Behavioural segmentation is a powerful marketing tool that allows businesses to personalise the ecommerce customer journey by grouping customers based on their behaviours and characteristics.
In this blog, we’ll be exploring behavioural segmentation – a more concentrated type of segmentation where visitors can be divided further to meet their specific wants and needs. We will also be looking at key examples with this form of customer service and customer retention with the 5 main types of behavioural segmentation.
Whether you are a small business owner looking to improve your customer retention rates or a marketer seeking to optimise your campaigns, this article will provide valuable insights on how to use behavioural segmentation to drive success.
What Is Behavioural Segmentation?
You may have heard of segmentation in the context of conversion rate optimization – when ecommerce businesses use processes to divide online visitors to improve targeted content.
By delving deeper and understanding behavioural segmentation, you can tailor your customer journey with the unique needs and preferences of different customer segments, businesses can tailor their marketing efforts to deliver personalised experiences that are more likely to lead to conversions.
Different types of visitors come to your website for different reasons, whether it’s to browse a new product or service or to commit to a sale. To serve them in a better way, behavioural segmentation is a vital practice to understand each customer journey, such as their likes and dislikes, and increase conversion rates (and therefore, ROI).
So, how can you begin to identify which consumer behaviours can be segmented?
As consumers research a product or service, their behaviours can reveal key insights into which offers are most applicable to them. Their actions and overall individual customer journey can determine the driving factors for that specific customer.
For example, if you promote a special offer for a certain shampoo, and the customer generally buys hair care products from your site, you could try personalised cross sell emails to promote their favourite brand of shampoo or conditioner – according to their previous purchase – to compliment their usual shopping habits.
This mode of behavioural segmentation, much like using personalisation, is most likely to achieve a higher AOV – and if not, it will definitely increase engagement and conversion rates.
What is Behavioural Marketing?
First of all, to be able to segment your consumer base with the correct knowledge, we must understand the basics of behavioural marketing. This form of marketing, driven majorly by social proof, aims to promote and sell products and items based on users’ interactions with your brand. These interactions include those with your brand’s website, ads, emails, social media pages, etc.
Put simply, behavioural marketing is the practice of serving targeted ads or content based on a consumer’s past actions and behaviours in the hope that they will react positively and convert with your brand.
SaleCycle recommends that you take a look at this article on the dynamics of 3rd party cookies to better tailor your targeted ads and onsite messaging, with the most up-to-date information.
What Are Some Of The Behavioural Marketing Characteristics on Websites?
To track your user’s behaviours through marketing, you can look at actionable insights and data in places in and around your website such as:
- Website analytics (Google shopping analytics, for example)
- Browsing and search history
- Pop-up interactions (e.g. email sign-ups)
- Social data (e.g. social pages and ads most interacted with)
- Purchase history
By collecting the insights that these areas provide, you can begin to create targeted content for individual consumers around multiple areas of your website for a higher chance of positive conversions.
Why is Behavioural Segmentation Important?
Behavioural segmentation gives you insights about your own brand, and what guides decision-making in your customer base. In ecommerce, this is important because it allows businesses to tailor their marketing efforts to specific groups of consumers. This can help businesses improve the effectiveness of their marketing campaigns and increase the likelihood of converting consumers into customers.
By identifying your most loyal and valuable customers, implementing these personalised experiences, and rolling out features users will appreciate, brand growth and retention metrics will improve.
What Are The Benefits of Behavioural Segmentation?
Here are a few examples of the benefits of behavioural segmentation:
- Boost revenue by offering the right product or user experience to each unique user based on their behavioural patterns.
- Avoid loss due to cart abandonment or confusion in the purchase process.
- Improve customer retention by proactively fulfilling their needs and creating programmes that reward them for staying.
- Lower the cost of feature development by efficiently testing and focusing new functionality on your most valuable user base.
- Win more business by predicting how prospects will behave based on similarities to your current customer base.
How To Use Behavioural Segmentation
Behavioural segmentation is a way to group consumers and potential customers through revised forms of personalisation. Behavioural segmentation aims to help marketing and product teams to use customer behaviour prediction to learn how different types of prospects and customers are likely to use their product, how interested and engaged they’ll be, and how long they might use your product or service (and remain customers).
