Your Guide to Behavioral Segmentation with Examples and Practical Tips
Research Intelligence

Your Guide to Behavioral Segmentation With Examples and Practical Tips

by Sarah Mehlman , Sr. Marketing Intelligence Specialist 8 Min.
February 10, 2022 | Updated June 22, 2022

Traditional audience analysis has become a dead-end road for many growing companies.

You know you need to fuel your audience’s interest. But how do you reach them at the right time in the right place with the right message? Consumers get to where they want because they’re offered more and more paths to find what they’re looking for. The challenge belongs to you.

Behavioral segmentation could just be the magic trick that gets you out of the aimless rotary. In this article, we’ll inspect why and how behavioral segmentation can help revitalize your marketing and growth strategies, plus practical tips and guidance on setting yourself up for success.

Ready for the ride? Buckle up, and let’s get going!

What is behavioral segmentation?

Behavioral segmentation is a form of market segmentation in which you group the audience based on behavioral patterns when interacting with your brand.

behavioral segmentation definition

This behavioral segmentation definition refers to any audience — prospect, customers, or anyone else — and covers any kind of engagement.

Let’s decipher for more clarity. Traditional audience segmentation looks at demographic or psychographic factors and aims to create consumer groups according to who the consumer is. Behavioral segmentation, on the other hand, considers what the consumer does and how. This method analyzes real-time activities taken on your website or app to identify common patterns.

An image representing that behavioral segmentation considers what the consumer does and how.

The role of engagement metrics in behavioral segmentation

Engagement metrics play an essential role and function as behavioral segmentation variables in developing a suitable strategy.

Ecommerce companies analyze browsing behavior and buyer journey to group their audience by funnel stage and readiness to buy. They also analyze the types of pages and products prospects browse.

If you run a SaaS platform, you may be more interested in segmenting according to user status, including gauging customer loyalty or frequency of visits, and average time spent on your site or app.

Gaming and other consumer apps may also find user status segmentation useful. However, other factors, such as device type and content type, come into play here.

What can behavioral market segmentation achieve for you?

Behavioral segmentation is often more powerful than traditional types of market segmentation. If you were to describe it in one sentence, this would be it: Reach the right customers with the right message at the right time in the right place.

Understanding audience behavior allows you to create more targeted marketing and efficiently allocate resources.

Let’s envision an example: You spend a significant chunk of your marketing budget on paid advertising offering discounts. However, many of your existing customers who frequent your website regularly don’t pay attention to these ads. Many miss out on some of the hottest offers, and you miss out on valuable brand ambassadors. Based on this behavior, you decide to find a better way to reach them and create dedicated campaigns for this particular segment.

A list of 7 marketing tactics you can use with behavioral segmentation.

In the following section, we’ll dig into the different subcategories of behavioral segmentation, and you’ll quickly understand how the various benefits pan out. This type of market segmentation enhances customer experience and satisfaction.

Behavioral segmentation examples

Before you sharpen your analytics tools, let’s recall: The meaning of behavioral segmentation is to identify behavioral similarities so you can divide your audience into smaller manageable groups and leverage their behavior to improve your marketing.

You can approach this in several ways. Here are some of the most common types:

1. Purchasing behavior

This is the most commonly used method of behavior-based segmentation. You can adapt your marketing campaigns accordingly if you know how people purchase and what impacts their purchasing decision. Discover common patterns in purchasing habits, like the time it takes to reach a purchasing decision, the number of interactions with your site and with other sites, and more.

Most companies categorize purchasing habits according to four patterns: complex, variety-seeking, dissonance-reducing, and habitual. What’s behind these abstract terms?

A chart of the 4 types of audiences based on behavioral segmentation.

 

  • Complex: The potential customer is actively searching, comparing, and trying to identify the best option. They will go through the entire purchase funnel and thoroughly investigate the pros and cons of your and your competitor’s offerings.
  • Variety-seeking: Customers who like to window-shop and stay aware of all the other options out there. We’re talking about regularly engaged visitors to your site – they may or may not be customers – and randomly browse many competitor sites, not always with a genuine buying intention.
  • Dissonance-reducing: Here’s the customer who’s never 100% satisfied and needs a lot of reassurance to justify a decision. They will keep coming back to the same products and content. This behavior is also typical when there’s little difference between products, and the customer needs to find something that tips the scale.
  • Habitual: Some purchases are simply a matter of habit. Customers know what they need, and they know they get it from a brand they’re happy with – end of story. Think about it: How often do you change the type of bread you eat or the kitchen cleaning solution you use? These are purely habitual purchases.

2. Benefits sought

This type of behavioral segmentation investigates why someone interacts with your site or becomes a customer. The idea is to segment according to the benefit they are after. Your goal is to identify whether they are driven by quality, a price advantage, urgency, convenience, or something else.

You want to figure out which pain point drives visitors to your site and into conversion. Inspect the factors that guide their decision and what helps move the decision forward.

For example, some customers of SaaS services may be particularly concerned with legal issues and always read the terms and conditions; others never even open them. If you identify this behavior, you can create a segment that will be provided with extra content addressing the legal matters to strengthen their confidence.

3. User status

Apps aim for continuous use and frequent engagement. To assess visitors’ value, you need to measure the intensity of app usage.

