Data collection is at the forefront of many business owners’ minds. The ability to know your customers inside and out can be of great benefit when it comes to effective digital marketing and business growth.
Behavioral segmentation is a modern approach to understanding the psychology of customer interactions. In this article, we will explore what it is and some examples of how it can be used to benefit your company.
What Is Behavioral Segmentation?
In the past, businesses have relied upon geographical and demographic segmentation. This only focuses on who a customer is. However, with new analytics and data collection tools available, you are able to identify not only who a customer is but what they do as well.
In essence, behavioral segmentation puts customers into groups according to how they interact with a brand and website as well as their purchasing history (we take a closer look at this later in the article.) This information is then used to introduce a personalized marketing experience that can:
- Provide a method for personalizing a customer experience.
- Expand a customer base.
- Track success and help businesses plan for future changes.
- Improve how resources are allocated to reduce monetary waste and increase productivity.
Personalization
Personalization allows you to target customers in a way that suits their needs.
For example, it would be beneficial to know the best time to send marketing emails for them to result in completed orders. By targeting and personalizing content, you are enhancing the user experience. The customer will feel that interactions are unique and tailored to their needs.
66% of customers expect a company to understand their expectations. The days of sending out mass emails with the same content are over. You must consider how your consumers engage with your brand and target them as groups, not a whole entity.
Expanding a Customer Base
This is key to business growth. Cold email, cold outreach, email outreach, cold email marketing, and many other related phrases are commonly discussed in marketing circles, and while these can be effective methods of introducing your business to potential customers, behavioral segmentation can be very effective at discovering new groups of potential clients. By using data available to you as well as analytics from emails, you can identify groups of people who are finding it difficult to engage with your business.
Once you are aware, you can consider how to increase your customer base. For example, if your business is lacking younger customers, think about why. Are you using marketing techniques that appeal to older generations? How can you market yourself to appeal to wider demographics?
These are difficult questions to answer, but the benefits of knowing this information are that you can reflect on what you need to do to find new clients.
Planning for Future Changes and Tracking Success
Digital methods of analysis provide businesses with a means for assessing the positives and negatives of how you engage your customers. Reviewing the effectiveness of the approaches you have used in the past can help you decide on methods for promoting future customer retention and interaction, as well as track the success of your techniques.
While digitization can be helpful for businesses, digital transformation is increasing customers’ expectations and accelerating behavioral changes. This is heightening the demand for businesses to make sure that they’re prepared to adapt to changing customer requirements.
Reducing Waste
Focusing on groups can help to reduce wasted time and money. Streamlining promotional emails and directing specific discounts to particular groups means you aren’t wasting time and resources.
Through the correct use of behavioral segmentation, you can target clearly and produce content that’s accurate to a customer’s needs. This also has the added benefit of ensuring that employees aren’t wasting precious working hours creating inaccurate promotional emails that don’t engage customers, thus saving your business money.
What Types of Behavioral Segmentation Exist?
It’s important to understand that there are many forms of behavioral segmentation. Below are some examples of how you can group your customers effectively according to behavior.
Purchasing Behavior
This aspect of customer behavior focuses on how they purchase products or services from your business.
It comes in many different forms, but it’s important to note that having a clear, thorough understanding of this can contribute well to converting clients into customers.
You can consider and answer questions such as:
- How are our customers approaching buying products from us?
- Is our buying process simple enough to navigate?
- What barriers are there in the way for customers trying to purchase a product?
- What role do customers play in the buying process?
Once you are aware of the behaviors of your customers, you can start to think about how to market effectively to improve customer retention.
For retail websites, around 88.05% of carts were abandoned, and orders were left incomplete. If this is an issue for your business, using automated remarketing emails can be incredibly beneficial, increasing purchase rates by around 11%. Here’s a great example from a phone case maker.
Benefit
You can segment your customers by looking at the reasons behind their purchases.
Two people buying the same product may buy it for very different reasons. Someone may choose a particular moisturizing cream to help reduce wrinkles. Another may prefer the price.
