Understanding The Relevance Of Behavioral Segmentation


Understanding the relevance of behavioral segmentation Brand Awareness Tracking
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Due to product proliferation today, consumers have a wide variety of products to choose from, making the purchasing process more complex. A brand must embrace behavioral market segmentation to stand out in the competition. 

This type of market segmentation highlights distinct phases in their ideal consumer’s purchasing process, such as what they want, why they want it, the advantages sought, and how they meet their needs. Leveraging behavioral segmentation can lead to an increase in retention and conversion rates.

In this blog, we will learn about behavioral segmentation strategy and how it benefits an organization.

What Is Behavioral Segmentation?

Behavioral segmentation is a type of market segmentation that classifies customers into groups based on average behavioral patterns. They may be at the same stage of their lifecycle, have previously purchased specific items, or have comparable reactions to your messages.

The ultimate focus of behavioral market segmentation is to assess the wants and expectations of customers to provide something unique depending on their behavior while buying a product or service.

Segmentation can be done through a market research survey based on the following criteria:

  • Their perception of your product, brand, or service
  • Their shopping habits, such as just purchasing on special occasions such as birthdays or holidays, and so on.
  • Their utilization of your product or service
  • Their general understanding of your organization and its goods. 

Let’s explore its characteristics in the next section to understand its relevance further.

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Characteristics of Behavioral Segmentation

Before conducting surveys to gather behavioral data; it’s important to understand the characteristics of behavioral segmentation. Let’s explore the characteristics that make it a popular market segmentation. 

  1. Behavior segmentation allows companies to learn more about customers’ decision-making and helps them become more responsive to customers. 
  2. Customer segments based on behavior help you focus your efforts on the right audience and create targeted messages for each segment. 
  3. It helps you ensure that the marketing communications and products/services are relevant to each customer cohort. 
  4. It helps you make predictions based on customers’ behavioral data allowing you to refine offerings and marketing and sales efforts. 
  5.  It allows you to adapt impactful marketing campaigns based on customer personalities. 

These are some of the characteristics of behavioral segmentation that contribute to its popularity. Next, we will explore the importance of behavior segmentation to understand why you should gather behavioral data during market research.

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Importance of behavioral segmentation

Customers’ needs, and preferences change all the time. This means a constant shift in behavioral market trends. Behavioral-based segmentation helps you identify your target buyer persona and find the optimal segment for your brand. 

In a market that is constantly in flux, it is ideal for keeping track of customer behavior and the drivers to stand out among the competition. Here we will explore four importance of behavioral segmentation in the market. 

1. Enhances targeted marketing efforts

Behavioral segmentation enables businesses to leverage behavioral variances to tailor marketing communications. 

For example, it can assist in selecting the best strategy for returning or freshly enrolled customers. It also defines the categories of your audience, such as folks aged 18 to 30, those who enjoy binging series, or those who enjoy traveling.

When you track your target customer’s behavior, you identify ways to create a more engaging customer journey. With the insights you gather, you can define the factors influencing purchase decisions and thereby optimize the path of conversion for targeted customers. 

2. Aids in the development of brand loyalty

Another importance of behavioral segmentation in the market is that it helps you understand customers throughout their shopping experience and what keeps them motivated all the time. The ones who are satisfied with your hospitality are likely to become more loyal to your brand. 

Using a customer buying habits survey, you can analyze their purchase behavior. This can help you identify the heavy users or repeat buyers. You can follow up with them to explore what drives their buying decision and use the insights to prioritize the VIPs. 

Segmenting customers based on their behavior can help you design a customer-focused loyalty program and encourage customers to convert into advocates. 

3.  Helps in providing better-personalized experiences

Deeply researching your audience and uncovering customer needs, problems, and expectations can help you personalize customer/user experience. By segmenting customers based on buying behavior, you can align your marketing and sales effort. This means customers receive more targeted communication and less impersonal experience from your company. 

By tailoring marketing communication and product/service offerings to customer segments or behavioral groups, you design a personalized experience that positively influences customer loyalty and satisfaction. 

4. Helps you prioritize your investments:

Behavioral segmentation is important as it assists you in spending less time and money on the unwilling audience so you can target company resources at the valuable and interested audience.

With behavioral-based segmentation, you can see which segment brings in more revenue. By further segmenting them based on where you are making money, you can focus your time, money, and marketing and sales effort on these segments. This way, you can deliver targeted experiences to long-standing customers and drive the ROI of exceptional CX

Real-world use case of behavioral segmentation

Starbucks is a multinational corporation that serves a vast clientele globally. The behavioral segmentation of Starbucks may appear peculiar to some; nonetheless, the corporation has been enjoying the benefits of this strategy for decades. 

The organization efficiently targets clients based on seasons, cultures, and tastes through market segmentation. Starbucks has effectively separated its brand from rival coffee chains by providing a good retail atmosphere and delicious coffee, emphasizing environmental activities, and profitably doing so. 

Starbucks’ consumer-focused positioning allows the corporation to give the finest customer service possible. Aside from its consumers, Starbucks promotes its social responsibility by recruiting refugees and military families and providing career and educational possibilities to its staff.

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Why is behavioral segmentation superior to demographic segmentation?

Behavioral and demographic segmentation are both components of segmentation. Behavioral segmentation is based on consumer activities, whereas demographic segmentation is based on standard consumer data.

Both are important, but demographic segmentation is gradually losing its value. Marketers want quick approaches for all of their jobs as the market expands faster.

Now the question arises, which one to choose and why?

The answer to this question is truly dependent on the brand’s objectives.

A new brand may opt to start with a simple segmentation based on period or geographical region to see which demographic segmentation performs best. However, behavioral factors help expand companies that wish to understand their clients in depth.

Since we are discussing market segmentation, let’s clarify how different it is from customer segmentation.

Are customer and market segmentation the same?

Both customer and market segmentation are effective strategies for guiding sales, marketing, and revenue intelligence operations, BUT these terms are not the same.

Market segmentation is the wider, elevated overview of all prospects throughout an entire market. Your target market is made up of present and future clients, and the procedure entails breaking this big population into generic categories based on shared criteria.

Customer segmentation, like market segmentation, entails monitoring data based on demographics, geographics, psychographics, and behavioral characteristics. However, the analysis further segments clients into multiple personas depending on what is known about them and their previous experiences with your company.

Market segmentation, as opposed to client segmentation, is broader and encompasses the whole marketplace. Market segmentation refers to the market as a whole, whereas customer segmentation refers to your specific portion of the market.

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Behavioral segmentation is determined by the behaviors or activities of the client. It gives a better understanding of target consumers by providing a deeper picture of client behavior.

While customer activity data is more difficult to obtain, it is valuable. You can enhance your marketing approach by gathering accurate information on a customer’s behavior across all mediums and channels.

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