Behavioural Segmentation: The Secret to Understanding Your Audience and Personalising the Customer Journey
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 article, 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 marketing?
To be able to segment a consumer base with the correct knowledge, we must first understand the basics of behavioural marketing.
This form of marketing 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 behaviour in the hope that they will react positively and convert with your brand.
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),Chatbots, 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.
What is behavioural segmentation?
As the name suggests, behavioural segmentation is the process of sorting and dividing customers into groups based on their behaviour. Such behaviours include interests, past purchases, website and page visits and their interactions with campaigns across different channels including website, app and other marketing channels.
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). 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.
By delving deeper and understanding behavioural segmentation, you can tailor your customer journey with the unique needs and preferences of different customer segments and deliver personalised experiences that are more likely to lead to conversions.
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 as well as increase engagement and conversion rates.
Why is behavioural segmentation important?
As we’ve seen, 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, enabling them to improve the effectiveness of their marketing campaigns and increase the likelihood of converting visitors into customers.
Behavioural segmentation also allows for more focused targeting that goes beyond the traditional demographic or geographic segmentation that don’t typically provide in-depth insights into your customers. However, it’s still important to note that behavioural segmentation should be done alongside these other types of segmentation to develop the most holistic view of your customers.
What are the benefits of behavioural segmentation?
1. Gain a deeper understanding of what drives customers’ purchase decisions
Behavioural segmentation is your key to unlocking why certain customers make the purchases they do. In other words, you can identify their triggers and motivations behind their purchases.Such information sheds light on customers’ needs and so can help businesses improve their product offerings and positioning as well as develop better marketing campaigns.
2. More targeted and personalised campaigns
Behavioural segmentation allows you to target different types of customers based on their preferences and interests. This means businesses can tailor their product or service to meet those needs and desires.
This leads to highly personalised campaigns that resonate with customers encouraging them to make a purchase.
This means that businesses can effectively allocate their resources and maximise their ROI by zeroing in on customer segments with the highest conversion potential, avoiding wasting time and resources on generic, less impactful marketing campaigns.
3. Higher brand loyalty
The more customers feel that their needs are being met with personalised customer journeys, the more likely they’ll keep coming back for more and making repeat purchases.
That’s because behavioural segmentation helps businesses analyse user behaviour and build tailored customer experiences that enhance customer satisfaction and, as a result, improve retention and drive customer loyalty.
4. Increased conversion rates
From the above, we can deduce that the more customers receive personalised messaging relevant to their interests, the more likely they are to convert and make a purchase. Plus, businesses can retarget customers who have abandoned their carts with targeted emails to recapture customers’ attention and get them to return to a website and complete their purchase.
For example, SaleCycle’s Browse remarketing feature sends targeted messages to visitors on a client site after they have added an item to the basket but did not complete their purchase, which can be scheduled to be sent following a given period of time after the visitor abandons the product(s).
Through the Basket Abandonment campaign, personalised messages can be sent to remind customers of what they left behind and encourage conversion of lost sales. You can further enrich these campaigns from a wide array of customisations depending on the visitor segment.
Read more: Bulk re-targeting
Through behavioural segmentation, businesses can also identify which type of customers would buy certain types of products so they can craft tailored marketing campaigns for these specific customer segments.
How to use behavioural segmentation
As mentioned, 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.
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.
This is what a typical segmentation process looks like:
- Determine the behaviours you want to track: Start by identifying the most relevant behaviours to your business that you want to track and the kind of insights you're looking to get about your customers.
- Collect the data: Once you've identified the behaviours you want to track, it's now time to start collecting this data. Use various sources such as customer surveys, website analytics, CRM tools and social media interactions.
- Analyse the data and create segments: This is the point when you start analysing the data to uncover trends and patterns with the help of specialised analytics software. Afterwards, you can create the segments based on your analysis by grouping customers into subgroups based on shared behaviours.
- Develop targeted campaigns: Once your segments have been defined, create marketing strategies and tailored campaigns to each of these segments.
- Test and refine: This will be an ongoing test-and-learn process, which means you should continuously analyse your segments' performance and make adjustments as needed.
Types of behavioural segmentation
In this section, we will take a look at how you can segment your customers depending on where they are in their buying journey.
