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Behavioral Segmentation | Types & Examples

Identifying behaviors and why they form allows marketers to target audiences with laser-like precision; refining their advertisements and strategies until the perfect marketing mix is concocted. A marketing campaign designed specifically to reach these target audiences with efficiency. 

Adam R.
March 22, 2023

What is Behavioral Segmentation?

Our personal history and our emotions - as much as we often wish otherwise - are hugely integral to influencing our behavior. 

Humans are intensely routine creatures. These routines are often made up of what we know as habits - a repeated action carried out almost unconsciously. To better understand how people - especially customers - develop these habits and behaviors, is the goal of most marketing strategists.  

Identifying these behaviors and why they form allow marketers to target audiences with laser-like precision; refining their advertisements and strategies until the perfect marketing mix is concocted. A marketing campaign designed specifically to reach these target audiences with efficiency. 

Before a strategy can be developed, one must first understand the basic principles behind behavioral segmentation. 

Importance of Behavioral Segmentation

Dividing markets into smaller communities is a practice in the marketing field known as market segmentation. Behavioral segmentation is a form of market segmentation that seeks to identify and differentiate customer groups on the basis of shared behaviors. Other kinds of market segmentation involve targeting customers on the basis of shared characteristics like geography, race, gender, and age. 

Identifying key behaviors among your customers enables you to identify how they interact with your products, marketing, and your company at large.

An example of behavioral segmentation can be seen in answers to questions at the end of a customer’s receipt - questions like: How many times a week do you shop at our store?; or Which incentive do you prefer for signing up to our mailing list - a discount code, or a free shipping guarantee? 

Benefits of Behavioral Segmentation

It improves your ability to communicate effectively with your customers.

Segmenting customers into distinct groups based on shared behavioral traits allows marketers to position themselves more effectively in any given market. The messaging is clearer because it speaks directly to the habits of the prospective customers.

If, for example, your target demographic were the 35- 55 year olds that shop at your boutique outdoor outfitter, you might split them up further along the lines of their interests and preferences: “cold weather campers” vs “summer athletes”, or “casual hikers” vs “mountaineers”.

It refines your customer experience. 

No two customers will ever be identical in behavior. That being said, there are ways you can target audiences niche desires and interests that will have them feeling greater affinity towards your brand. A personalized approach to your marketing - like emailing users coupons related to items they’ve purchased in the past - can have a dramatic improvement on your customer experience outcomes. 

It creates longer-lasting customers.

Curating your services and product selections to the tastes of your clients will make them feel valued. Attending to your customers creates loyalty, and will generate long-lasting favor for your brand. These relationships will pay dividends in the form of increased value over a customer’s lifetime, and secures your future revenue streams.

Benefits of Behavioral Segmentation

Types of Behavioral Segmentation

There are four primary categories that make up behavioral segmentation. Each one of these elements seek to explain the different nuances of behavior. 

Purchase or Usage Behavior

This segment identifies what stage of the buying process your customer is in, as well as: challenges they face navigating your store or website, what their role in the purchasing process is, and more.

Let’s refer back to our earlier example of a high-end outdoor outfitter. It can be assumed that someone who shops for heavy winter pants and snowboarding goggles likely participates in some kind of winter sport.

Using this information, this retailer can send the customer targeted sales information and coupons over email related to winter apparel and snow sport equipment. This type of advertising is far more effective than undifferentiated marketing; the kind where there is only ever one variant of an advertisement. 

Occasion and Timing

This element of behavior places the time of purchase as a crucial element of the buying process. The time of year, the season, the timing within a customer’s own life - all of these factors influence customer purchasing habits.

Holidays are the best example of the importance of timing. Modern retailers are careful to always keep a rotating selection of holiday goods stocked at the appropriate time. This is to keep up with the changing seasonal demands of their consumers; the ones who clamor for frozen turkeys before Thanksgiving, and then trample each other for lightly discounted televisions on Black Friday.

Benefits Sought

Another vital component of defining customer behavior is the benefits that the different customers look to gain from purchasing a product or service. Keeping with the outdoor retailer example, stores like this will often see a rise in the purchases of winter clothing during - you guessed it - the colder months. 

Having a clear idea of the different benefits your customers want from what your business sells is key to better addressing their needs.

Customer loyalty

Finally, there is segmenting your customers along the lines of their familiarity to and loyalty with your brand. It is important to not overlook your most loyal customers, and to pay consideration to those that support and grow your brand. 

There are many ways that customer loyalty can present itself in buyer behaviors. One example is the way in which customers respond to rewards programs. Creating a system that rewards frequent shopping makes a great incentive for customers who might otherwise split their purchases  up between you and your competitors. 

Building up strong feelings of loyalty among their customers does more for a business than simply increase the lifetime value of their customers. A loyal customer is also more likely to market the business freely through word-of-mouth and social media advertising. This kind of customer culture is how fan-favored businesses like Trader Joe’s thrive. 

5 Real-life Behavioral segmentation examples

  • Ride-share apps like Uber and Lyft target business professionals with special services that reward users that travel frequently and therefore must often hail a ride. 
  • Amazon segments users based on past shopping experiences - cataloguing the orders of other clients, and using that information to market to shoppers. The famous "Users like you have also purchased" feature offers users the ability to purchase items that compliment the original object of desire.
  • Craft supplies store Michaels engages their regular clients with targeted emails - offering different coupons and discounts based on the user's recent purchases. They also offer 3 tiers of craft supplies, ranging in quality and price. These tiers are named after their target customer: academic (level 1), artist (level 2), and professional (level 3).
  • Dating app Tinder offers users 4 different tiers of access to their app - offering more features and benefits as the pricing tiers go up: free, plus, gold, and platinum. These pricing tiers are designed to offer casual users a way to occasionally boost their ability to interact with the app's features; while platinum users are given special privileges in the form of priority over other users, super-likes, and so forth.
  • Meal kit delivery services like Home Chef and Blue Apron offer a wide range of unique product selections and optional add-ons for their subscriptions. These services are able to cater to a large and diverse customer base by offering up an equally diverse selection of vegan foodstuffs, organic foods, and specialty diet meals - as well as the traditional fare.

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