What is behavioral segmentation?

Behavioral segmentation refers to the grouping of certain audiences of users based on their actions and behaviors. A group or cluster of users with similar behavioral profiles is referred to as a segment. Performing this segmentation means you’re inferring something about a certain segment of users based on specific behaviors.

The most common example of behavioral segmentation is web browsing or purchasing behavior. Let’s say some new users who visit your ecommerce website from a social media ad put a few items in their cart and click to check out. Some of these users go through with the purchase and place an order, but some abandon their cart. In this case, you would have one behavioral segment for those that purchased and another segment for those that didn’t. You would then use these segments to plan a different marketing experience for each group.

Somebody that went through with the purchase might receive an email showing other available products, based on their cart history. At that point, this person is no longer part of the segment of people who have not yet converted — they are part of the segment of those who have purchased products X, Y and Z. Their new segmentation will then impact their experience with your brand.

The group that abandoned their cart will be encouraged through email marketing, ads, or other means, to see their purchase through. They stay in the no-purchase segment until they are successfully converted.

Why is behavioral segmentation important?

Identifying segments. You can segment consumers by their wants and needs. By doing so, you can target people with similar interests, meaning it’s likely that different customers in the same segment will have similar reactions to certain campaigns and tactics.
Determining product relevance. You’ll better understand if a product is relevant to a particular segment.
Tailoring your product or service. This gives you the opportunity to update your product to be more relevant, meet a segment’s needs, and drive brand loyalty.
Creating tailored marketing campaigns. You can increase the probability of purchase if you zero in on a segment. The more personalized to them, the better.
Discovering optimization opportunities. Each customer journey stage is something to be tweaked and refined based on segment characteristics.
Identifying competition. Who has a hold on your customer base? Seek out the competition and analyze why they’re successful.
Developing an improved marketing strategy. You can use behavioral analytics to help create a strategy to expand your customer base.

Benefits of behavioral segmentation.

Infographic with four quadrants representing benefits of behaviors segmentation: 1. Improves targeting accuracy. 2. Sifts engaged users from uninterested. 3. Provides a more personalized experience. 4. Makes it easier to track success.

Improves targeting accuracy. Find customers with similar buying habits and behaviors, then align your marketing and sales teams on a plan of action.
Separates engaged users from uninterested users. You can put more time, money, and effort into cross-selling and upselling to key segments. This helps you avoid wasting time on customers who rarely buy or spend much less, so you can focus on driving meaningful customer engagement.
Provides a more personalized experience. Today, personalization is expected from online consumers. It makes their customer journey easier, more enjoyable and, if done well, unforgettable.
Makes it easier to track success. Continue monitoring a segment through a marketing campaign’s performance and gain even more insight into their behaviors.

Risks of behavioral segmentation.

Favoritism. Over-prioritizing your most engaged customers can create blind spots. If you focus too much on this segment, you might overlook emerging audiences, underinvest in less vocal but high-value customers, or fail to adapt as market trends shift. This can lead to stagnation, missed opportunities, and a skewed perception of your total customer base.
Lack of data. You may not have enough data to make correct marketing decisions. This can be the case if you’re creating a new product or entering a new market. It’s a good idea to leverage other forms of segmentation, like psychographic segmentation and other forms of data collection.
Consumer behavior changes. Consumers are inherently unpredictable, which means behavior patterns, data, and segments may become quickly out of date.
Reliance on certain assumptions. Segments provide a frame of reference based on perceived customer needs, personality and behavior, not confirmed facts.
Based on complex data. Segmentation is a complicated approach that isn’t always easy to understand initially. It may take time to fully comprehend how it works.

How can behavioral segmentation benefit your brand?

Behavioral segmentation saves time and money from being wasted on already-converted, loyal customers — resources that could be on converting other potential patrons and driving conversion rates.

Going back to our ecommerce example, the customers that already made a purchase move out of the non-converted segment into one reflecting the products they’re interested in. Because they are new customers, the marketing campaigns targeting this group won’t need to be as aggressive as those for an almost-convert. Creating different groups of customers helps determine what types of marketing each segment needs, so that the proper messaging reaches them.

Besides allocating time and budget properly, behavioral segmentation also helps companies learn what’s working, and what needs a tune-up.

For instance, a company notices that 50% of new customers brought to a certain landing page end up clicking away. Analyzing that segment helps them identify that something about the landing page doesn’t catch a potential customer’s attention. So, not only does behavioral segmentation drive efficiency, but it also drives better customer experiences. This is because each customer is receiving personalized offers and messages from that brand.

How does behavioral segmentation improve customer loyalty?