To begin segmenting your customer base, you should start by analysing and categorising key behavioural trends to find your brands most significant patterns.
Once you can identify these key patterns, you can begin to build and tailor individual customer experiences, personalised to that specific group.
In terms of your product or service, you can begin to prioritise certain messaging, such as on-site messaging and customer retention emails, and integrations based on the categories that would respond to each product.
Marketing strategies can also be drawn from these behavioural blueprints, and should be able to improve targeted ads and content to reach the appropriate consumer.
What Are The Benefits of Customer Behaviour Analysis?
As mentioned, in order to segment your audience you must first begin with customer behaviour analysis. By tracking and analysing online behaviours, you can begin to categorise (or segment) key areas of your user base to create marketing campaigns and other helpful features in order to gain the most value from your brands efforts – whether that be from new or returning customers.
What Are The 5 Types Of Behavioural Segmentation?
We have looked at some brief examples of behavioural segmentation cases – so let’s look deeper into how you can segment your customers depending on their place in the sales funnel. Here are the 5 most common types of behavioural segmentation:
1. Segmentation Based On Purchasing Behaviour
Purchase behaviour segmentation considers how customers decide to buy, as well as the trends in their customer journey (e.g. browsing habits, and adding to basket) associated with making a purchase. For example, you can segment under purchasing behaviour when you consider:
How much research does a customer perform before purchasing? Is this driven by certain emails or ads?
What search queries – such as Google shopping analytics – does a customer use to ultimately find your brand?
In the same vein – what form of information do they seek, and what types bare the most conversion rates?
What questions are being asked when consumers speak with sales representatives or customer support?
When all of the above is taken into consideration, are there any barriers during their customer journey that could result in abandoned baskets?
Understanding your customer’s purchasing behaviour allows you to eliminate obstacles in your customer’s journey and therefore, boosts sales.
2. Segmentation Based On Customer Loyalty
According to multiple studies, repeat customers spend on average 67% more than first-time buyers. And with the growing popularisation of loyalty schemes throughout ecommerce, we can only assume this is a contributing factor.
Using and tracking customer loyalty segmentation to your brand helps reveal the drive behind repeat purchasing and customer loyalty, as well as what types of incentives increase customer lifetime value in retail. In other words, segmentation based on customer loyalty lets you place resources where they’re most likely to produce a greater ROI.
Diving deeper into this form of segmentation, you can also divide customers based on their user status. As well as first-time buyers and returning customers, you can also begin to consider prospective customers (who need more convincing, or more incentive to buy), and customers who may want to return after previously leaving the ‘loyal customer’ category.
Understanding these variables behind consumer behaviour can unlock key insights and target the consumer directly no matter their status, so that your brand stands out among the competition – much like in this example by Nike, where customer loyalty is praised and rewarded with exclusive rewards, allowing the brand to draw in and segment returning customers.
3. Segmentation Based On Benefits
In most cases, we as consumers buy things because they solve a problem or boast a benefit. Segmentation based on benefits should help you to understand and group audiences based on why they purchase based on the benefits of your product. Types of benefits sought mainly include components like: Pricing, unique selling points (or USPs), quality, reviews, etc.
In this example by Selfridges, the ”What’s Trending” section of the website allows consumers to make more informed decisions about the best products they can browse and buy with their platform according to other customers. Consumers who convert through this section of the website can be segmented into a benefits driven group.
4. Timing-Based Segmentation
Timing or occasion-based segmentation groups consumers based on exactly when they choose to interact or purchase with your brand.
For example, if it’s common knowledge that your site hosts a Black Friday sales period, new or returning consumers may be more likely to visit and purchase via your brand in the month of November.
Another example is targeting potential customers on their birthdays by offering a ‘’birthday treat’’ discount upon signing up to your mailing list – causing them to return to your site on their birthday.
Timing-based segmentation can also refer to timings throughout the day, which can include targeting a customer with a drink to go with their meal during lunch time, for example, following typical daily consumer behaviours.
