From the dawn of marketing history, the ultimate target of all consumer studies has been to deliver the right solution to the right person who would reap a benefit from it.
The challenge has always been to discover how to use available data to serve their customers in the way they want to be served. Obviously, this presupposes an insight into the fundamental question of “Who is my consumer?”
Let’s assume that you’ve already found the answer to that problem. Otherwise, you would still be in a place where your business blitzes the general population with ads that are irrelevant to them, sends out stock emails, makes innumerable cold phone calls, etc. that are rightly and inevitably trashed.
This is not merely of nuisance value; it could seriously damage your brand and image.
Modern marketing has evolved enough to ensure that businesses get enough usable data that can unerringly earmark the precise target. It can also take this a step further to predict future behavior and guide the consumer to reach the target more efficiently and swiftly.
One of the most exciting concepts that’s ruling marketing studies today is an amalgam of sociology, psychology, anthropology and data analytics, packaged in the form of Behavioral Segmentation. It divides the homogeneous mass of consumers into bite-sized segments that can be managed more easily and quickly.
Before we learn more about behavioral segmentation, it’s important to understand the concept of segmentation itself.
What Is Market Segmentation?
In 1902, GB Waldron, an employee of Mahin’s Advertising Agency used available tax registers, census data and street directories to demonstrate the different consumption patterns between the educated and illiterate, income levels and consumption patterns etc.
The market for your product/service can divided from an amorphous mass into smaller segments, based on certain shared characteristics. This is known as market segmentation.
While segmentation is a good strategy, it is also dependent on company resources, product viability and life-cycle, market characteristics, competition, etc.
Researchers work with available data to draw the lines between different segments. This helps to identify the higher-yielding segments that would be more likely to show profits and also lower-yielding segments that may not.
High-yielding segments can be selected for special attention in marketing campaigns, allocation of resources and time, since the assumption is that markets cannot be served a one-size-fits-all marketing message.
When the market is accurately segmented, it’s possible to position the products/services in sync with the target segment.
There are different criteria for market segmentation such as:
- Geographic location
- Demographic profile
- Psychographic information
- Behavioral characteristics
- Volume
- Product-space characteristics
- Perceived and accrued Benefits
However, since the early 1930s, marketers have been aware that mere geographic or demographic characteristics, volume or product-space markers etc. may not provide the whole picture.
They began to explore other aspects such as lifestyle, values, attitudes, beliefs, culture etc. and incorporated them into the mix.
With advances in technology, it is possible today to identify an individual customer and conceptualize segmentation at that micro level.
Behavioral Segmentation and The Market
Dividing the market according to behaviors displayed on a website yields a rich vein of information that can be used by marketers.
It gives immense insight into their attitudes, product use, spending and consumption behaviors, etc.
A study conducted by McKinsey in 2017 reveals that information regarding what customers buy, how often they get in touch with customer service, and the time they spend on the website can give valuable insights into choices and purchasing habits. Though many organizations do have access to such data, they seldom put it all together.
As a result, companies miss the opportunity to formulate pattern data. Such information was unavailable even ten years ago, but the advances in technology have made it possible. The study further concludes that organizations that can leverage behavioral data surpass their competitors by 85% more sales growth and upwards of 25% in gross profits.
Behavioral segmentation identifies customers not from the purview of their attitudes to the product, product knowledge or use of the product. Instead it looks at:
- Geolocation
- User status (regular, occasional, new, non-user, etc.)
- Purchasing behavior
- Benefits sought
- Occasion for purchase
- Frequency of purchase
- Readiness or willingness to receive purchasing messages
- Customer loyalty
- Visit history
- Journey stage
- Level of engagement
- Data about previous transactions
Goals of Behavioral Segmentation
Behavioral segmentation provides insights that can be directly leveraged to your advantage. The goals of behavioral segmentation are to:
Know: Through such fine separation and segmentation, your target customer can be quickly and clearly identified. If you have a range of products, they may appeal to different sectors. Behavioral segmentation helps to convey your marketing messages to the appropriate target. This data can also help you to identify regular, occasional and non-users of your products, so you can calibrate the frequency of messages accurately. This way you can avoid obstacles such as “banner blindness” where customers ignore campaigns they deem too aggressive or irrelevant.
Understand: Once you get to know your target customer, the logical step is to personalize the connection. You are able to understand the reasons for their purchase, the occasions that usually trigger a purchase, the kind of products that appeal to them and how they interact with your website.
Personalize: Your messaging becomes more customer-centric rather than product or media centric. This gives the customer the feeling of trust and relief that a problem they had has been solved for them personally by your personalized suggestions. You can then tailor products or services to sync with their needs, preferences and budget.
Discover patterns: Spending patterns are a rich vein of information that can be used to predict and direct future purchases. Customer profiles and response rates yield data on what products, through what channels, the type of content that customers interact with can all be coalesced into distinct patterns.
Develop: These patterns can be the blueprint for improved marketing strategies, more efficient messaging and clear calls to action that will expand your consumer base, extend your popularity on social media and boost your revenues.
Predict: The most important goal of behavioral segmentation is to enable a business to predict and anticipate what the customer wants and then present it to them before they ask for it. This quality earns the trust and appreciation of customers. As a result, they begin to develop a stronger brand loyalty and are less wary of sharing personal information with the company, if they can be sure that it will be respected and kept confidential.