Traditionally, marketers use segmentation to create targeted marketing campaigns. Even today, segmentation is one of the cornerstones of a successful marketing strategy. What has changed for marketers over time is the type of segmentation.
Previously marketers used to group their audience on the basis of factors like age, gender, geographical location etc. However, in today’s day and age, it’s important for businesses to dig deeper into the minds of their audience and segment customers based on how they interact with your brand. Otherwise, you may risk losing them over the course of time.
Wondering how to prevent churn and re-engage lost customers?
Say hello to behavioral segmentation.
Behavioral segmentation is the process of sorting and grouping customers based on the behaviors they exhibit. These include the types of the products and content they consume and the cadence of their interactions with an app, website, or business.*
An example of this would be recommendations suggested by streaming platforms like Netflix, Spotify, or Amazon Prime. These recommendations are often curated based on user activity and preferences. Another example would be the loyalty programs used by Starbucks and Sephora which encourage users to make more purchases.
Why is behavioral segmentation important?
Behavioral segmentation is based on data, rather than assumptions. The correlations drawn between different user characteristics are not arbitrary, therefore helping marketers in the following ways:
Studies show that 70% of consumers prefer brands that provide a personalized service or experience*. While demographic data barely skims over the surface of user experiences, behavioral data dives deep and helps marketers uncover user motivations and friction points. This insight allows marketers to predict future behavior and proactively delight customers, leading them to be brand champions over time.
- Predict future behavior and make better decisions
Historical data and trends can be analyzed to predict and influence future user behaviors and outcomes. With access to data regarding user behavior, buying habits and trigger events, marketers can reallocate resources towards initiatives that generate the highest ROI.
There are many ways to go about behavioral segmentation. Each of these methods can establish different outcomes, depending on the nature of your business. Understanding the 4 different components of user behavior is essential to develop a successful strategy:
1. Buying behavior and usage
By identifying how different customers behave during the purchase process, marketers can learn about restrictive factors, complexity and role played by the consumer. Based on this information, marketers can build predictive models based on the likelihood of different consumers making a purchase. Also, marketers can create buyer personas and identify the key obstacles that need to be removed from the user’s path.
An example would be food tech or streaming apps which send campaigns on a Friday evening knowing that app usage is higher on weekends.
2. Benefits Sought
People have different motivations to make a purchase. Understanding the underlying motivations behind a purchase can help marketers understand what features of a product are preferred over the others. This can help marketers to segment consumers based on the benefits they deem important and learn to better serve each segment.
Occasions during which a user makes a purchase could be either universal or personal. Universal occasions usually apply to the majority of your customer base – this could be major holidays like the New Year or seasons like summer.
Personal occasions could be further broken down into recurring and rare, such as birthdays or anniversaries. Rare occasional purchases, on the other hand, are more irregular and spontaneous, such as purchasing a baby gift.
The right time for an effective time-based segmentation would vary from business to business. So, the best way to find the right time is by analyzing customer behavior and patterns.
4. Customer Loyalty
One of the most important behavioral segments is that of the loyal users. They are the most important subset of your customer base with the highest lifetime value and the lowest cost to retain. This segment of customers is crucial when it comes to beta testing a new feature in your product or service, getting referrals, testimonials, or even customer feedback.
Segmenting your users based on the recency, frequency and monetary value can help marketers identify their champion users and understand their needs.
Using these 4 components of user behaviors, marketers can create endless permutations and combinations of behavioral segmentation strategies. Some of the most common ones include retargeting, targeting complementary products and marketing based on attribution. While creating a marketing strategy using behavior segmentation to re-engage lost users, it is important to remember that every step of the customer journey is different for every user.
With a user retention platform like CleverTap, marketers can create behavioral segments to gain deep insights into user behavior and usage trends across web and mobile. These segments can be used to create a custom user experience based on real-time product and app usage that dramatically increases engagement and conversions while reducing customer churn.
Author Bio:- Apoorv is a Digital Marketing Manager at CleverTap. He is a power user who writes about marketing automation and everything about the customer engagement sphere. He previously worked as a Digital Marketing Analyst at Freshworks.