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Understanding customer behavior is essential for any merchant. Without it, a brand is essentially marketing in the dark. The right customer data can help drive your buyers to make more personalized purchase decisions—and this is where behavioral segmentation comes into play.
Knowing who to market to and with which methods can lead to boosted revenue. Omnisend’s studies have revealed that custom automation can yield incredibly high open and click-through rates. Behavioral segmentation is just one of the ways that automation has been picking up steam over the last few years. In fact, our own studies have shown an overall increase in open rates, click rates, and even conversion rates.
It’s no surprise that automation driven by behavioral segmentation saw over half of all emails opened—87% of Americans have stated that they’re willing to have activity tracked for a more personalized, rewarding customer experience. Additionally, 68% of ecommerce merchants reported that they rely on real-time behavior segmentation with their websites.
This is why behavioral segmentation is so important. But what is behavioral segmentation? How does it help boost revenue? And how does it improve customer engagement? We dive in and explore, examining examples of each type of segmentation along the way.
Omnichannel and automated marketing is extremely useful when utilizing behavioral segmentation. Our complete guide to omnichannel marketing automation elaborates and explains.
What is behavioral segmentation?
Behavioral segmentation is essentially how a company divides their customer base. It is the process of grouping customers together, determined by behavior patterns. These ‘patterns’ are those that a customer exhibits throughout each of the customer lifecycle stages.
This can include purchase behavior, which products they purchase, as well as how loyal customers interact with specific marketing campaigns. Generally speaking, behavior segmentation considers the following:
- When customers first interact with a website.
- Where they go whilst on it.
- How often they visit the website.
- How long they spend on the website.
Behavioral segmentation is often utilized to improve customer retention—especially considering how it can be effectively used to convert one-time buyers into loyal customers. Behavioral marketing segmentation helps divide a customer base. With this divide, you can be efficient with time and resources to create more honed marketing strategies for your customers.
For example, a store discovers that during email marketing campaigns, many customers click on images of products more so than CTA buttons. This segmentation can then take these customers and tailor marketing with more imagery. This would include emails primarily showing products with large images.
That’s the behavioral segmentation definition established. Now, let’s explore the different types of behavioral segmentation.
Types of customer segmentation
Including behavioral segmentation, there are three other main forms of customer segmentation. These type of segmentation include geographic, demographic, and psychographic segmentation.
If you find high customer engagement with a target market based in one region, you can segment the customers in this area. The area can include a specific city, region of a country, or even a country itself.
Geographic segmentation divides customers according to where they live. The six main factors for geographic segmentation are:
- Primary location
- Climate and season
- Cultural preferences
- Population type
The clearest difference between geographic vs behavioral segmentation is:
- Geographic segmentation can take place before a customer interacts with a website. It groups potential and existing customers by their surroundings and location. This includes which area of a country they live in and what languages they speak on a day-to-day basis.
- Behavioral segmentation can only take place when a customer interacts with a website. It groups potential and existing customers by their interactions with a website, regardless of their geographic situation. This includes how often they visit and how long they spend on a website.
On the other hand, behavioral segmentation simply focuses on customer interactions.
Psychographic segmentation divides a customer base by certain customer habits and traits. These habits and traits include:
- Interests & hobbies
- Values & attitudes
The clearest difference between psychographic vs behavioral segmentation is:
- Psychographic segmentation groups potential and existing customers by what personal information they provide. This includes who they are and how their interests & lifestyle syncs up with your website.
- Behavioral segmentation groups potential and existing customers not by any aspect of themselves, but how they choose to act. This includes what they do and how they interact with your website.
Demographic segmentation groups potential and existing customers via more universal traits. Demographic’s universal traits include:
- Ethnicity and/or religion
The clearest difference between demographic vs behavioral segmentation is:
- Like geographic segmentation, demographic segmentation can take place before a customer interacts with a website. It groups potential and existing customers by important aspects of their life, some of which may be out of their control. This includes their overall income and what languages they speak on a day-to-day basis.
- Behavioral segmentation groups potential and existing customers by how they act, regardless of where they come from. This includes what parts of a website they explore and what they search for whilst on it.
Tips to boost sales using behavioral segmentation examples
Segmentation helps merchants re-engage with customers at any stage of the customer lifecycle. Of course, the right type of customer lifecycle software can help. But overall, segmentation is designed to boost both engagement and revenue. This is true whether it’s using email segmentation or omnichannel marketing.
Let’s explore how behavioral segmentation is equally effective. We can do so by taking a closer look at some behavioral marketing examples:
A clear task for behavioral segmentation is to consider, overall, what actually interests a customer. Whether a merchant is selling products or offering services, there’s always the opportunity to cross-sell. Successfully achieving this is what behavioral segmentation is all about. Because of this, it’s vitally important to be able to learn what interests your customers.
The key to doing this is to see how customers interact with different products in a store. One product might give a good idea for what the customer is interested in, but several provides a clearer picture. For example, a musical instrument store might sell a particular type of guitar to a customer. The guitar may be best suited to rock music, but then again, it might just be that the customer liked the look of the guitar. However, if they then proceed to buy a rock music sheet book, it’ll be much more likely that that’s what interests the customer.
