmentation analyzes what specific time or event triggers influence the customer’s behavior. Birthdays, anniversaries, festivals, business trends etc. are the most common reasons for increased sales.

Insert the right keywords: Your landing pages or headlines, articles on your blogs etc. can be made more effective by dynamic insertion of keywords into the content. This is a direct result of observing the customer’s behavior on your site.

Rewards customer loyalty: You can achieve desired marketing outcomes with data gleaned from behavioral segmentation. Once you analyze the kind of behavior a particular customer displays, you can reward them with different benefits such as loyalty points, coupons, cashbacks, etc. Further, you can gauge the right type of reward that the customer appreciates.

Predict behavior: This is probably the most important aspect of behavioral segmentation. When you analyze the behavior, choices and actions of a customer, it’s possible that a pattern emerges. Purchasing habits, how the customer interacts on your site, and what actions they take can be reasonably predicted through the data you get via behavioral segmentation. Modern algorithms help to analyze behaviors and create patterns that make it easier to predict future behavior of customers. You can use this data to launch new products and services.

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