Forget demographics: behavior segmentation is more effective

Segmentation has always been key to successful marketing, but a lot of companies still don’t use it, and even when they do, they rely on demographic segmentation — age, gender, location — which is now outdated. Behavior segmentation is something we already experience as consumers. It’s new(ish), and it’s quickly replacing demographics as the essential ingredient of effective marketing. 

It’s no longer enough to know who and where your customers are. You need to know what they do so you can intelligently predict what they’d do next, and what you can say to get them to do it. This is what behavior segmentation does, sifting through data to give you insight and more results for your time and budget. 

Behavior segmentation moves the needle 

Personalization drives a huge part of how effective behavior segmentation can be. The insight you get from customer behavior can greatly empower your sales and marketing teams’ personalization efforts.

All these together form the sum of a deep understanding of your customers’ lifetime value. Marketing by demographics might attract new customers, but with customer behavior, you can keep each customer coming back. 

It means you can correctly address the needs and wants of every customer group, deliver the right messaging that resonates, maximize every step of the buyer’s journey, and quantify the customers’ value to your business. 

The most common behavior segments each pull your customers at every cycle of the buyer’s journey, customer status and engagement level, while providing insight for the four advantages that make behavior segmentation a real bang for your buck: 

These segments also feed each other for pinpoint insight on your customers. 

1.  Purchasing behavior

  • Personalization and buyer’s journey: Gives you insight on how each customer group approaches the purchase decision — and what persuasive messaging you should send.
  • Prioritization: Empowers you to address barriers and complexities to purchasing decisions.
  • Predictive: Identifies the behaviors most and least likely to lead to purchase, according to past purchases,
  • Performance: Are your segments changing? Are their personas shifting? 

Purchasing pattern personas include bargain hunters, smart buyers who seek information on every factor before they buy, and persuadable buyers who happily traipse to checkout when they receive cross-sell or upsell offers.  

Persuadable buyers can shift to bargain hunters, and it might depend on benefits sought and the time of year. That’s where dynamic behavior AI data can help you stay updated and in sync with your customers’ needs to avoid customer churn and earn customer loyalty instead. 

2.  Benefits sought, usage

  • Personalization and Prioritization: Analyzing benefits and how your customers use your products/services gives you insight on WHAT your customers need, so that you can send the right message. This is where you save so much time and budget otherwise spent on generic messages that miss 75% of your target customers who all seek a different primary benefit or use.  
  • Predictive: These can also predict each benefit’s lifetime value, and customers’ likelihood to purchase or turn away. 
  • Performance: There would be peaks and lows for customers who seek out specific benefits or might have timing in their level of usage. With the help of your data, your teams can target the right groups at the right times. 

Customer personas by demographics can look identical until you segment them by the benefits and features most and least relevant to them. 

3.  Customer journey, customer status, interest, customer loyalty, customer satisfaction and engagement

  • Personalization and Prioritization: A customer on the brink of purchase and a customer who has only just discovered you would need separate, different messaging. 

And a repeat customer and an unhappy customer can’t both receive the same experience with your business. Unhappy customers have the potential to become loyal customers, if you handle them right.  

  • Predictive and Performance: These segments give you insight on how to approach your customers — for example, connecting to interest behavior can help convert warm/cooling/danger zone leads — and on why certain customers become voluntary marketers/defectors, and what you can do about it. 

Behavior pattern algorithms are particularly helpful in correctly identifying where your customers are in the buyer’s journey, interest, and engagement. They don’t progress through it in a linear fashion, and they don’t “naturally” transition to the next stage over time. 

4.  Occasion or timing

  • Personalization and Prioritization: Depending on your brand or service, you might prioritize certain segments of your audience depending on the personal (birthdays) or universal occasion (Christmas, Valentine’s, tax season). Customer behavior patterns lead you to the accurate personalized offers. 
  • Predictive and Performance: Behavior data will also show you any consistent and recurring patterns when your customers are at their most receptive: Whether it’s around Halloween or at 7-ish in the mornings when they’re reading emails while probably having their coffee.

Timing behavior can be a little difficult and tricky, but it can be useful if you’re genuinely helpful and thoughtful — you can offer personalized pricing for birthday celebrants or repeat customers who consistently snap up your products around a certain time, for example — rather than invasive. 

Behavioral segmentation is worth the work and process it takes to set it up. Once it’s running, everyone in your organization works smarter, not harder, and your time and budget are effectively used in every campaign. 

Sarah Cooper

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