Behavioral Segmentation

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Updated: April 8, 2020
Written by: Kim Kohatsu

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It’s happened to everyone who has a Facebook account: you’re scrolling through your feed when suddenly, an advertisement for the exact toaster you were looking at last night on Amazon pops up. Unbeknownst to you, this is behavioral segmentation at work.

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Four Major Factors of Behavioral Segmentation

What is behavioral segmentation?

Because you don’t know this yet, you post about how creepy it is that Facebook can see inside your mind and actions. In the comments, some people agree with you. Others say it’s simply a marketing tactic and that all major companies do it to help show you relevant advertisements. One smart marketing friend jumps out with the exact term — behavioral segmentation. They let you know that all good marketers are using it to help keep their customers’ buying experiences relevant.

The truth is that, thankfully, Facebook can’t see inside your mind. But it can —and does — use data from cookies and IPs to track everyone’s online behavior. And like every other smart company in the world, Facebook uses behavioral segmentation. Put simply, behavioral segmentation splits an audience into segments based on similarities in purchasing behavior.

What is behavioral segmentation in marketing?

Here’s what behavioral segmentation looks like in everyday marketing. First, understand that the point of this user segmentation model is to help you understand and anticipate your customers’ desires and needs.

To that end, you need to study your customers’:

  • attitude toward your product, service, or brand in general
  • use of your product or service and response to that service
  • overall knowledge of your brand and products
  • purchasing tendencies

How do you identify customer segments?

There are several different characteristics to look out for and study when you’re diving into behavioral segmentation (see below). By knowing these behavioristic variables, you can then use analytics software like Google Analytics, Qualtrics, and Sailthru to find out which of your customers fit into which user segment.

You can also use polling software like PickFu to ask potential audience members directly how they would respond to certain aspects of your product.

The 4 types of Behavioral characteristics in marketing

Let’s take a look at some examples of the main four types of behavioral market segmentation.

Occasion-oriented shoppers

Also known as occasion segmentation, this type of buyer segmentation can be easier to study than others. Occasion-oriented shoppers tend to buy most heavily during holidays and other special occasions.

Occasion-oriented-shoppers-compressed
Black Friday – One of the busiest shopping times of the Year

Let’s pretend we’re the company Pusheen. We sell products based on the popular cat character Pusheen and her friends. We notice that keychain sales tend to go up around Christmastime, so we study our customers to find out who purchases more keychains as Christmas gifts. Then, we put those buyers into a segment together and send them marketing emails in the days leading up to Christmas and other holidays that they’re likely to buy gifts for: Mother’s Day, for example, and even lesser-known but equally celebration-worthy holidays like National Best Friends Day. Add a sale or promo to that marketing email and your chance at securing a conversion goes up.

Your seasonal buyers can be a fantastic source of revenue if you know how to market to them.

Purchasing behavior

Within your audience, there exist all types of buyers: the bargain-hunting shoppers who only buy things that are on sale or clearance. The spontaneous shoppers who purchase everything they see. The careful buyers who research products across several different sites, read reviews, and collect as much proof as possible that the product is worth their money. It behooves you to know all these types, and more.

Purchaing-behavior2
Each purchaser has a different behavior – tap into what your audience likes and dislikes.

Think about the shopper who leaves items in the cart for a long time but does eventually come back to purchase. The buyer who won’t purchase unless free shipping is offered (and who might just spend that minimum $30 to get free shipping). The buyer who needs an easy returns policy in order to commit.

Many times, these behavior types blend and blur. Disentangle them as much as you can and split them into segments!

Benefit-seeking buyers

When you go to the hair care section of your local Target, what do you look for in a shampoo? There are dozens to choose from. But if you have curly hair, you’ll probably grab a shampoo that speaks specifically to you, the curly-haired person. Example: L’Oréal Paris’s “anti-frizz, non-drying” Ever Curl Shampoo and Conditioner.

If you have super oily hair, on the other hand, you might buy Head And Shoulders Instant Oil Control Dandruff Shampoo.

In short, benefits-based buying is when you purchase a specific shampoo based on its benefits to you. You choose the product based off the benefits that they provide you.

It’s important to take note of which of your customers buy products based on specific benefits. While this is true for any type of product, it’s especially important if you sell products and services that specifically benefit different characteristics. For example:

  • personal care products (shampoo, conditioner, body wash, toothpaste)
  • beauty products (foundation, mascara, lipstick)
  • services that accommodate a range of abilities (writing-coach services, tutoring, courses of any kind)
  • massage therapy and spa packages

Loyalty-oriented purchasing

Sometimes you’ll see a post on Instagram that says something like, “I LOVE this coffee from @bestcoffeeshopever, seriously the best I’ve tasted in my life and there isn’t even sugar in it. If you know me you know that is huge!!”

Loyalty-oriented-segmentation2
Brand Recognition is a key determinant of people’s propensity to purchase a specific product.

The tag doesn’t mention an advertisement, because it isn’t one. It’s someone who really, truly loves a product so much that they had to post about it on social media — and tag the company.

