Segmentation is a long word
But it basically says: Categorize different people for different values. Understanding behaviors and leveraging them through segmentation is paramount in modern marketing. After all, we wouldn't treat singles looking to travel the same as families, would we? Segmentation forms the essential foundation for personalization, guiding businesses to tailor content and services according to distinct audience groups.
How does segmentation help us in our daily lives
In an ideal world, segmentation would be integrated into every marketing activity. You can use it across all marketing channels and touchpoints: from Google ads to Social media, Email campaigns to Push messages. Segmentation enables precise communication tailored to each interaction. The key benefits include deeper customer insights, increased engagement, personalized language, and improved profitability through refined customer journeys.
By segmenting based on characteristics, it becomes easier to craft tailored messages and incentives. But where do you start?
There are 4 main types of segmentation
1. Demographic – Based on age, gender, income, etc.
2. Psychographic – Focuses on attitudes, opinions, lifestyles, etc.
3. Geographic – Segmented by location
4. Behavioral – Segmentation based on actions taken, such as purchases or interactions
Examples of behaviors
(According to these actions we can categorize audiences)
Referral
Enrolment
Completing a survey
Item search
Added an item to “favorites”
Added an item to the shopping cart
Giving a rating or a review
Purchase of a product or service
Interaction with a sponsored campaign
Now that we understand what it is, and how to use it, let’s talk about behavioral segmentation. By categorizing audiences based on their behaviors, we can adapt our communication strategy accordingly. Actions like referrals, purchases, or interactions with sponsored content reveal valuable patterns that inform our approach.
Maximize the value
The ultimate goal in marketing is to earn more, right? Research indicates that investing in behavioral segmentation can yield significant returns, with increases in revenue ranging from 10% to 25%.
Here are 3 classic examples of using behavioral segmentation to increase profitability:
1. Win-Back: Brands can target customers who have lapsed or who are near abandonment in an effort to re-engage them and encourage repeat purchases. By tailoring offers based on their engagement level, we can encourage them to return.
2. From free to paid users: If we notice that customers frequently attempt to use premium subscription features, we can leverage this to our advantage. Just like free Spotify, where you need to pay to listen ad-free, for instance. Companies can run campaigns targeting users who perform specific actions within the free subscription limits to increase profit.
3. Cross-Sell: Already bought jeans? How about a belt? By leveraging data from past customer purchases and browsing activity, brands can send recommendations for effective cross-selling. These campaigns aim to increase purchases and add value to the customer.
There are many other ways to use behavioral segmentation to boost profits and streamline marketing efforts. These strategies are particularly favored by us because of their high return on investment.
At the end
Investing in behavioral segmentation pays off. Fast-growing companies that outpace competitors in personalization yield 40% more revenue. The challenge for brands is implementing segmentation effectively. Only 35% of businesses feel capable of providing personalized experiences across different channels. Currently, less than half of brands personalize the experience based on customer data.
So, where does your brand stand in the statistics? Do you use segmentation? What behaviors do your customers do?
