Top 10 Practices in Customer Behavior Segmentation

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No two individuals or in this case customers are the same. However, there are certain groups of people/customers that may be very much alike. These customers may fall into the same category based on similar items they bought, how much they spent, the typical amount they purchased and so on.

 

Why segment customer behavior?

Knowledge is power. And, this can be very well illustrated with respect to customer behavior. Now the more you know about your customer’s behavior the easier and more effective it will be for you to come up with an offer or message that will resonate with your clients and lead to more sales for your business. For instance, if you own a website that sells female clothing, it is possible for you to have a group of customers that identify with “cool” colors. This, you may get to know through their online profile or purchasing history.

However, it is also possible for you to have another group, which on its part identifies with “warm” colors. Okay instead of sending exactly the same email to these two groups recommending accessories that go with different clothing wouldn’t it be wiser sending them two separate mails that identify with their preferences?

Yes, of course it will. In one mail, you will send your message to the “cool” color group featuring your products or clothing in that particular color palette. And, in another email you will send your message to the “warm” color group in colors that resonate with them. Okay in order to achieve successful segmentation with customer behavior, here are six best practices you should take note of below:

 

Best customer behavior segmentation practices

 

1. Stay organized

Before embarking on customer behavior segmentation, make sure that you have a plan. In other words, a strategic plan of how you intend to execute segmentation according to customer behavior. Regarding this plan come up with different segments and determine the ones that work or have proven to be most effective over time and run with these only.

 

2. Be ready to always fine-tune

Change like they say is a constant thing in life. This is no different with customer behavior. Therefore, you should be prepared to effect changes to segmentation whenever such need arises. To illustrate this, a customer may change his/her buying pattern due to a change in lifestyle or due to advance in age, etc. So to ensure that you get the best from your segmentation, do endeavor to monitor and update data.

 

3. Too many vs. too few

It is necessary to know the particular behaviors of customers, which can be calibrated and fed into the segmentation process. For instance, two key behavioral dimensions that ought to be tracked in order to get a better understanding of retail shoppers’ motivation include visit behavior as well as shopping behavior. But these two dimensions are not enough. You see having too few dimensions will make it hard for you to completely understand your customer, while having too much can cluster your mind. The solution is maintaining a balance between these two extremes.

 

4. Identify particular customer attributes for measuring

After you have succeeded in narrowing down behavioral dimensions, you should also specify customer attributes, which will measure the concerned behaviors of customers. Such behavior may be customers making more inbound calls than outbound ones.

 

5. Choosing the appropriate clustering technique

Choose the right clustering technique that will meet the objectives of your segmentation exercise as well as address data constraint challenges like missing values, et al.

 

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