This is another point to highlight the impact of focusing on personalization. By considering why a customer is buying a product, you can produce marketing content that is relevant to them and their decisions.
Customer Journey
When buying a product, a customer will proceed through various stages of the buying process:
- Awareness
- Understanding
- Consideration
- Purchase
- Adoption
- Retention
- Expansion
- Advocacy
It can be challenging to pinpoint exactly where a customer lies on this journey as they can often be at different stages at the same time. Using all of the data you have available on customer behavior is key to accurately understanding and targeting this group.
Being aware of the groups who are struggling to complete their purchasing lifecycle and the stage they’re getting stuck at helps to plan methods or create marketing content focused on moving customers along in their buying journey.
Usage
Dividing your customers into levels of usage can identify those who are not engaged at all. There are three basic levels:
- Intensive: those who use the service as a part of their life. These customers are of high value and deserve to be treated as such – we discuss customer loyalty later on in the post.
- Regular: they make use of your business but not to its full capabilities. Do they know everything your product can do? What do they need from your business to integrate it into their daily life? Could you use your chatbot in conjunction with emails to make them aware of new services or products?
- Occasional: they know about your product or service and have contact with your company but rarely make purchases. Find out why they aren’t using the product as frequently as others through a survey, for example. Make moving them towards regular and intensive users a primary focus.
Occasion Based
Being aware of when customers are likely to make purchases through data collection and sign-up forms can help to complete orders. Offering promotions around birthdays increases loyalty and helps develop engagement with a brand.
A large fast-food company uses data on birthdays to offer free food and discounts via its app. The business makes money and, because people take advantage of the deal, gathers more information for potential future clients. All the while, consumers are made to feel important on their special day and stay loyal to the brand.
Customer Loyalty
Vitally important to the operation of a business is recognizing those who are loyal to your brand. It’s easier to retain current customers than find new ones. Also, they’re more likely to become brand advocates.
Knowing this information also helps you to consider how you promote loyalty. What does your business do to make sure customers are becoming more, not less, loyal?
Developing reward programs helps customers feel appreciated. Increasing what a customer gains over time also maintains retention. A new customer may get something free after 10 purchases, whereas a long-standing one may get it after 5. If the customer values your product, they won’t want to lose their privileges, and newer customers will want to move towards the greater benefit.
Customer Satisfaction
Ensuring you have an effective form of customer feedback can help divide customers into groups through satisfaction. Using a CSAT can measure how well interactions with customers go.
Discussions with both groups highlight successes and failures, producing positive points and potential areas for development.
They allow you to reflect and consider how you can do better next time to make sure the customer is satisfied with your current customer service methods.
Methods for Interaction
Communicating with customers has never been easier. Using all of the opportunities available to gather information about behavior and segment accordingly will develop your business.
For this to be a successful method, you must focus on how you’re gathering information. If the knowledge you have about customers is incorrect, then your marketing campaigns will be ineffective. Make sure your software and data collection tools are modern and up-to-date, and you know how to use the information to have the greatest impact.
Conclusion
The real takeaway here is that customers want to feel valued. It’s all about how you market your business to loyal, existing customers and potential customers.
By being aware of customer behavior, staying up-to-date with changes, and segmenting customers according to their behavior, you can personalize their experience and develop loyalty and satisfaction and track how they interact with your business to focus on improving.
Check Out The New Martech Cube Podcast. For more such updates follow us on Google News Martech News
ABOUT THE AUTHOR
Grace Lau, Director of Growth Content at Dialpad
Grace Lau is the Director of Growth Content at Dialpad, an AI-powered cloud communication platform with cloud PBX solutions for better and easier team collaboration. She has over 10 years of experience in content writing and strategy. Currently, she is responsible for leading branded and editorial content strategies, partnering with SEO and Ops teams to build and nurture content. She has also written for sites like Trans4Mind and Klipfolio. Here is her LinkedIn.