The Concept of Behavioral Segmentation

Behavioral segmentation explains how the prospective customers are turned into customers, i.e., Acquisition. The classification of customers based on their past purchase behavior explains how often they use the product, i.e., Engagement. It also elaborates on how the customers continue to purchase or use the product or service, i.e., Retention

Purchasing and Usage Behavior: Ride-sharing app companies such as Ola and Uber use Artificial Intelligence and Big Data technology to understand customer behavior and pattern. For instance, a professional individual uses the taxi-sharing services to commute to and from the office during the weekdays. The ride-sharing companies use the commuting pattern to devise the discounts to incentivize the customer, i.e., engage and retain them. Tracking and engaging the customers is a means of forecasting demand, and segmentation helps companies predict customer’s purchase behavior to devise unique and effective marketing strategies.

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Occasion Purchasing: It considers the timing or duration of a purchase made by a customer. The probability is that a customer buys goods or services during special occasions such as birthdays, anniversaries, or festivals. The restaurant chains use behavioral segmentation to target their regular customers with an incentive to retain them against the tough market competition. Nowadays, companies use push notifications and mobile apps to keep customers engaged with the product or services.

Customer Loyalty: Customer loyalty is one of the most significant components of behavioral segmentation. The loyal behavior of customers increases the brand reputation and the possibility of wider market coverage. Companies use rewards programs to reciprocate customer loyalty, such as “buy 3, get 1 free”. Besides that, behavioral segmentation can include customer satisfaction, engagement level, and user status.

Behavioral Segmentation Strategies
Personalization is a segmentation strategy that helps a marketer to initiate and establish a connection with the customer. For instance, addressing the customers by names or otherwise. Besides that, personalization strategies of retargeting, targeting complementary products, attribution-based marketing, and avoidance of certain segments are some segmentation strategies.

Retarget Desired Behaviors: Customers usually have certain behavioral traits, and such traits of the past could guide future interaction. Though the past customer traits cannot completely help make a precise decision, they can assist in making assumptions. Just as the assumptions or probabilities are measured in economic forecasting, the companies can gain relevant insights into the customer consumptions pattern based on their behavioral traits. For example, YouTube and e-commerce websites use sophisticated algorithms to track the viewer’s likes and dislikes and their browsing patterns to recommend similar videos and products, respectively.

Location-Based Segmentation: Geofencing is a dynamic use of technology to promote one’s business or products based on the location of a prospective buyer. For instance, social media and dating apps send push notifications to the users based on their current or last location. Also, cab services use the previous and current location beside the previous travel history of users to determine the rush hours and apply dynamic pricing. Thus, the technology can help the marketers to assess the past behavior of a user or customer and prepare a layout of the business strategy.

Complementary Features or Products: Behavioral segmentation assists in developing a system that can highlight the probabilistic behavior of customers. For instance, Amazon (an e-commerce company) uses customers’ browsing history to track their purchasing patterns and recommend similar goods. It has been observed that such targeting based on past behavior results in a 35% increase in its sales.

Timing: The users may or may not have a fixed schedule. Some users might have a flexible pattern of usage of certain services. The data gathered via the study of past user patterns enables the marketers to segment the users and optimize the timing of marketing activities. News and social media apps use the push notification strategy to reach their user base at the right time.

The Significance of Behavioral Segmentation
Behavioral segmentation enables companies to strategize their marketing plans and offerings. Businesses use segmentation to understand how and why customers react to promotions. It becomes easier for brands to convert prospects into customers when tailored to a specific target audience. Segmentation makes it easier to target customer that shares common variables.

A holistic campaign that targets huge people might gain the attention of a small percentage of individuals. But a focused campaign that targets a specific group of customers could yield a better response. Segmentation thus enables companies to rationalize their overall business strategy and resource allocation.

Behavioral segmentation opens the way for the personalization of services. It highlights which product receives a favorable response from the customers and which promotional measure encourages them to respond or make a purchase. It allows businesses to allocate their budget to the most responsive market segment. Thus, behavioral segmentation contributes to the identification of customer trends and makes highly probable assumptions.

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