Typically, companies will divide their audience segments into three main user statuses’:

  • Heavy users. These are your daily active users who spend much time on your site or with your app. They are also your most loyal customers with the highest business potential.
  • Medium users. This segment comprises customers who use your app or site but not regularly. This is an interesting group to analyze further and see how to get them interested and engaged.
  • Light users. These are occasional visitors with no particular connection to your brand or users who have little need for what you offer. They also hold limited potential for your business.

4. Customer journey or lifecycle stage

To segment according to the buyer journey stage, you use behavioral indicators to determine the funnel stage of your prospects or potential customers. Identify what behavior characterizes visitors in the awareness, engagement, and decision-making phase.

The buyer journey funnel

This type of segmentation is useful for companies with particularly long buyer journeys. Complex technologies or B2B services can take months, and the potential client goes through long phases of comparing and evaluating. Each stage may require a completely different approach, and involve different levels of interaction with various business units.

Less complicated services or product providers may segment according to lifecycle stage. It would look something like this: non-user, prospect, first-time, regular, defector.

5. Other types of behavioral segmentation

One important factor to investigate is the impact of external events, such as holidays or time of year. Many retail branches are heavily affected by outside trends and events and want to analyze occasion purchasing.

This type of segmentation seeks to divide your audience by the impact of special occasions on purchase decisions. This includes holidays and official events as well as special occasions like birthdays. It can also consider seasons of the year, time of the months, or even time of the day, which might be significant for gaming sites as an example.

Other variables of behavioral segmentation include spending habits. This is an extension of the differentiation between occasion buying and regular. For example, some customers only purchase using coupons or special offers; others never use credit cards. In some types of business, these are relevant factors.

Behavioral customer segmentation has many benefits, and the type depends on your business character and needs.

Behavioral segmentation variables

If you already have efficient audience analysis in place, you have the infrastructure for your behavioral segmentation laid out.

First, select the touchpoints from which to collect data. This can include all channels that connect your audience to your brand. Then determine the scope of each segment.

Different metrics represent different segmentation strategies, so the data you monitor with your web analytics tool depends on the type of behavioral segmentation and the goals you aim for.

In many cases, you want to add data from your partners or affiliates. You may discover an entirely new set of behavior in the audience arriving from specific partners or partner sites.

It may also be helpful to collect data from other sources, such as the CRM, social media, and your email automation tool. In some industries, you should consider adding non-digital touchpoints to the mix.

How to segment users by behavior for more targeted strategies

Let’s imagine the marketing department feels they are wasting time and resources because the generic marketing material is too sophisticated for light users and boring to your heavy users.

You decide to go for user status segmentation for your SaaS application that targets business owners.

The simple way to segment your users is a binary system in which you set a specific condition on a specific metric. You could divide the audience by the frequency of visits – do they visit more or less than once a day? Or you could use time spent on site as a gauge. Visitors who spend more than an hour on average per day are considered heavy users, for example.

A more complex method is, of course, to combine metrics and scale. Instead of measuring time spent on site, you could look at audience loyalty. All you need to do is figure out what to measure.

That, however, is often easier said than done. How do you decide what to combine and which metrics are relevant?

4 tips for segmentation based on audience behavior

When you follow these guidelines, you’ll quickly be able to choose the metrics that help you segment your audience effectively.

Other types of audience segmentation

You’ll get even more out of behavioral segmentation when you utilize the info you already have on your audience. Correlate with common audience segmentation methods such as:

  • Geographic. A fundamental segmentation based on audience geography may be necessary simply due to language and time zones.
  • Demographic. Age and gender are crucial factors in many industry types. Additional useful demographic factors are socioeconomic status, family status, and so on. For B2B companies, the position in the company or size of the company could be relevant.
  • Psychographic. This type of segmentation is more common in B2B and tries to identify shared values or beliefs by customers groups.

Adding demographic or psychographic aspects can enhance your behavioral segmentation strategy and allow for an even more pinpointed marketing strategy in terms of budget and targeting.

Further reading: What Is Market Segmentation? Tips, Types, and Benefits Explained

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Behavioral Segmentation FAQs

What is the definition of behavioral segmentation?

Behavioral segmentation divides audiences based on behavioral patterns. It’s a form of audience analysis that uses real-time behavioral data to define and characterize groups of consumers.

Why is behavioral segmentation important?

Real-time behavioral data can be used for more precise targeting. Behavior-based segmentation enables you to reach the right people with the right message in the right way.

What are behavioral segmentation variables?

The method inspects interaction with your brand at significant touchpoints on the buyer’s journey that provide insights on their purchase habits or the benefits they seek. Other segmentation models measure user status or consider the user’s lifecycle stage.

How to use behavioral segmentation?

You’ll apply behavioristic segmentation in your audience analysis and build a digital marketing strategy based on the needs and preferences of each segment. Your site visitors are allocated to a segment to allow them to receive the dedicated campaigns.

What companies use behavioral segmentation?

Behavioral segmentation is gaining popularity in every industry and business type. Large companies, such as Apple, have successfully used it for years. Even offline companies, such as Mcdonald’s, employ the strategy.

What is the difference between behavioral segmentation and psychographic segmentation?

Psychographic segmentation aims to identify a person’s beliefs, values, and attitudes, whereas behavioral segmentation considers consumer actions in real-time.

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