This is every business owner’s dream. While this hypothetical person will probably get coffee at other coffee shops sometimes, she’ll stick to @bestcoffeeshopever as much as she can because it’s her favorite. She’s a loyal customer.

It is well worth your time to find out who your loyal customers are and group them together. Known as loyalty segmentation, it’s one of the most valuable groups in your audience.

Think about how major companies reward their most loyal customers. Starbucks has a rewards program that enables frequent customers to collect stars, which earn them free drinks and meal items. Which, of course, keeps them coming back to Starbucks.

Alaska Airlines (and most airlines, for that matter) has a program where if you use its credit card, you earn frequent flyer miles — plus you get one “buy one, get one free” flight every year. Because of these two things, pretty much everyone who lives in Alaska is a loyal Alaska Airlines customer. They might even convince out-of-state family members to sign up for the Alaska card.

Happy loyal customers make perfect advocates for all types of brands. Make sure you know who your loyal customers are and create campaigns that reward them for that loyalty. Their satisfaction will keep your business strong.

Usage-oriented customers

In user status segmentation, you look at your sales and often the actions within those sales to figure out how often someone uses your product.

Airbnb

Take Airbnb. The lodging-brokerage site is increasingly popular, and you can bet that the company pays attention to how often its customers make Airbnb bookings. Those customers then receive notifications about upcoming Airbnb offers.

Airbnb goes a step further, offering customers the opportunity to rent out their own home while they themselves are on vacation. Airbnb’s business model has an unusual focus: co-founder Brian Chesky said in a 2016 interview with Fast Company that, “This company is first and foremost about the hosts, not the guests.”

The hosts pay a service fee for each booking they take on their properties. Guests also pay Airbnb a service fee, but it’s the hosts that find the guests. So it makes sense that Airbnb encourages its guest customers to turn into host customers. And the more a guest user books with Airbnb, the more often they are gone from their own home.

Airbnb can keep pitching the potential of making money from hosting while guest users are on vacation, likely seeing new hosts join its platform as a result.

Netflix Behavioral Segmentation

In another example, Netflix saves money and keeps its customers by knowing their usage patterns. According to marketing expert Neil Patel, Netflix likely wants its users to watch a certain amount of hours of Netflix every month.

Using analytics, the company has probably figured out that a certain number of hours watched per month brings with it a higher percentage of user retention, that is, users who don’t cancel their subscription.

This drives Netflix to customize each viewer’s experience to be as relevant and interesting to that user as possible.

Because user behavior and Netflix itself are both always changing, Netflix is constantly tracking usage — time spent on Netflix, amount of pauses, fast-forwards, or re-winds, what time of day customers watch — to personalize their customers’ experience.

This type of user category marketing can benefit you, too.

Journey stage segmentation

In journey stage segmentation, your goal is to find out where customers are in their journey. Group them together and create advertisements targeted to each group.

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At Minimum, there are usually six steps.

The customer journey stages are as follows:

  • Awareness — customer finds out the product exists
  • Education — customer learns about the product
  • Consideration — customer thinks about what the product can do for them
  • Purchase — customer becomes a first-time buyer or user
  • Adoption — customer retains product and/or buys again (or rejects it)
  • Advocacy — customer spreads the word about the product

For audience members in the awareness stage, figure out how to get them interested in learning more about you and your services. With audience members in the consideration stage, try to nudge them into becoming first-time buyers. If a shopper leaves an item in their online carts, that customer is in the consideration phase. A smart company will then remind the customer to come back and buy.

Why is behavioral segmentation important?

Behavioral segmentation goes a step deeper than demographic segmentation. While demographic segmentation is an important starting point, it’s important to understand your audience on a deeper level. This knowledge helps you customize your messaging to specific groups of people who are displaying similar behaviors.

Behavioral segmentation is not always cut and dry. Sometimes your customers behave in manners that seem irrational, but even studying strange or back-and-forth behaviors can help you better understand your customers.

In the long run — and often the short run, too — behavioral segmentation saves you money, earns you new customers, and helps you keep current ones.

What behavioral segments can I target on PickFu?

On PickFu, you can target the following behavioral segments:

Frequently Asked Questions:

What does behavioral segmentation mean?

Behavioral segmentation splits an audience into segments based on similarities in purchasing behavior.

What are four types of behavioral segmentation?

The four traditional types are occasion-oriented, benefits sought, user-oriented, and loyalty-oriented, though there are several more types.

What companies use behavioral segmentation?

Major companies like Netflix, Airbnb, Amazon, Starbucks, and more use behavioral segmentation. So do smaller companies! Every businessperson can benefit from studying their customers’ behavior variables.

What is the difference between psychographic and behavioral segmentation?

Behavioral segmentation studies a customer’s external behavior. Psychographic segmentation seeks to study a customer’s inner world: their beliefs, values, and priorities, for example.

What are some behavioral segmentation examples?

Whenever a business studies how often a user purchases a product, or if they buy products or services only during certain events or holidays, they then group those users into a segment and tailor campaigns to encourage or reward the spending they do. The Starbucks reward program and the Alaska Airlines frequent flier program are examples of behavioral segmentation to encourage and reward brand loyalty.

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