Behavioral Segmentation: 4 Main Types + Top Examples in 2024

Basing strategies on the ‘prediction’ of customers’ responses is a mistake marketers often make. By putting themselves in the users’ shoes, they decide what is best for them without considering users’ different behavioral patterns. That is why many companies use a popular strategy called Behavioral Segmentation that helps them acknowledge customer differences.

What is Behavioral Segmentation?

Behavioral segmentation is a marketing strategy that divides customers into groups based on specific behaviors they exhibit when interacting with a product, service, or brand. This method goes beyond demographics and focuses on actual consumer behaviors such as purchase history, usage patterns, engagement levels, and brand loyalty.

By understanding how customers behave, businesses can deliver more personalized experiences, offering products or services that align with customer preferences and needs. Behavioral segmentation provides deeper insights into the “why” behind a customer’s action, helping marketers design highly targeted campaigns that resonate with specific customer segments.

Why is Behavioral Segmentation Important in 2024?

As consumers become more demanding and expect personalized experiences, behavioral segmentation is more important than ever. In 2024, with the rise of data-driven marketing and AI-powered tools, businesses can easily access customer behavioral data and create segmented marketing strategies that target customers based on their actions.

Behavioral segmentation helps businesses:

• Improve customer retention by delivering relevant content and offers.
• Increase conversion rates by targeting high-intent customers.
• Enhance customer satisfaction by providing tailored experiences.
• Optimize marketing spend by focusing resources on the most valuable customer segments.

As competition grows, behavioral segmentation gives brands a strategic advantage in understanding their customers and building long-lasting relationships.

The 4 Main Types of Behavioral Segmentation

To effectively implement behavioral segmentation, it’s essential to understand its four main types:

1. Purchase Behavior

Purchase behavior segmentation focuses on categorizing customers based on their buying habits. This includes analyzing their frequency of purchases, the types of products they buy, the time of purchase, and their overall decision-making process.

There are four subcategories within purchase behavior:

• Brand-loyal customers: These are repeat customers who consistently purchase from a specific brand. They are valuable because they contribute to long-term revenue and can become brand advocates.
• Occasional buyers: These customers purchase a product only on special occasions, such as during holidays or sales events. Marketing strategies for this group often focus on promotions and limited-time offers.
• Discount-driven buyers: These customers are highly motivated by discounts and special offers. While they may not be brand loyal, they will take action when a product or service is available at a lower price.
• Impulsive buyers: Impulsive customers make quick, unplanned purchases. Marketing to this segment requires immediate and engaging offers, such as flash sales or “limited stock” promotions.

Example: Amazon excels in segmenting customers based on purchase behavior. By analyzing purchase frequency and preferences, Amazon provides personalized product recommendations, exclusive discounts, and timely reminders for frequently bought products.

2. Usage-Based Segmentation

Usage-based segmentation groups customers based on how often they use a product or service. This type of segmentation identifies high, medium, and low-frequency users, helping businesses tailor their marketing efforts to match customer engagement levels.

• Heavy users: These customers use the product or service frequently and derive significant value from it. They are likely to be more receptive to premium offers, loyalty programs, or upselling opportunities.
• Moderate users: These customers use the product or service occasionally and may need an incentive to increase usage. Personalized reminders or usage-based rewards can help increase their engagement.
• Light users: These customers use the product or service infrequently. It’s essential to understand why their usage is low—whether it’s due to lack of awareness, a less engaging experience, or a competing product. Targeted campaigns offering discounts or tutorials may help re-engage this segment.

Example: Spotify leverages usage-based segmentation by categorizing its users into heavy listeners, casual listeners, and dormant users. They offer personalized playlists, premium offers, and free trial incentives to convert casual listeners into premium subscribers.

3. Loyalty-Based Segmentation

Loyalty-based segmentation identifies customers based on their level of loyalty to a brand. This type of segmentation allows businesses to reward and nurture their most loyal customers while identifying those at risk of churning.

There are generally three categories of loyalty-based customers:

• Highly loyal customers: These customers make repeat purchases, often advocate for the brand, and are highly satisfied. Loyalty programs, exclusive rewards, and personalized experiences can help further cement their loyalty.
• New customers: These customers are in the early stages of building brand loyalty. Engaging them with welcome offers, onboarding support, and personalized communications can strengthen their connection to the brand.
• At-risk customers: These customers may have shown interest in the brand but are at risk of churning due to negative experiences or competitive offers. Retargeting campaigns, surveys, or special discounts can help re-engage this segment.

Example: Sephora is known for its loyalty program, Beauty Insider, which offers tiered rewards based on customer loyalty. By segmenting customers into loyalty levels, Sephora provides personalized product recommendations, exclusive events, and special discounts to retain and reward their most valuable customers.

4. Occasion-Based Segmentation

Occasion-based segmentation groups customers based on specific occasions, events, or timing. This type of segmentation is particularly useful for businesses that sell products or services linked to certain seasons, holidays, or life events (e.g., birthdays, anniversaries, or graduations).

There are two main types of occasion-based segmentation:

• Seasonal: Customers who make purchases during specific seasons (e.g., back-to-school shopping, holiday shopping).
• Event-driven: Customers who purchase for specific life events, such as weddings, vacations, or birthdays.

Example: Nike uses occasion-based segmentation effectively during events like the Olympic Games or major sports tournaments. They release limited-edition products and targeted ads that appeal to sports enthusiasts during these events, creating a sense of urgency and relevance.

Top Examples of Behavioral Segmentation in 2024

Brands across various industries are using behavioral segmentation to elevate their marketing efforts. Here are some top examples from 2024:

1. Netflix uses viewing behavior to recommend personalized content, increasing customer engagement and reducing churn.
2. Airbnb segments users based on travel behaviors, offering personalized destination recommendations and targeted promotions for frequent travelers.
3. Coca-Cola leverages loyalty-based segmentation through its rewards program, which encourages customers to collect points and redeem them for exclusive products or experiences.

How to Implement Behavioral Segmentation in Your Marketing Strategy

To implement behavioral segmentation effectively, follow these steps:

1. Collect data: Gather data on customer behaviors using tools like Google Analytics, CRM systems, and customer surveys.
2. Analyze patterns: Use AI-powered tools like HubSpot or Segment to analyze patterns in customer behavior and identify key segments.
3. Create personalized campaigns: Develop targeted campaigns for each customer segment, ensuring the messaging, offers, and timing align with their specific behaviors.
4. Test and refine: Continuously test and refine your campaigns based on customer feedback and behavioral data

Conclusion

Behavioral segmentation is a game-changer for businesses looking to deliver more personalized, relevant, and effective marketing campaigns in 2024. By understanding how customers behave and tailoring your messaging accordingly, you can improve customer satisfaction, increase conversions, and build stronger brand loyalty.