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Use Behavioral Segmentation To Focus Your Marketing Investments

January 19, 2010

I’m constantly surprised at how little effort companies apply to understanding their targeted buyer.

Big companies and small, and especially B2B companies, can be lulled into complacency by the notion that they actually can identify all of their potential buyers. By identify, I mean that they might easily be able to focus exclusively on a profession or members of an association.

Just because you’re selling to a target that you can put your finger on, say you’re selling something to doctor’s offices, doesn’t mean that they’re all the same.

Behavioral segmentation can be the answer to help you identify where to place your next marketing investment and sometimes more importantly, where NOT to put your next marketing dollar.

Here’s a simple example:

Assume that you would like to sell software to physicians. It’s relatively simple to purchase a list of every licensed physician in the country.

So, do you still need to segment the market (or really, discover the segments that already exist?)?

A resounding YES!

Some of those doctors could have a foot in the grave and not be interested whatsoever in your software. Others might have already purchased practice management software from another company and won’t be in “the zone” for another purchase anytime soon.  Others could be on your list but really in a larger practice group, meaning that they don’t have a lot of impact on software purchase decisions.

In other words, if you keep trying to reach every physician, you’ll be wasting a lot of effort. Effort that should be applied to “fishing where the fish are.”

So, this is where you can benefit from behavioral segmentation.

And, why behavioral segmentation as opposed to some other flavor. Well, you can create segments from a lot of different data sets. It comes down to the basic question – when it comes to figuring out what people are going to do in the future, which do you trust more – what they’ve done in the past or what they say they will do?

There really is no comparison. Behavior rules. Just think about it.

If you’re interested in developing behavior-based segments to improve your marketing investments, there are some interesting options to consider.

Using analytics tools like Omniture’s Site Catalyst along with some of the usual statistical suspects like SAS or SPSS, you can begin to pull together all of the behaviors of your prospects and customers. This is a critical step to getting to powerful insights. You really must pull together information about current behaviors so you can gain insight into what behaviors are the good ones – meaning they lead to good customers (people who buy a lot and often).

Sometimes even more importantly, you can begin to create a profile of those behaviors that are bad – or don’t lead to good customer behaviors.  There are lots of ways a bad customer can be more expensive than just a non-customer. Imagine someone who calls customer service constantly, or maybe buys and returns products constantly.

I’ve completed many classic segmentation efforts, those that include survey results, and can tell you that behavioral data enables an entirely different level of understanding into what prospects and customers are going to do.  Call me a marketing nerd, but this is what digital marketing analytics is all about.

Once you have a better sense of good behaviors and bad behaviors – and don’t call me too judgmental – now what? Now you can refocus your marketing (and business) investments toward creating the good and limiting the impact of the bad.

What’s that mean?

Getting back to our physicians example, assume that you figure out that a behavior that points to a potential purchase of your software is a combination of a specific keyword search, visiting certain parts of your site, and downloading a specific whitepaper – all combined with the age and specialty of the practice.

Now you have something to go on. With this understanding of your segment (and the behaviors associated), you can make the smart marketing investments that drive business results.

Pretty cool, huh?

It’s hard work, but it’s worth it.

Now that I’ve got the basics covered, I’ll work on finding more detailed examples that can give you a better sense of what’s possible.  Let me know if you’re interested in learning more. Or, even better, send me a message if you have a great behavioral segementation success story that you would like to share.