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(Note: We published this blog post in October 2019, and the noticeable difference between then and now is that AI-based tools have only become more common. Behavioral segmentation is still more important than demographic (not just our humble opinion), and now it’s easier than ever to automate the process of collecting this data and use it to make the ultimate impact. To learn more, read the blog below and consider joining me for a master class on how to find yours real Audiences and How to Talk to Them Builder.AI Thursday, April 27, 2023.)
Behavioral segmentation gets to the heart of what consumers do, the pattern of past/current actions and the projection of future actions, who they are.
In other words, using demographics to segment your prospects and customers isn’t enough. You need to see how the contacts in your customer database are performing to understand what they want and what they want in the future. Your messages, campaigns, etc. Tailoring based on behaviors (versus demographics) is much more likely to create engagement – and therefore positions you to convert faster and at a higher rate.
So why do marketers and sales teams focus so much on demographics? Business plans usually have a dedicated section WHO Your target market is, and perhaps that’s why demographics are so ingrained in entrepreneurs.
But behavioral segmentation is a better indicator of why your product or service is right for your target market because it tells you what important to your customers and therefore what manages their purchases.
How does behavioral segmentation work?
Traditional demographics group your customers by age, location, gender, job title, geography, etc. This is not bad at all. They can work if you have products for men and women, or, say, geo-targeted discounts.
When you get beyond that to actual engagement, you’re only guessing if you’re using demographics. They give you vague signals about what your audience wants and needs and what you can do for them along the sales funnel.
With behavioral data, you’ll have a more accurate understanding of your customers.
Behavioral segmentation groups your customers based on their actions (or lack thereof), allowing you to plan campaigns/outreach efforts and provide personalized experiences that lead to better engagement, conversions and, most importantly, repeat customers.
Some of the behavioral segments include buyer journey stage (early adopters vs. late adopters), purchase behavior, benefits sought, usage of your service/product, and customer loyalty, among others.
For example, you’re sending completely different messages to a lead who continues to your landing page (but hasn’t yet engaged), a lead who’s visited your landing page for the first time and downloaded your eBook, and a customer who’s already bought your product four times.
If you treat the aforementioned repeat customer like you don’t know them, you can bet they’ll stop buying (click here for more on that).
Understanding your customers at a high level
Demographics won’t get you very far. On the other hand, understanding your customer’s values, interests, needs and preferences through behavioral data can help you connect with them.
It’s what led to decades of market research, an entire industry dedicated to asking people what they want and why, and days, weeks, and even years documenting what consumers do. Without this hard data, most demographic data can be useless.
From “target market” we moved to “buyer persona” and from buyer personas we now have “buyer intent” and “transaction history”. It sounds more invasive than it actually is, but today’s age of information and convenience leaves a trail marketers can use to understand their customers at a higher level. Now that we’re undoubtedly in the AI zeitgeist, you can count on AI (probably emerging every day) to help automate the process of gathering data about prospects and customers and making predictions based on that data.
From the 2019 Marketing Week survey:
- “When asked to reflect on recent campaigns, behavior emerged as the most effective segmentation method, according to 91% of marketers surveyed.”
- “Nearly three-quarters (73%) think behavior has also become a more effective means of segmentation in the past five years.”
Four years later, I don’t think much has changed.
Asking the right questions
A deeper understanding of your audience leads to more of the same. Behavioral tracking helps you ask the right questions, such as adding “gift” buttons at checkout, or sending a more interactive and effective “survey” through offers and seeing which ones your customers choose.
Are your customers buying your items as gifts? Or maybe they like to try the flavors you’ve released? Or maybe they just don’t want to run out of your products? The answer will dramatically change your personalized campaign messages. Behavioral segmentation is more important than demographics to inform your marketing campaigns.
Behavior is an essential ingredient of customer data
AI can now package and analyze transaction data, first-party and third-party data to form a reliable data set, along with any demographic characteristics, for a complete picture of your customer’s needs and wants. Add today’s sophisticated analytics that can identify opportunities for your business, and you’ve got the right questions and Send the right offers with dual benefits: 1. Delight your customers with your personalization and 2. Conversions and customer loyalty. This means that you are at the heart of your clients’ business and why.
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