Taking a backward glance at the marketing landscape prior to the 1950s, an unimaginable picture emerges.
The “market” was largely a somewhat mysterious, amorphous entity. As a result, there was a rather clumsy and undefined approach to understanding how consumers would receive a new product. There was an astonishing amount speculation and guesswork involved, along with certain assumptions that may or may not have had their basis in ground reality.
Today, it’s hard to figure out how products and services were launched back then, with no advance knowledge of what to call it, or look like, whether it would sell, who would buy it, how to package it, etc.
All that was set to change when a social scientist and public opinion analyst Daniel Yankelovich founded a market research firm in 1958. He was one of a group of social researchers who believed in the interdisciplinary approach to marketing. This new approach involved sociology, anthropology, psychology, statistical analysis, etc.
His research involved not just documenting what/where/when/why people purchased and preferences, but also delved deep into how it made them feel. He went on to develop the idea of segmenting markets, according to people’s lifestyle, social and cultural trends, their behaviors and what were the drivers of these aspects.
Dividing a market into segments enables swifter, more efficient and economical and more precise targeting of the intended audience. This means that your marketing message reaches the right group of people, at the right time and place and that it is customized to their known preferences, needs and budget.
Traditional segmentation included demographic, geographic, firmographic, psychographic etc.
What Is Behavioral Segmentation?
With behavioral segmentation, the marketing message uses web-user information to observe and analyze the customer’s behavior on the website.
Data is available from multiple sources such as:
- purchase history
- frequency of visits
- frequently visited pages
- viewing times
- duration spent on website
- ads and links clicked
- stage of journey through the website
- data on mobile devices,
- social media clicks
- subscription/registration data
- first/second/third party data from DMPs (data management platforms)
- IP address
- data points where the journey took a different turn or was abandoned
- Payment methods
- gaps between visits
- benefits customers are interested in
- loyalty, reviews, influences
This can then be compiled from different sources to yield certain behavioral patterns. A consumer “persona” can be created from these patterns, and similar persona can be collated into clusters of different behavioral segments.
Benefits of Behavioral Segmentation
Observe, compile and analyze: Through behavioral segmentation, marketers can get an insight into the exact nature of a transaction and how a customer typically behaves on the website. It can then be compiled through the use of algorithms and automated calculations into a discernible and holistic picture. Once the persona is firmed up, it can be analyzed and marketers can provide the right messages and ads.
Identification: Behavioral segmentation is a filter through which you can identify and categorize visitors to your website, customers, those seeking information, comparison shoppers, casual itinerants, etc. The data that comes through behaviors in your website helps you to pinpoint those who engage most and respond to these customers in the correct way. A very important benefit of this is that you can avoid cold calls and leads completely.
Journey Stage: Behavioral segmentation allows you to get better customer insights. For instance, you can categorize them into non-user, first-time user, prospective users (who are not very sure about purchasing, but are willing), regular buyers who are happy to receive marketing messages and respond to them with regular purchases, and ex-customers who were loyal customers earlier but seemed to have switched to your competitor.
Timing: You get access to data that informs you when exactly the customer tends to purchase. This could be tied to special occasions, milestones, relationships, etc. and if you can align this with social media information, you can be sure of success.
Prioritization: When your market is segmented correctly, it’s easier to prioritize where and how to allocate resources, ensure the right return on investment, put more money, effort and time into upselling/cross-selling to the more valued segments. This way you can avoid spending too much on those customers whose behavior reveals that they are only sporadic or are low spenders. This allows you to provide more benefits and rewards to loyal customers and makes their UX more memorable.
Proper Allocation: Every organization, no matter how big or small, has a set marketing budget. With the insight and information that comes in to you through segmentation, you can ensure that every dollar you spend on marketing messages is supercharged and that it reaches the customer who is willing and ready to purchase. Patterns of behavior are usually repetitive, since customers value familiar and comfortable ways of doing things. This means that they’re more motivated to purchase when the website is responsive to their needs.
Responsiveness: Behavioral segmentation provides valuable insights into the progress of the customer journey. Today, an overwhelmingly large majority of customers access websites and browse on their mobile phones. You can ensure that your website is optimized for this behavior, where they may access your website from laptops, desktops, tablets, smartphones, etc. in the course of a single journey, without losing the quality of the UX.
Prediction: Behavioral segmentation’s most important benefit is that it gives marketers enough insight into customer behavior to be able to predict future actions. This helps businesses to forward plan accurately, know which products would move faster or lag behind, so that you can calibrate your manufacturing/procurement. It means that you can send out timely reminders, communications and enhance the product flow.
Personalization: Since 2019, marketers have known that audiences don’t merely prefer a great UX, they expect it. Instead of a one-size-fits-all marketing message, it’s possible to address segments and also individual customers based on their unique characteristics. Personalization results in more responses to CTA and relevant product recommendations. Studies show that 67% of customers are influenced by personalized product recommendations that occur on the website’s home and landing pages. It also improves loyalty, brand recognition, and more time spent on the site.