Behavioral segmentation: Understanding customer behavior to boost business
How customer behavior impacts a business can be seen in many ways. For example, customer behavior may affect customer retention rates and the company’s ability to generate revenue. But what is customer behavior? And how does it impact a business?
This article will discuss behavioral segmentation and how determining customer behaviors can help improve your business!
What is behavioral segmentation?
Behavioral segmentation is a marketing strategy that uses customer behavior to make important decisions about which customers are valuable and how to communicate with them. This segmentation is based on customer actions instead of demographics or personal information, like age, income level, gender, etc.
The goal behind behavioral customer segmentation is for businesses to tailor their marketing efforts (prices, products/services offered) according to the customer’s purchasing habits in order to generate more revenue from loyal consumers who spend money frequently while also attracting new prospects through digital advertising.
Marketing across social media platforms has become easier than ever due to companies using an individual’s online activity as predictive indicators of future spending behaviors within certain product categories – thus allowing businesses to leverage customer data and behavioral analytics in a way that is cost-effective.
Here are a few examples of how customer behavior has been used as the basis for segmentation:
An entrepreneur or business owner may find it helpful to divide customers into segments based on their likelihood to recommend products/services, or “inward propensity,” which would help them determine who should be targeted with promotional campaigns via email marketing.
In this case, customers’ online activity can be analyzed by looking at post frequency on social media platforms and time spent reading certain articles from the business’ blog. Businesses have also found that those consumers likely to share positive reviews about a brand online (transactional segment) could form another valuable customer segment if the business also targets them with special offers or other customer incentives.
Another behavioral segmentation example would be dividing customers into segments based on their likelihood to “react” when exposed to certain marketing messages. These behavioral markers are usually seen through online activity, such as the number of times a customer has visited the business’ website or engaged with its social media pages.
It’s also beneficial for businesses to divide consumers into behavioral groups by analyzing activities like frequency and recency of purchases at brick-and-mortar locations (in order to determine who should receive special offers via text message), consumer use patterns across multiple devices (to forecast future purchase volumes), etc.
The key is that all these metrics can be used in tandem with other tools like predictive modeling software – which helps marketers make more informed decisions about how they allocate their marketing budget.
Why does it matter to our business?
Behavioral segmentation is so important to a business because it can be tied directly back to revenue. The ability for behavioral segmentation to boost revenues through targeted marketing campaigns has been proven time and again, especially in the world of eCommerce. This is where businesses have access to vast amounts of data about their customers’ demographics, interests, etc., making targeting them with just the right message much easier than ever before.
Online behavioral analytics help improve conversions by making websites more user-friendly and streamlining customer service practices by giving agents insight into what type of issues most commonly arise within specific segments or product categories.
When businesses act on this information, they are able to effectively manage risk across their entire organization – including financial institutions that use behavioral analysis as part of their fraud prevention system.
What is customer behavior?
Customer behavior is the sum of all internal and external actions that drive customers to take a particular course of action. Key behaviors influencers include:
- Behavioral intention (customers’ motivation for taking action)
- Behavioral attitude (the likelihood that the customer will perform the behavior; whether it’s positive or negative)
- Behavioral belief (the perceived benefits and barriers of performing a certain behavior), and finally
- Behavioral competency (how easy or difficult it may be for customers to perform a specific task).
Businesses need to understand behavioral elements within their customer base so they can formulate an effective marketing strategy that increases not just brand awareness but also loyalty and, ultimately, revenue.
Having a deep understanding of behavioral data is particularly helpful in the retail industry, where marketers use behavioral segmentation as part of predictive analytics – helping them determine demand forecasting by studying purchase history and patterns over time. This makes customer behavior a crucial element in behavioral segmentation.
Can behavioral segmentation help gather customer traffic?
Yes, behavioral segmentation can definitely help a business grow its online presence and gather more customer traffic. By using behavioral analytics to create targeted marketing campaigns, businesses can make sure that they are always reaching out to the most relevant prospects with whatever messaging is appropriate for their specific purchasing habits.
This ultimately helps improve conversions by lowering acquisition costs (less ad spend per qualified lead) as well as reducing churn rates (keeping customers longer).