Top 5 Behavioral Segmentation Examples to Drive Personalization

Personalization has become an incredibly important approach to building strong customer relationships. While segregating based on demographic information like age and gender is a good start, it’s somewhat limited. This is where high-precision targeting, such as behavioral segmentation, can be helpful.

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Creating segments based on behavioral data points and triggers can help you better understand users' needs, preferences, and behavior patterns which can then be used to create hyper-personalised campaigns and strategies. This article will explore the top 5 behavioral segmentation examples you can use to boost customer engagement.

What is Behavioral Segmentation?

Behavioral segmentation is a strategy that groups customers based on their behaviors and actions with a product. This involves analyzing customer interactions, purchasing behaviors, and preferences to create tailored strategies. By understanding users behavior, you can enhance customer retention and optimize product offerings for different segments.

Behavioral segmentation is important for several reasons. Let's take a look at a few of them:

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Enhanced Customer Experience: You can optimize your customers’ experience by understanding how they behave at different stages of their journey. This may involve streamlining processes, offering relevant recommendations, or providing timely support, which can contribute to higher customer satisfaction.

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Customer Retention and Loyalty: You can implement retention strategies by identifying loyal and high-value customers through behavioral segmentation. This includes loyalty programs and personalized rewards to strengthen customer relationships.

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Better Resource Allocation: Behavioral segmentation helps you allocate resources more efficiently by focusing on segments with the highest potential for growth or profitability. This ensures that marketing budgets are spent wisely and generates a higher return on investment.

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Behavioral Segmentation Examples

Behavioral segmentation is a powerful strategy to deliver personalized experiences. By dividing your customer base based on factors such as purchase behavior, product usage, and loyalty, you can implement targeted strategies that resonate with specific customer segments. The following are examples of behavioral segmentation that can be useful:

Purchasing Behavior Segmentation

Segmentation based on purchasing behavior is a practical approach to understanding and targeting different customer segments. It categorizes customers into distinct groups according to their buying habits, preferences, and decision-making processes. Businesses can tailor their marketing efforts by analyzing how users behave when making purchasing decisions. There are four primary types of buying behavior that influence purchasing decisions:

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Complex Buying Behavior: This occurs when customers are highly involved in the purchase process and invest significant effort in researching and evaluating options. They typically gather extensive information, compare alternatives, and make deliberate decisions. Businesses can target this segment by providing in-depth product information, expert reviews, and personalized consultations.

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Dissonance Reducing Behavior: This refers to situations where customers experience post-purchase anxiety or dissonance after making a decision. It often happens when the purchase involves significant financial investment or when the available options are similar. Customers in this category may seek reassurance and validation that they made the right choice. Businesses can address this segment by providing exceptional customer service, offering guarantees or return policies, and engaging with them to address concerns.

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Variety-Seeking Buying Behavior: This behavior involves customers who enjoy trying new products or experiences and may not exhibit strong brand loyalty. These customers are open to exploring different options and are motivated by novelty and variety. Businesses can target them by offering innovative products, limited-time promotions, and unique experiences to capture their interest and encourage repeat purchases.

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Habitual Buying Behavior: Customers make purchases out of routine or habit without much thought or consideration. They tend to be loyal to specific products and may not actively seek out alternatives. To target this segment, businesses should focus on maintaining brand visibility, providing convenient purchasing options, and fostering loyalty through rewards.

Purchasing Behavior Segmentation Example

Let's consider Amazon as an example. It gathers extensive customer behavior data, including browsing history and purchase decisions. Based on this, Amazon segments its customers and personalizes their shopping experiences.

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For instance, if customers frequently purchase electronics, Amazon may recommend related products, provide personalized deals, and send targeted email campaigns highlighting new tech releases. By leveraging purchasing behavior data, Amazon enhances customer satisfaction, increases conversion rates, and fosters long-term loyalty.

Timing or Occasion Based Segmentation

Timing or occasion-based segmentation is a strategy that involves segmenting customers based on specific events, occasions, or timing-related factors. By understanding when customers make purchases, you can effectively target your audience with personalized messages and offers. This allows you to tap into the emotional and practical needs that arise during specific events or occasions. Here are some examples of occasions that you can leverage for segmentation:

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Birthdays: Birthdays are highly personal and celebrated occasions that present businesses with opportunities to offer customized products or personalized experiences. By segmenting customers based on birth dates, you can send targeted promotions and special discounts, making them feel valued and understood.

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Anniversaries: Send personalized messages to customers on their signup anniversaries, expressing gratitude for their continued support. Make the communication feel unique and tailored to their journey with your product. Additionally, consider offering them exclusive discounts or promotions. This shows appreciation and incentivizes them to make additional purchases or upgrades.

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Holidays: Holidays like Christmas, Valentine's Day, or Mother's Day are ideal for occasion-based segmentation. You can deliver targeted offers and drive engagement by segmenting customers based on their holiday preferences or previous purchasing behavior during specific holidays.

