Purchase Behavior Segmentation: Examples, Metrics, and Tools

33% of PMs say building a product strategy and roadmap is the most challenging to track and measure success. When developing a product strategy, insights into purchase behavior help identify key features, functionalities, and value propositions that resonate with your target audience.

Analyzing how customers decide to buy informs all stages of product development–from ideation to commercialization. This is where purchase behavior segmentation comes into play. It allows you to eliminate obstacles and sell more products faster.

This article will explore excellent purchase behavior segmentation examples that can help you leverage this strategy to guide your product journey and deliver the personalization your audience expects. We will also discuss the best purchase behavior segmentation tools and the metrics to track.

What is Purchase Behavioral Segmentation?

Purchase behavioral segmentation is a strategic approach that simplifies understanding customer actions and intentions. It helps product and data teams understand how customers make purchasing choices. The purchase behavior analytics also unveils trends, habits, and behaviors linked to the crucial moments of decision–PURCHASE.

When you delve into the diverse behavior patterns to uncover valuable insights, you can discover:

• How extensively do customers research before buying?
• How complex is the purchasing process?
• What information or features persuade them most?
• Which search queries lead to your brand?
• What are the key questions during sales or chat support that influence the purchase?
• Any barriers impacting the path to purchase?

By focusing on these aspects, you can tailor your strategies to resonate with the audience directly.

Benefits of Purchase Behavioral Segmentation

Let’s discover how purchase behavioral segmentation helps all spheres of an organization. Whether marketing, product, customer success, or operations, this segmentation gives you a bird-eye view of what users want and how to improve user experience.

1. Marketing: Segmenting customer behavior according to purchase allows you better to understand the needs and wants of different customer groups. This helps marketing teams craft tailored strategies that resonate with the specific actions and preferences.

2. Customer Success: Your customer success teams can benefit by dividing segments or cohorts based on metrics like onboarding time, time-to-value, freemium conversion rate, etc. The insights from these metrics can help them focus more on segments that require personalized attention or support. They can identify areas where users might be getting stuck or experiencing challenges

3. Product Development: Purchase behavior segmentation guides informed product development and innovation. Product teams can leverage insights into what features or improvements will resonate with specific customer groups.

Purchase Behavior Segmentation Examples

Purchase behavior segmentation examples in business help you learn from leading players. You can learn how they meet their goals and stay ahead of the competition.

1. Quizizz

Quizizz is an interactive learning platform with a significant presence in the U.S. education sector. It has an impressive user base of 80% of schools and 30% of teachers in the United States. The platform has evolved from a concept to over 100 million users in just six years. With this scale, the team’s data engine also scaled into a deep, contextual, and powerful source of business insights. Quizizz leveraged Houseware to dig into behavior analytics. The teams started to understand feature adoption rates and conducted more experiments to prioritize enhancements to the product. By tailoring their new features as per the insights, Quizziz saw a remarkable 2.5x increase in user activation rates for a new feature.

The activation rate for our features has more than doubled since we’ve started leveraging Houseware’s product analytics. Now that I am used to having insights on my fingertips, I would feel pretty crippled if Houseware was taken away from Quizizz.  — Remo George Joseph, Growth Product Manager, Quizizz

2. Amazon

Amazon serves as one of the purchase behavior segmentation examples in marketing. The eCommerce platform leverages customers’ purchase behavior to drive sales, personalize product feeds, and implement dynamic pricing. Following behavioral analytics principles, Amazon analyzes customers' purchasing patterns from recent buys, wishlist items, and shopping cart saves. It also pulls information from products reviewed and rated by consumers and their most searched products. This purchase behavioral segmentation helps Amazon predict user preferences better.

3. Netflix

This streaming service makes watching TV shows and movies special for each user. It suggests what to watch based on what users have watched before, how much they've watched, and what kinds of shows they like. It also looks at which types of shows they explore a lot. Plus, it leverages trend analysis to create content that aligns with user preferences.

Purchase Behavioral Segmentation Metrics to Track

The latest State of the Product Management Report states that “post-release evaluation and reporting” is the least likely part of the product life cycle to receive dedicated tools for the job. While many organizations may not have the resources, some might not consider it necessary to track the post-release and post-purchase behavior. However, businesses need to understand how customers engage with a product. It is then, when you understand, you can refine onboarding processes, enhance user satisfaction, and identify areas for improvement.

1. Product Adoption and Engagement

Product adoption and engagement occur when a user signs up or buys your product and starts using it as intended. These metrics give you deeper insight into how quickly and effectively customers integrate your product into their daily operations. Measuring adoption post-purchase can help you gain insights into the effectiveness of your onboarding processes, user satisfaction, and the overall value customers derive.