When an organization uses behavioral segmentation, customers receive more personalized experiences, leading them to form stronger relationships with a brand. And if, as a customer, you receive personalized offers more often, you’ll be able to discover more products and services that are relevant to you. Overall, this drives customer satisfaction and encourages return custom and retention.

How do you collect behavioral data?

To collect behavioral data, you’ll need to use an analytics tool like Adobe Analytics. Then, you need a system that can ingest that data alongside other data points.

As for what behavioral data you should pay attention to, some marketers might only use web analytics to do their segmentation. However, not every customer approaches a brand by web. For example, a tech store might have a website and several physical store locations. That means they should keep track of web analytics data and store traffic data, as customers might browse online but purchase in store.

This is where multichannel data gathering comes into play, so the tech company can stop targeting customers for products viewed online but purchased in-store. Without store traffic analytics, the company might continue marketing a product to a particular customer who already purchased it.

Sophisticated marketers have developed data-sharing partnerships and collect data from their partners as well. An example could be a credit card brand that has a relationship with an airline. If the credit card company has an airline points rewards system, that data gets shared with both the card and the airline company. This is so they can market to customers with an offer that’s relevant to their travel and financial interests.

How do you optimize the data you collect?

To optimize your data, you need to segment it. The most basic segment you could make would be binary — based on yes/no criteria. This relies on whether a user takes a certain action. If yes, then they’re in this segment — if no, they’re not. As a marketer, you should make sure you’re building valuable customer segments from the data that you have.

Adobe Real-Time Customer Data Platform (CDP) has a real-time customer segmentation service that allows you to create robust segments that go way beyond simple, binary segmentation. With Real-Time CDP, you can build customer segments based on time-bound qualifiers such as taking action A, then action B, followed by action C, within X amount of time.

This is also a much more specific segment that can provide much deeper insight into potential marketing messages. And, when you have this specific data, you can deliver personalized offers that are more likely to make a sale.

What is the difference between behavioral segmentation and psychographic segmentation?

Behavioral segmentation groups people based on how they act. However, psychographic segmentation groups them based on how they think or feel.

For example, let’s say a news website sends out a survey to its readers, asking them what kind of news content they prefer. A huge group of readers respond that they prefer business content. However, after the survey is conducted, the news website checks what content categories are frequented most, and actually, the same readers are checking on sports content most often.

Maybe it’s true that the readers enjoy reading business content (psychographic data), but on this particular news site what they consume is sports content (behavioral data).

Though these types of data are different, marketers should consider both and how they overlap. Behavioral data can sometimes provide insights into psychographic data and vice versa.

What are the different types of behavioral segmentation?

Occasion-oriented behavioral segmentation. This is when a product is purchased only for a particular occasion.
Usage-oriented. This is based on how many times a consumer uses a product.
Loyalty-oriented. The higher the level of brand loyalty from customers, the less a company has to worry about acquiring new customers.
Benefit-oriented. This is for customers looking for a product with the maximum benefits. These could come in different forms — availability, variety, or affordability.

What tools are best for behavioral segmentation?

Customer data platforms such as Adobe Real-time CDP, and data management platforms such as Adobe Audience Manager, are fantastic tools to use for behavioral segmentation. These specific systems not only ingest data from analytics, but they also ingest data from other tools. These include CRM, ad campaigns, internal customer systems, and a variety of data lakes.

You should perform behavioral segmentation using tools that have the most sources of data to pick from — and the most destinations available for activation of the data. This keeps all your segmentation in one place, not across several different systems.

What data privacy factors do brands need to consider?

The level of personalization you choose to pursue is up to you. However, it’s often a good idea to stay away from:

Collecting or requesting health information.
Specifics about what somebody viewed while on a website (like products that didn’t even make it into the cart).
Any type of direct targeting that presumes an established relationship between a customer and a brand. Especially when such a relationship doesn't exist yet.
Aggressive targeting toward only a potential customer, especially with personal information they did not provide.

The goal of a company shouldn’t just be to make sales — it should be to establish a relationship of trust with its customers.

What will behavioral segmentation look like in the future?

A focus of future behavioral segmentation will be on data consent. Behavioral segmentation will evolve, because consumers are more aware of privacy. In some cases, they’re going to have to provide consent to collect and use their behavioral data. This will be a valuable opportunity to explain to your customers the value of personalization and why it can benefit them.

Another future evolution of behavioral segmentation will be the ability to combine behavioral data with a person’s attribute data. This will provide even deeper insights into personas and potential marketing choices.

In the future, a target audience segment won’t just be a group of device IDs and email addresses to target. Instead, it’ll be an insightful way to group people interacting with your brand, which can help you develop new campaigns, products, and services.

A personalization solution built for marketers — based on historical behavior.

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