What is behavioural segmentation?

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

The most common example of behavioural segmentation is web browsing or purchasing behaviour. Let’s say some new users who visit your ecommerce website from a social media ad put a few items in their basket and click to check out. Some of these users go through with the purchase and place an order, but some abandon their basket. In this case, you would have one behavioural 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 basket 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 affect their experience with your brand.

The group that abandoned their basket 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 behavioural 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 personalised to them, the better.
Discovering optimisation 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 analyse why they’re successful.
Developing an improved marketing strategy. You can use behavioural analytics to help create a strategy to expand your customer base.

Benefits of behavioural segmentation.

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

Improves targeting accuracy. Find customers with similar buying habits and behaviours, 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 to avoid wasting time on customers who rarely buy or spend much less, so you can focus on driving meaningful customer engagement.
Provides a more personalised experience. Today, personalisation 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 behaviours.

Risks of behavioural segmentation.

Favouritism. Over-prioritising 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 behaviour changes. Consumers are inherently unpredictable, which means behaviour 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 behaviour, 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 behavioural segmentation benefit your brand?

Behavioural 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, behavioural 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. Analysing that segment helps them to identify that something about the landing page doesn’t catch a potential customer’s attention. So, not only does behavioural segmentation drive efficiency, but it also drives better customer experiences. This is because each customer is receiving personalised offers and messages from that brand.

How does behavioural segmentation improve customer loyalty?

When an organisation uses behavioural segmentation, customers receive more personalised experiences, leading them to form stronger relationships with a brand. And if, as a customer, you receive personalised 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 behavioural data?

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

As for what behavioural 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 optimise the data you collect?

To optimise 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 personalised offers that are more likely to make a sale.

What is the difference between behavioural segmentation and psychographic segmentation?

Behavioural 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 (behavioural data).

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

What are the different types of behavioural segmentation?

Occasion-orientated behavioural segmentation. This is when a product is purchased only for a particular occasion.
Usage-orientated. This is based on how many times a consumer uses a product.
Loyalty-orientated. The higher the level of brand loyalty from customers, the less a company has to worry about acquiring new customers.
Benefit-orientated. 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 behavioural 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 behavioural 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 behavioural 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 personalisation 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 basket).
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 behavioural segmentation look like in the future?

A focus of future behavioural segmentation will be on data consent. Behavioural 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 behavioural data. This will be a valuable opportunity to explain to your customers the value of personalisation and why it can benefit them.

Another future evolution of behavioural segmentation will be the ability to combine behavioural 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 to develop new campaigns, products and services.

A personalisation solution built for marketers — based on historical behaviour.

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