7 ways to use behavioral segmentation

Why do 95% of product launches fail?

Product launches, marketing messages, and ideas flop because companies did not identify or failed to reach their target audience. How can marketers improve the odds of getting their products and services seen by the right audience?

The market segmentation definition describes how companies group people into unique market categories, often using marketing research surveys to define their needs. After analyzing these market segments, companies will perform customer segmentation to describe different types of buyers.

Age, occupation, gender and other demographic data are common ways to segment customer groups. Companies can also describe their target market by defining their buying behaviors, known as behavioral segmentation. The definition of behavioral segmentation is grouping buyers based on their real-life behaviors, not just their general demographic traits. This form of customer segmentation can be more effective than demographics, psychographics, and other segmentation methods.

Consumers have more product choices than ever before. For instance, today’s larger grocery stores have 80% more individual items than they did 30 years ago. This product proliferation has expanded consumer choices, making it more difficult to make a purchase. It has never been more critical for companies to understand how their buyers make simple or even complex purchase decisions.

Because there are so many products, sellers need their products to stand apart from their competitors. They must define their market segmentation approach. What is market segmentation? It is a method that companies use to identify their target market and develop messaging to help them navigate the sea of product choices.

Companies use market segmentation surveys to identify demographic, psychographic, and geographic approaches to hone in on their target market. However, these approaches assume that everyone with those characteristics will act the same way. Will all 50-year olds buy the same kind of orange juice? Will all 20-year olds buy the same shampoo? Marketers can also perform behavioral segmentation to identify their market's unique buying habits and make their products stand apart from their competitors.

Behavioral market segmentation describes specific steps in their ideal customer’s buying process, including what their ideal customers want, why they want it, the benefits sought, and how they go about getting their needs met. Through market research, companies learn what steps buyers take to gain awareness, buy products, and become brand loyal for the long-term.

The behavioral segmentation definition is the process by which businesses define a buyer’s behavior. That is why companies study both Business-to-Consumer (B2C) and Business-to-Business (B2B) buyers to understand their actions and cater to their wants and needs. Through market research surveys and analysis, companies identify specific customer behaviors that include:

Purchasing behavior. Identify if buyers purchase based on the lowest price, best ratings, competitive research, or other criteria.

Occasion and timing.  B2C buyers may buy for a holiday (Valentine’s Day) or an event (birthday or anniversary). B2B buyers may purchase to stay within budget timing constraints or to meet a project deadline.

Benefits desired.  B2C purchases can increase the buyer’s status (a luxury car), safety (face mask), or offer the latest technology (iPhone 12). B2B buyers often purchase items with advanced technology to gain a competitive advantage or reduce costs.

Customer loyalty. B2C customers can accumulate and use points for free or discounted products, cash back rewards, and travel discounts. B2B buyers may receive a customer appreciation discount from a manufacturer for frequent purchases.

Customer journey stage.  The customer journey starts long before the sale and may last after the sale is completed. For instance, if  B2B and B2C buyers are new to a seller, they will require product information to make informed decisions. After the sale, they may need product support and service.

Engagement level.  Companies want customers to stay in contact to grow their relationship. New customers may buy one product (iPhone) from a company, but their engagement programs will develop devoted fans who will purchase more items (iPad, Apple Watch, Mac, AppleTV).

Customer satisfaction. Customer surveys show how companies can improve their products and services or make the buying process easier, which makes buyers happier.

Surveys are a great way to understand buyer’s behavior. You can use customized or pre-formatted templates to delve deep into a buyer’s motivations.

How do customers approach purchase decisions? Analyzing product reviews, customer service chats, and market surveys can outline the steps buyers take to make buying decisions. Do they rely on product information, testimonials, or price comparisons? Companies that know these answers can make the buying process easier.

Are there roadblocks in the purchasing process? How many clicks does it take for an online purchase? Are in-store purchases speedy? Is there more than one person involved in the buying process? Where feasible, companies should remove any roadblocks that make the buyer’s purchase process challenging.

Do you know the buyer’s personal preferences? What color, size, or quantity does the buyer need? If the desired product is unavailable, what alternative product recommendations are there? When companies understand what customers need before they ask, the better the chance they will have of making a sale.

What happens before, during, and after the purchase? Is the checkout process easy? Are sales, customer service, and other professionals trained and helpful? Do the customers expect advice after they make the purchase? Companies will benefit by focusing on buyer expectations before, during, and after the sale.