Behavioral Customer Segments: What They Are and Why You Need Them Yesterday

Today, we're peering into the crystal ball to understand your customers better. Join us as we explore how segmenting by customer behavior can make a real difference in your business.

What are Behavioral Customer Segments?

Picture this: You're at a party, surrounded by people of all ages, interests, and personalities. Some prefer the dance floor, while others find a quite spot to engage in conversation. Just like party-goers, your customers have different behaviors, preferences, and needs. Behavioral segments are simply groups of customers who exhibit similar behaviors or patterns. 

Understanding the Importance

Now, you might be thinking, "Why should I care about behavioral segments?" Behavioral segmentation isn't just a buzzword; there are some compelling reasons to care. By identifying these segments, you can:

1. Design Informed Products: By peering into customer behavior, you gain the ability to design and cater to specific needs and experiences. This knowledge enables you to enhance existing offerings, eliminate underutilized features, and tweak customer experiences based on real data.
2. Predict Churn & Improve Customer Retention: Customer churn can often be signaled by changes in feature utilization. Proactively watching for changes within customer segments allows you to address pain points and take swift action.
3. Personalize Sales & Marketing Strategies (At Scale): Matching a prospect with an existing behavioral segment empowers you to craft messaging that speaks directly to their needs and use cases. Personalizing by segment means creating these tailored experiences at scale rather than each individual separately.
   
4. Prioritize Your Efforts: When coupled with Lifetime Value (LTV), behavioral segmentation provides a valuable framework for allocating resources and making informed decisions across your business.

How to Identify Behavioral Segments

These segments shine a light on how customers tackle their use cases with your product. As such, you'll need to collect information about how they interact with your product, such as sign ins, clicks, and time spent by page, feature, and device info. Then, begin organizing customers by responses to key questions such as:

• Feature Utilization: Which features do different customers use the most? Which customers engage with your traditionally low use features?
• Device Preferences: Which customers are on-the-go on their mobile devices versus their desktop? Is there a split between which features are used on which device type?
• Engagement Frequency: Is engagement with your product a daily ritual or an occasional visit?
• Longevity of Engagement: Do customers stick around for the long haul, or is your product a brief fling?
• Interaction Patterns and Trends: What are the recurring behaviors and trends among your customers?
• Getting Help: Which customers reach out with support tickets, turn to your knowledge base, and silently struggle?

Example: Let's say only 14% of your customers use feature A but those customers make up nearly half of your revenue. That's a big difference. Now you have something more concrete to work with--does this delta suggest an issue with onboarding, product market fit, etc.? How does this knowledge compare to your product roadmap?

Wrap Up

Understanding the behaviors behind your revenue is like discovering hidden treasure. By digging into these patterns, you have the opportunity to grow your revenue opportunities while also making your life easier. You can't afford to miss out. Happy segmenting!