Customer Portfolios' Blog

Behavioral Segmentation Solving the Targeting Dilemma

behavioral targeting

Ten years ago, marketing was relegated to a perfunctory role within an organization, focused on coming up with the next great idea. Today, marketers are being called upon to drive business growth and revenue. This is changing the game for marketers, giving them a new set of expectations and challenges. One of the challenges that marketers face is how to better target and engage with their customers and prospects in an effort to help drive transactions.

Targeting, however, is not a new kid on the marketing block. What has changed is the extent to which it is becoming more pervasive and thorough, enabling marketers to determine the best targeting and segmentation tactics to meet their business goals and objectives.

Traditionally, demographic segmentation has been used to target customers and prospects. Demographic segmentation classifies customers and prospects according to various demographic criteria and then these different subsets are targeted with different marketing activities and engagement. For example, males who are 45, college-educated, married, making a certain HHI, and living in the Northeast are targeted in a different manner than males who are 18, not college-educated, single, making a lower HHI, and living in California.

Demographic segmentation is great when companies do not have access to knowledge and information about their customers. However, we live in a digital world where we can track every interaction a customer or prospect has. We have access to seas of data and behavior patterns that can be used to offer customers and prospects unique and relevant experiences. It is at this juncture where we see the limitations of demographic segmentation because while it can be quite helpful, it is not always the best approach for engaging with customers and prospects.

Enter behavioral segmentation. Behavior segmentation divides customers and prospects into subsets based upon their attitudes, uses, knowledge, past purchase behavior (if applicable), and how they have previously engaged with the brand.

Behavioral segmentation enables marketers to be able to segment those who exhibit similar behaviors even if their demographic profiles look very different. For example, a male and female shopper (who are of different ages, HHI, education levels) may both only shop at a certain retailer when a sale is happening. If a brand understands this behavior, then they know to market to these customers when a sale is about to happen. Notice that although their demographic profiles are very different, their behaviors are similar and can give clues to how customers and prospects will likely engage with the brand throughout their lifecycle.

The ability to analyze customer behavior enables marketers to be able to develop strategic and targeted marketing campaigns that foster customer acquisition, retention, and growth. In my next blog post, I will begin to explore some of the tactics that can be supported through the use of behavioral targeting. Stay tuned!

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