With this example, behavioral segmentation would place the customer firmly within an audience. That is, the audience is ‘more likely to respond to marketing with similar music sheet books’. There’s even the potential for different accessories or hardware that is well-known within that genre of music. This shows that one product offers some insight, but even buying two products can yield a much more focused look at the customer’s interests.
Let’s say the customer has done their research on your store and products. Even so, they still need convincing—benefits-based behavioral marketing helps give them a gentle push. Customers abandoning their cart is something that every merchant encounters. Due to this, they may require benefit-based behavioral segmentation during the checkout process.
Segment customers that have either viewed a product and left your site or gotten to the end of the checkout process then left. Once you do, you can offer them benefits that might bring them back to make a purchase. A unique discount or offer can entice customers, as our studies revealed. Behavioral segmentation at this stage resulted in increased conversion rates by approximately 34%.
For example, a customer has several products in their cart and reaches the delivery section of their checkout. The cost of delivery is higher than the customer expected, so they leave the store. However, throughout the checkout process, they input their email address. Behavioral segmentation could then use a cart abandonment solution. This could include automatically sending this email address a discount. If the customer has left due to unexpected costs, a discount or an offer of free shipping could bring them back to finish their purchase.
If a customer is a repeat customer, you can calculate how often they will visit your store. This is true whether you sell products or offer services. Understanding when your customers choose to engage with you will help maximize your engagement with them.
For example, a customer signs up with a store that sells a monthly subscription box for chocolate. If they’re on a subscription basis, they may only visit the website to change or cancel their subscription. By knowing how often they visit the website, the store can send them product recommendations. Using behavioral segmentation helps achieve this before they’re due to visit. This could convert them to buy more products—or even to mean they refrain from cancelling their subscription.
Of course, this doesn’t just apply to subscription-based stores. Behavioral segmentation can indicate if a customer rarely visits. In response, marketing to these customers can receive more specialized focus. It might even merit a more deft touch with special marketing campaigns.
Planning marketing around occasions can be simple, especially if the occasions are holidays. However, occasion-based purchasing can also refer to the time of day—specifically how a customer interacts with stores throughout their day.
For example, food delivery businesses could opt to target customers depending on what they’ve been looking for at a specific time of day. This could include caffeinated products like coffee in the morning. Or, indulgent food during weekend evenings. This helps merchants understand when their customers want certain products. Thanks to this, behavioral segmentation makes personalized product recommendations much more effective.
The same applies to specific times throughout the week or the month—including common times for celebration like paydays. These kinds of occasions often serve well for special sale events. They can capitalize on the likelihood that customers will have more money to spend than average—and perhaps be more likely to be frivolous with it. Recognizing any customers that are likely to engage with a store in this manner makes them ideal for behavioral marketing.
One of the easiest behaviors to identify from customers is simply how often they engage with a store. This applies to interacting via frequently opening and engaging with emails. It also includes interacting with social media and even clicking on website banners. The trick to using behavioral segmentation with these customers is knowing how regular their engagement is.
Monitor the average amount of engagement your store gains with all of your customers. Once you have an average to work off of, you’ll be able to tell who engages more and who engages less. This allows you to use segmentation to target either those that require more marketing or those that will be more likely to convert.
For example, say a customer consistently engages with new product emails or banners for a beauty product website. The customer never seems to miss at least checking out new products, showing a clear level of engagement. This would make the customer a prime addition to marketing that offers deals on new products, or even to join a loyalty program.
Customers engaging with a brand’s loyalty programs make behavioral segmentation simple. After all, they have opted to be an audience specifically catered to with special offers and deals. These customers will have the highest lifetime value and may often serve as brand advocates. You should always strive to use retention marketing for those that identify as your loyal customers.
Along with this approach to marketing, you should work to maximize the value of them—as well as seek out more customers like them. To do so, you need to think about what made customers loyal. Investigate the key factors and behaviors during each stage of the customer lifecycle. Consider how to showcase these factors to more customers and how to improve them.
Knowing what makes your loyal customers happy can go a long way. Try to recognize what achieves this at each stage of the customer journey. If you can, you can begin fostering loyalty with potentially high return customers.
For example, loyal customers are engaging with special promotions. You then spot similar trends with new customers’ behavior. This behavior is the same behavior that loyal customers displayed themselves previously. It would make sense to segment the new customers for the same marketing that loyal customers receive.
The bottom line is that knowing and understanding your customers is hugely beneficial. More importantly, it can also be essential to keeping a business successful. With behavioral segmentation, it becomes much easier to predict what customers will engage with.
This will ultimately lead to higher sales and boosted revenue.
These tools for customer intelligence aren’t all that Omnisend offers though, as a merchant can easily make the most out of the likes of behavioral segmentation with the well-oiled machine of marketing automation as well as engaging email marketing.
It’s never been easier to understand and engage with your customers. Start Omnisend for free and see your engagement and conversion rates skyrocket.