5. Segmentation Based On User Journey
Segmenting your customers according to their stage in the customer journey means being able to deliver the right message, in the right format, at the right time.
Observing your customer to see where they are, and how they move through each stage of the sales funnel helps you to personalise their journey and create a better customer experience overall – equalling to better conversions. Equally, it’s important to understand when (and why) consumers decide to leave your site so that you can begin putting solutions in place.
For example, someone in the decision-making stage of buying a new pair of shoes might use online customer reviews to help them come to a buying conclusion, like Wickes. This brand states their Trustpilot reviews and rating upon checkout, to ensure the customer that they can be trusted as a great brand and can follow through with their purchase with peace of mind.
As they move to their baskets, the sale could be solidified by offering a discount upon approaching the checkout stage.
Behavioural Segmentation Case Study [Example]
In summary: behavioural segmentation is a marketing strategy that involves grouping customers based on their behaviour, such as their purchase patterns, usage rates, and interactions with a company or brand.
But for further insight, here is a Q&A case study between SaleCyle Marketing Assistant, Matt Anderson, and Account Growth Manager of tech giant HP, Caroline Oswald, to illustrate how behavioural segmentation might be used in practice:
Q So let’s start by discussing how SaleCycle helps HP…
A We provide HP with a holistic solution to increase their online sales. The solution is designed around their current business needs and strategy. We deliver it through intelligent On-Site and E-Mail messages that we have tailored specifically to suit their customer.
Q What would you say is the most unique aspect of HP’s campaign?
A We are really flexible with our campaigns, so whether it is strategic segmentation or a specific promotional drive we work hand in hand with the client to deliver on the goal. The way that we use segmentation and targeting differs in each campaign, depending on what the goal is.
I loved the recent promotional OSR campaign that we delivered for HP, not only was it Star Wars themed but the design was also outstanding.
Q Is this the only time that we have used segmentation with HP?
A No, not at all! This is something that we implement throughout all of our campaigns with every client, we do this by showing different messages dependent on set criteria. With HP, for example, if a customer was looking at business products and then abandoned, they would receive an email tailored towards this and vice versa with consumer products.
We also tailor the type of OSR message that they receive. If the number is compelling enough, we show a ‘Consumer Trends’ message which displays how many people are looking at the product at that moment in time. If this number is below a certain level, the ‘Email my Basket’ message will appear allowing a consumer to enter their email address, to which they will be sent the content of their basket to convert later, along with product USPs to try and drive the conversion in session.
It is all about personalisation at the end of the day.
Q Would you say that SaleCycle have proven to be flexible to the clients needs?
A Of course, it means that we can ensure that customers are receiving EMR and OSR messages that are specific to them. This is important as it is proven to increase conversion rate, plus there is nothing worse than seeing or receiving messages that you aren’t interested in.
It has been great being able to use segmentation with our campaigns, as it has helped to improve our customer’s online experience.
Q How important is personalisation to the HP brand
A It is and the focus that the Client Services team put on recognizing the right segments is what makes it so valuable. Then we run split tests to ensure that every change we make provides a positive impact. A latest test showing almost a 10% increase in conversions in a template including multiple items as opposed to just one. This statistical analysis from our dedicated Client Services team is something that serves to heighten our knowledge and ability to do our very best for all of our client base.
Q Segmentation is something that we have discussed quite a lot, do you feel it is something that we can do more of?
A Absolutely, it is vital for companies to do this to get the best out of our products. We are always coming up with new and innovative ways to segment that will deliver significant returns to our clients.
One thing I would say is that the more we can see on a website, for example information in a data layer, the more intelligence we can add to a campaign. There are also possibilities to integrate with a Client’s CRM systems in order to garner intel from there and apply it to the campaigns we run.
Q Finally, I’d like to know what it’s like to work with one of the world’s biggest IT companies?
A Just as you’d expect, they’re proactive and efficient. They also know how to challenge us and keep us on our toes, just as it should be.
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Casey is a Fashion Journalism graduate & ecommerce marketing executive at SaleCycle. Casey is committed to producing high quality content backed by in-depth research and data. She has experience developing content in a range of sectors including fashion, ecommerce and sports.