Why behavioral segmentation matters more than demographics

Behavioral segmentation gets at the heart of what customers are doing, a pattern of past/current actions and a projection of future actions, versus who they are. Business plans have that section on who your target market is, and perhaps that’s why demographics are so ingrained in entrepreneurs. 

But behavioral segmentation is the better indicator of why your product or service is right for your target market, because it tells you what matters to your customers, and therefore what drives their purchases. 

How behavioral segmentation works

Traditional demographics groups your customers by age, location, gender, job position, family. These aren’t necessarily bad. They can work if you happen to have products for men and women, or, say, geo-targeted discounts. 

When you step beyond that to real engagement, you’d only be guessing if you use demographics. They give you vague signals on what your audience wants and needs, and what you can do to nudge them along the sales funnel. 

With behavioral data, you’d have a more accurate grasp on your customers. 

Behavioral segmentation groups your customers according to their actions (or lack of), which empowers you and your team to plan campaigns/outreach efforts and provide personalized experiences that lead to better engagement, conversions, and best of all, repeat customers. 

A few behavioral segments include buyer’s journey stage, purchase behavior, benefits sought, usage of your service/product, customer loyalty, among others. 

For example, you send completely different messages to a lead who keeps visiting your landing page (but hasn’t opted in yet), a lead who has visited your landing page for the first time and downloaded your ebook, and a customer who has bought your products four times already. 

If you treat the above repeat customer as if you didn’t know her, you can bet she’d stop buying (click here for more on that). 

Understanding your customers on a high level

Demographic data doesn’t get you far. On the other hand, insight on your customer’s values, interests, needs, and preferences through behavioral data can help you connect with them.  

This was what drove decades of market research, an entire industry dedicated to asking people what they want and why, and days, weeks, and even years documenting what customers do. Without these complex data points, most demographic data can be useless. 

From “target market,” we’ve graduated to “buyer personas,” and from buyer personas we now have “buyer intent” and “transaction history.” That sounds more invasive than it actually is, but today’s age of information and convenience leaves a trail marketers can utilize to understand their customers on the highest level. 

From a Marketing Week survey: 

  • “When asked to reflect on recent campaigns, behaviour emerges as the most effective method of segmentation, according to 91% of the marketers questioned.” 
  • “Nearly three quarters (73%) think behaviour has also become a more effective means of segmentation over the past five years.” 

Asking the right questions

A deeper understanding of your audience leads to more of the same. Behavior tracking helps you to ask the right questions, like adding “gift” buttons at checkout, or sending a more interactive and effective “survey” through offers and seeing which your customer would pick. 

Do your customers buy your items as gifts? Or maybe they like trying out the flavors you release? Or perhaps they simply don’t want to run out of your products? The answer would drastically change your personalized campaign messaging. Behavioral segmentation matters more than demographics in giving you insight for your marketing campaigns. 

Behavior is THE essential ingredient of customer data 

AI can now pack and analyze transaction data, first-party and third party data to form a reliable data set, combined with any demographic characteristics, for a complete picture of your customer’s needs and wants. 

Add today’s sophisticated analysis that can recognize opportunities for your business and you get to ask the right questions and send the right offers, with the double benefits of, 1. Delighting your customers with your personalization, and 2. Conversions and customer loyalty. This means you are at the heart of what your customers are doing, and why.

Sarah Cooper

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