How to Use Behavioral Segmentation in a Merchant Meeting

Most merchants have a strong sense of the demographics that make up their customer base. Point of sale data probably confirms what they personally observe to be true about who walks through their doors, like the ratio of men to women; older to younger shoppers; and bargain hunters to big spenders.

Because they leverage this information to inform their own messaging and merchandising, an important component of a successful merchant meeting is demonstrating that you have a working knowledge of the merchant’s audience and that your brand and products are aligned with their goals for growth.

But what if you could go beyond demography to contribute something especially valuable to your conversation with your merchant? What if your data could tell you not only what is but what could be? For that, you’ll need behavioral segmentation.

What is behavioral segmentation?

Simply put, behavioral segmentation is the process of separating consumers into distinct groups. Unlike demography, which tends to focus on fixed characteristics, behavioral segmentation allows researchers to group respondents based on virtually any characteristic, including their beliefs, attitudes and opinions.

Think of the consumer population like a bag of trail mix. Now, imagine that someone asks you to develop a system to organize it. Do you separate the sweet parts from the salty parts? Do you group the chocolate candies by color? Do you pick out the pieces you don’t like?

The different approaches you could take to sorting a bag of trail mix are almost endless, and they’re all fairly easily accomplished – but are they meaningful, useful and helpful?

The ultimate challenge of behavioral segmentation is determining how to organize consumers in a way that effectively answers your marketing questions and informs strategies.

Use behavioral segmentation to tell the merchant something they don’t already know.

Chances are, your merchant already has mountains of consumer data, and they’ll expect you to be an expert on yours.

At a base level, staying on top of shopper demographics is simpler than ever. Robust computer programs can analyze the data that originates at the point of sale even more quickly and flawlessly than you can separate raisins from peanuts. What they can’t do is interpret it.

It is one thing to accurately report that your target audience is mostly made up of men aged 25-40, and another to determine what attributes of your product or branding contribute to this fact and how you may be able to appeal to other consumer segments. Investing in research that investigates shoppers’ motivations and attitudes will allow you to predict and explain shopper behavior in a way that demography cannot.

Approach your merchant meeting with insights that go beyond the data that is already available, and you’ll gain a distinct advantage.

Use behavioral segmentation to turn data into strategy.

We’ve all been warned about the dangers of mistaking correlation for causation. The primary purchasing demographic of fruit snacks may be women aged 35-45, but it would be misguided to assume that an endorsement from a 90s celebrity would boost sales – the true audience is their children. A deeper analysis may reveal that a particular segment of end users is differently motivated (or that the purchaser and the end user aren’t even the same person).

In order to communicate effectively with your target audience, you have to know who they really are and what characteristics unite them. The answer is often much more complex than age or gender. A behavioral segmentation study looks at the why behind shopping behavior and identifies potential confounding variables.

This more complete picture can direct targeted, well-informed marketing strategy that leads to a better return on investment. Show your merchant that you are capable of this analysis, and they will want you on their team.

Use behavioral segmentation to tell a story.

Is your target audience made up of men or women? Pros or DIYers? Boomers or Millenials? Or are your end users really just an assortment of people with similar shopping behaviors?

Behavioral segmentation is a robust analysis that allows you to cross-reference the variables you already have on hand, like age, gender and socioeconomic status, with intangibles, like attitudes, fears and values. The result: a rare glimpse into the inner workings of your end user. In the hands of an expert analyst, this data tells the story of a consumer problem that needs to be solved, how your product can meet those needs and what role your brand plays in that person’s life.

Knowing what really drives the consumer allows you to craft messaging that speaks to their intrinsic motivations – and demonstrates that these motivations can often cross demographic lines.

This is great news for you and your merchant because it proves just how broad your potential audience can be. While demography is usually fixed, consumers’ beliefs and attitudes can be changed through strategic messaging.

Use behavioral segmentation to become your merchant’s strategic partner.

In a merchant meeting, solid data is foundational to demonstrating that you have a deep understanding of the retail landscape and your role within it.

Investing in behavioral segmentation research offers your business many advantages when it comes to formulating marketing strategy. However, the benefits extend well beyond short-term sales and growth.

By supplying and interpreting data that your merchant doesn’t already have access to, you can readily set your business apart from competitors and begin to nurture a consultative relationship with your retailer. A well-designed behavioral segmentation study is as valuable to the merchant as it is to you because it yields a body of data that can be repurposed in many ways to answer critical marketing and consumer research questions.

Coming in armed with robust data not only prepares you to impress your merchant in your meeting, it demonstrates that your company is agile, research-minded and results-driven - ideal qualities in any future business partner. Position yourself as a strategic ally, and your merchant will come to see you as an integral part of their future plans.