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Now, let's take a closer look at how Hallmark implements occasion-based segmentation effectively.

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Hallmark collects contact details from its customers when they make online purchases, storing data such as the category and timing of card purchases. Using this information, it segments buyers based on when they shop for cards and gifts, such as birthdays, anniversaries, or holidays.

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Leveraging this segmentation strategy, Hallmark sends push notifications and emails to its customers with reminders and suggestions for upcoming events. This personalized approach increases customer engagement and establishes Hallmark as a trusted brand that meets its customers' diverse needs on different occasions.

Loyalty Based Segmentation

Loyalty-based segmentation divides customers into segments based on their loyalty to a specific product. Loyal customers are invaluable assets, contributing to a steady revenue stream and higher profit margins. By identifying and understanding loyal customers, you can develop targeted marketing initiatives that strengthen customer relationships and increase retention rates.

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Once you identify loyal customers, you can design and implement special rewarding programs tailored specifically for this segment. These programs may include exclusive discounts, personalized offers, or early access to new products. By offering such unique benefits, you can show how valuable they are to your business.

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For example, Starbucks offers a loyalty program that rewards customers who use its app to buy products. It distinguishes its most loyal customers by analyzing visit frequency, purchasing behavior, and app usage data. This segmentation allows Starbucks to personalize its efforts and tailor rewards to different customer segments, fostering a stronger connection with each group.

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Benefit Sought segmentation

Segmentation based on benefits involves dividing customers into groups based on the specific benefits they seek from a product. This approach recognizes that different customers have distinct needs and desires and aims to tailor offerings to meet those specific requirements. Let's explore an example of benefit segmentation in the context of a fitness app.

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The app can segment its users based on the benefits they seek from their workout routines, such as weight loss, muscle gain, or overall health improvement. By understanding the different benefits each group seeks, the app can tailor its workout recommendations to better meet each group's needs and desires.

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For example, the app might offer a workout plan specifically designed for weight loss, which includes high-intensity interval training and a calorie tracker. It might also offer a workout plan for muscle gain, which includes strength training exercises and a protein tracker. The app can create a more personalized experience and increase customer satisfaction by segmenting its users based on the benefits sought.

Customer Journey Segmentation

It involves dividing customers into segments based on their interactions and experiences with a product throughout the customer journey. This approach allows you to understand various touchpoints and behaviors of users at different stages of their interaction with the product. By segmenting customers based on their journey stages, you can offer personalized experiences to meet their requirements at each step.

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For example, Airbnb, a platform for booking accommodations and travel experiences, uses customer journey segmentation to provide personalized recommendations to its clients. Depending on the customer journey stage, Airbnb tailors its approach to meet their specific needs. For example, in the awareness stage, where customers are about to explore travel options, it shows them content about popular destinations and travel tips to grab their attention.

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In the consideration stage, when customers actively seek options, Airbnb considers their browsing history and preferences to offer personalized recommendations. This helps customers find the most suitable accommodations based on their interests and previous searches. Finally, in the decision stage, it sends special offers, discounts, or time-limited promotions to encourage customers to complete their bookings.

Improve Your Behavioral Segmentation with Houseware

When you segment your users based on behavioral patterns, you can better tailor your product offerings to meet each group's unique preferences. To achieve this, consider using advanced product analytics tools like Houseware. It is an AI-powered third-generation platform that helps you analyze behavior among valuable segments to gain deeper insights. It offers powerful visualizations of user behaviors, making it easy to interpret data with just a few clicks.

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Let's explore the key features of Houseware:

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Cohorts: This feature lets you group customers based on shared characteristics or behaviors over a specific time period. By creating cohorts, you can analyze different customer segments' behavior patterns and trends. This information helps understand how users engage with a product time, identify retention or churn rates, and tailor marketing strategies to specific cohorts.

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Funnel Analysis: Funnel analysis allows you to segment customers based on their behaviors at different funnel stages. For example, a segment may show a high drop-off rate at the consideration stage, while another may exhibit higher conversion rates. This information helps you understand how different segments engage with the product, enabling you to target and address specific behavior patterns for each segment.

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User Flows: Flows, or customer journey maps, visually represent how users navigate a product. You can identify behavioral patterns and trends by analyzing user flows for different user segments. For example, one segment may follow a linear path from awareness to conversion, while another might exhibit more exploratory behavior, engaging with multiple features before converting.

Wrapping Up

Behavior segmentation is a fundamental strategy many businesses use to categorize customers based on their behaviors, preferences, and interactions. This article discusses various examples of behavioral market segmentation in detail. You can utilize them to personalize strategies, improve user experience, and maximize conversion rates.

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However, advanced product analytics tools, like Houseware, can significantly facilitate the implementation of behavioral segmentation. Book a demo today to explore its features and how it can help segment your customer base effectively.