2. Time-to-Value

A positive post-purchase experience hinges on how well you understand your users and optimize their support, onboarding, and communication strategies. A shorter time to value often correlates with higher satisfaction and vice-versa. Analyzing insights from tracking the metric can help you understand how swiftly customers derive value from your SaaS solution after the initial purchase.

3. Usage Frequency

The usage frequency will allow you to determine how frequently users use your product. A high usage frequency will help you segment your best customers. Conversely, a low usage frequency will help you spot customers who need additional attention or support to reach the full value of your product.

4. Net Promoter Score (NPS)

This metric answers How likely customers are to recommend the product to others? A high NPS indicates strong customer advocacy and vice-versa! When you analyze different scores across different segments, you can more precisely understand the groups that are more likely to advocate for the product.

5. Contract Length and Renewal Patterns

Purchase behavior segmentation metrics help you identify segments with specific purchasing or renewal patterns. You can leverage the insights to enable targeted marketing campaigns during peak times for each segment.

6. Purchase Timing and Seasonality

Diving cohorts and segments based on the time/season of purchase can help

You can segment customers as “Early Adopters," "Regular Purchasers," "Seasonal Shoppers”, “Holiday Buyers,” and more to enable targeted strategies.

7. Customer Lifetime Value (CLV)

Getting excited about big purchases or long-term customers is natural. However, it is important to check if they're bringing in more money than it costs to serve them. Without this comparison, it's hard to know if your business is growing or staying afloat (or losing money).

Tools to Use for Purchase Behavior Segmentation Analytics

When you divide your user base into distinct segments based on purchase behavior, you can better tailor your product offerings, marketing strategies, and communication to meet each segment's unique needs and preferences. Using cutting-edge tools to gather, analyze, and visualize behavior among valuable segments can help you gain deeper insights and make informed decisions.

1. Houseware

Houseware is a warehouse-native analytics tool offering a built-in customer segmentation and reporting suite. It digs deep into your customer purchase behaviors within your digital product. It helps marketing and product teams learn how different segments of prospects and customers are likely to use the product, how engaged they’ll be, and for how long they might remain customers. Houseware creates powerful visualizations in just a matter of a few clicks. Besides, its advanced segmentation capabilities help you segment customer behavior based on numerous parameters and allow you to customize customized profiles, tags, and fields and organize the segments.

2. Google Analytics

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This platform by Google is designed to collect data from browsed apps and websites. It helps you get insights into the number of visitors, their behavior, purchases, location, the type of device used, and numerous other information. In Google Analytics, you can segment according to demographics, traffic source, technology, sequences, behavior, e-commerce,

conditions such as custom variables, time, goal conversions, and the date of the first session.

3. Heap

The next on our list of purchase behavior segmentation tools is Heap. The platform helps you segment customer data based on parameters like purchases, clicks, likes, media plays, uploads, page views, data entry, or social shares.

4. Mixpanel

Mixpanel is a data analytics software providing insights based on user interaction. The platform’s functionality includes advanced segmentation capabilities. You can take into account different attributes, user properties and create cohorts based on similar properties. High-level segmentation from Mixpanel gives you a more granular view of your users and their engagement drivers.

Unfortunately, in one aspect, it’s similar to the competitors—you can’t find the pricing unless you start using it. The price you pay will depend on the volume of customers you have, and it increases as you scale.

5. User Pilot

This is a great analytics tool that gives detailed insights into:

• who’s using your app, how and for how long;
• from which devices and
• which features or parts of the app they are using.

It also has advanced segmentation capabilities. You can create targeted user segments based on technographic, firmographic, demographic parameters and more.

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Wrapping Up

The inability to measure return on investment has always been a thorn in the side of many organizations. Purchase behavior segmentation is an excellent strategy to track every behavioral brand metric that matters to your business—from awareness to loyalty and advocacy.

Are you ready to leverage this out-of-the-box technique to understand your customers at a granular level? If YES, delve deeper into how Houseware can empower you with informed product development, personalized marketing, enhanced customer relationships, and strategic decision-making. Connect with our team today!

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FAQs

1. What is a real life example of behavioral segmentation?

Some real-life examples of behavioral segmentation include Netflix, Amazon, and Spotify. All three brands leverage behavioral segmentation to tailor their marketing strategies and fuel business growth.

2. How profitable is purchase behavioral segmentation?

Purchase behavioral segmentation can help you optimize the customer journey. You can offer a personalized customer experience, design better products and services, and retain your users when you understand more about them. However, the profitability of purchase behavioral segmentation depends on how well you implement it.