Why You Should Start Using Behavioral Segmentation

Why You Should Start Using Behavioral Segmentation

We often see users creating segments around demographic-based data points like location, age, gender, and company. When we look at the variations in performance between these segments, there typically isn’t much difference in conversion rates or feature interaction between them.

Of course, these segments can be useful in some scenarios, like figuring out if men or women are more likely to purchase a certain product. However, there’s a much more powerful way to build segments: using behavioral data. This approach speaks more to who your users are and what they did/do, as opposed to their most basic demographic traits.

At the end of the day, knowing your customer’s age and gender will only get you so far. What really matters is being able to understand their interests, needs, wants, and values so you can connect with them on a more meaningful level. This level of understanding typically comes from being able to deeply analyze how users behave.

This is where behavioral segmentation shines.

How Behavioral Segmentation Works

Behavioral segments allow you to group your users into cohorts (or groups) that are based on actions they have or haven’t taken.

If you’re using a platform with behavioral analytics capabilities such as Heap (Behavioral Analytics), you can track and analyze your cohorts over time to gather more actionable insights about them. You’ll learn how certain groups interact with your product while discovering how to strengthen those interactions and incrementally build loyalty. This process is known as cohort analysis.

The possibilities of applying behavioral segmentation and cohort analysis are limitless. You can identify your most loyal customers, implement better re-engagement campaigns, and deliver better, more personalized user experiences. Here are just a few examples of how you can use these strategies to grow your business:

  • Boost revenue via recommendations: You discover that users who buy handbags from your fashion website tend to buy shoes as well. You can then send an email or alert offering a 20% off coupon for shoes to users who recently bought a handbag.
  • Facilitate the buyer’s journey: You discover that visitors who use your free app’s bookmarking functionality tend to upgrade to a paid membership at a higher rate than those who don’t use it. You can create an in-app guide that encourages new visitors to use bookmarks.
  • Improve customer retention and reduce churn: You discover that users who are inactive for longer than 60 days have a low rate of retention. You can send a special three-stage email marketing campaign to re-engage users who have been inactive for 30, 45, and 60 days.

Also, check out this video with Eric Pollman, Co-founder & CTO at Clearbrain, as he discusses the benefits of behavioral data:

 

Why This Is Powerful

According to a study by the customer data infrastructure company Segment, 44% of surveyed participants said they were more likely to become a repeat customer after a personalized shopping experience. Additionally, 39% said they’re likely to tell family or friends, 32% are likely to leave a good review, and 22% are likely to leave a positive social media comment. When customers have these experiences, the impact can be multi-dimensional.

Segment - Personalization

Consider household brands like Amazon, Netflix, Facebook, and HubSpot – experts in building loyalty at scale through thoughtful, personalized user experiences. They’re so successful at this because behavioral segmentation is a foundation of their business model. They never stop gathering, analyzing, and applying new data to better understand their users and deliver the kinds of service and experiences that keep them coming back for more.

Here’s How to Do It in Heap

Heap’s Segments feature allows you to create segments based on any combination of user-level properties and actions they’ve taken on your site. To do this, visit Define > Segments in your Heap account and click the ‘+ New Segment’ button. Then, enter the name of your new segment and select the appropriate category and filters.

Heap Segments

For example, you can create a “Big Spenders” segment for users who have made 10 or more purchases by selecting:

  • Behavioral property: Count of
  • Key event: Purchase
  • Value: greater than 10

Heap - Big Spenders

Or you can create a time-based segment, like defining “Active Users” as those who have logged in within the past seven days. To do this, select:

  • Behavioral property: Has done
  • Key event: Submit Any Login
  • Time: In past 7 days

Heap - Active Users

You can also create more complex segments that integrate other platforms and tools your business uses. Consider this three-part segment:

  1. Users who viewed any app page more than three times in the prior month, and
  2. Users from either the “Enterprise” or “Strategic” Account Customer Tier in your company’s Salesforce account, who
  3. Were in the United States the first time they accessed your website

Heap - Complex Segments

To learn more about Heap’s Segments, watch our Heap University Segments video.

Dive in and Explore Your Data

Although it is easy to create segments in Heap, building out and maintaining behavioral segmentation and cohort analysis will take time and careful planning, which should align with your overall marketing and product strategy and goals. This will likely be an iterative process where you continue to learn as you explore your possibilities and uncover new insights from all of your company’s data streams.

To get started, examine your current analytics reports for patterns, trends, and areas for improvement. Try focusing on enhancing your most profitable opportunities and “best-sellers,” while improving the areas where you see the poorest performance. As your business and customer relationships evolve, you’ll find that so too will your segmentation and analysis strategies.

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