Powerful behavioral segmentation methods

Posted by alvina on May 28th, 2019

Customer segmentation is a very crucial and important thing. Nowadays, the customer experience and personalization could either break or make factors for business, effective segmentation is very important.

According to some surveys, however, not more than 33% of the companies who use customer segmentation say that it is highly impactful. The prime reason why businesses fail, in this regard, is that they are still using traditional approaches without considering the latest analytics techniques and the wide sea of customer data available.

We may just say that these companies are not using modern approaches for behavioral segmentation.

What is behavioral segmentation?

Behavioral segmentation is yet another form of customer's segmentation. This type of segmentation depends on the customer behavior patterns that are recorded over the years. These behaviors are recorded using and analyzed using analytics and depend on how customers make their purchasing decisions and interact with the company/business.

Using behavioral segmentation, companies are able to put the customers in various groups based on the customer's use of, response, and knowledge of the particular brand or service.

The prime objective of behavioral segmentation is to understand the customer segmentations that in turn allow companies to address the desires and needs of that particular group of consumers.

Some powerful behavioral segmentation methods

Customer’s journey stage

Consider the stage in the journey in which an existing or new customer is in. Behavioral segmentation based on the customer journey allows companies to align their personalized customer experiences and communications to increase the conversion. It also helps companies in discovering the stages in which customers are not progressing as fast.

There is one common misconception among people that a single customer interaction or behavior accurately pinpoints their stage in the journey.

However, even two behavioral data points may not be enough to identify the journey stage of a customer accurately. This is because customers that exist in different levels engage and interact with experiences that are designed for the different stages, at random times with no order to it. In order to do this, they may also be using various channels.

Segmentation based on usage

Another common way of segmentation is that by usage. In this type of segmentation, customers are divided, based on their interactions and purchases. In other words, it refers to their usage of the product/service.

Over a period of time, it is very important to monitor the deflections in the usage behavior of the customers. This allows companies to identify the opportunities and problems both at the individual level and at an aggregate level.

Segmentation based on the quality of use

While frequency and quantity of use is a valuable segment, it is also important to divide customers based on the quality of use. This is because the high frequency of use does not always mean that the greatest value has been delivered to the consumers, and hence, ultimately to the company. Where some customers fit the requirements of a ‘heavy frequent user', they aren't always getting enough value in reality as a result of which there may be a high probability that sooner or later, the customer will leave especially as soon as he/she finds an alternative.