Here are the 5 most common types of behavioural segmentation:
1. Segmentation based on purchase 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?
Therefore, purchase behaviour segmentation observes how a customer acts and their motivations when making a purchase decision so businesses can understand how they make these decisions and the behaviours that lead to purchase or abandonment.
As an example, you can determine if some customers take a long time before making a purchase decision and the kind of pages they browse through before buying. These insights into their decision-making process allow businesses to recommend customers only the most relevant items, thereby enhancing customer satisfaction and revenue.
A great example of purchase behaviour segmentation is Amazon whose strategy involves recommending relevant and related products based on a customer’s frequently bought items and their purchase history. It does this by analysing customers’ purchasing patterns from recent purchases, wishlists and what they’ve added to their basket as well as products viewed and what item they search for the most.
2. Segmentation based on customer loyalty
According to multiple studies, repeat customers spend on average 67% more than first-time buyers, not to mention they’re cheaper to retain and have the highest customer lifetime value. And with the growing popularisation of loyalty schemes throughout ecommerce, we can only assume this is a contributing factor. Thus, this type of segmentation focuses on existing repeat customers - their needs, interests and behaviour patterns and so on.
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.
The ultimate goal is to develop a marketing strategy that focuses on retaining loyal customers and increasing their level of engagement.
A typical example is Starbucks, whose loyalty program rewards customers with free drinks by collecting “stars” on their app. This encourages customers to download the app while their point-based system incentivises them to return to the store and make a purchase until they get that free drink or reach the “gold” status which offers even more perks.
3. Segmentation based on benefits
In most cases, we as consumers buy things because they solve a problem or we believe that we will receive a certain value from using the product or service.
Segmentation based on benefits should help you group customers based on the benefits they associate with your product or service. Needless to say, different customers will have different needs they’re looking for when making a purchase.
Types of benefits sought mainly include price, unique selling points (or USPs), quality, reviews, performance etc.
When companies understand how customers act based on the benefits they get from a product or service will enable them to shift their messaging strategy based on these benefits and focus on the wants and needs of customers.
A good example is beauty brand Sephora that has a “Shop by Concern” category for both its skincare and hair care products, where each category speaks directly to the concerns they’re facing and benefits they’re seeking from the product. Such categories demonstrate a great understanding of the types of customers that visit the website and their needs.
4. Occasion- or 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.
In other words, this type of segmentation groups customers based on their purchasing habits when it comes to specific holidays or events.
This is particularly useful as businesses can get insights on when customers are most likely to make a purchase and then create targeted campaigns based on these special occasions to bring awareness to your products.
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 the customer 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.
Customer journey behaviour segmentation provides valuable insights as it enables you to observe your customers to see which stage of the customer journey they’re in, 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.
This helps reveal any pain points that customers face at any point in their journey by determining where they drop off to better understand where and why they cannot complete their journey to purchase. For example, if a customer abandons their basket, you can recapture their attention and entice them to complete their purchase by sending targeted emails with a special offer.
For example, French fashion brand Claudie Pierlot used SaleCycle to recapture first-time customers through cart abandonment campaigns to nudge them to complete their purchase by offering a special code for an exclusive 10% discount on their first order.
Additionally, segmenting customers depending on where they are in their journey will allow you to better refine your campaigns. Users in the early stages of the customer journey require a different type of strategy and message than those in that final stage between desire and purchase.
For example, some brands may consider offering enticing discounts for new visitors to encourage them to make that first purchase as in the pop-up example below.
Behavioural segmentation: The key to increasing customer engagement, enhancing customer experiences and driving conversions
At the end of the day, people seek value in whatever content they consume including when it comes to the online shopping experience.
Behavioural segmentation hones in on customers’ action and their preferences. This enables companies to offer tailored messaging and experiences that are of value and relevance at every stage of the customer journey which, in turn, boosts engagement and conversion rates.
Leveraging behavioural insights is no longer just a nice-to-have—it’s essential for businesses looking to stay ahead. With a world of choices at each customer’s fingertips, it’s vital that businesses can provide personalised experiences that speak to their individual needs and preferences.
Behavioural segmentation is truly a win-win situation: Businesses can leverage behavioural segmentation to personalise their marketing campaigns according to the target audience, driving retention and revenue while customers receive better, more personalised experiences at every stage of the customer journey that improve customer satisfaction.
