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July 27, 2023

Elevate Your eCommerce Strategy with Behavioural Segmentation

If you’re running an eCommerce business, you’ve probably thought many times “I wish I could get inside the heads of my customers and target audience.”

Understanding how your customers think, shop, and engage with your products would make your role much simpler. What makes life even more difficult is the fact that every customer is wired completely differently and has very different habits that you need to take into consideration.

But what if we told you that there was a way to collect data on your customers and sort them into groups based on their unique habits?

All of this is very possible for any eCommerce business – if you apply behavioural segmentation.

What is behavioural segmentation?

Behavioural segmentation involves grouping consumers based on actions and behaviours.

You may have heard about some of the most common forms of segmentation and be asking yourself, “What is demographic segmentation” or “What is psychographic segmentation?” These are very broad types of segmentation that can be broken into much narrower analysis tools.

To summarise, demographic segmentation is where you group customers based on a list of certain demographic features. Psychographic segmentation is where you group customers based on psychological characteristics. There’s also geographic segmentation where you group based on where customers are from.

Some other examples of segmentation factors include:

●     How customers use your products/service

●     How customers buy your product/service

●     Overall knowledge of your product/service

●     The percentage of new vs. returning customers

●     Time spent on your website

●     Where your customers come from

●     What language they speak

●     What do customers add to their baskets and how often do they abandon their cart?

All of this information can be found using analytical tools and audience engine platforms which collect accurate and up-to-date customer information. Some platforms can even help you create relevant segments based on this data.

The importance of behavioural segmentation in eCommerce

Behavioural segmentation is important no matter what business you’re running, but it’s especially important for those in the eCommerce space. Not only does segmenting customers mean you can understand the people buying your products better, but you can also ensure your marketing and outreach efforts have a better chance of success.

According to a report from Salesforce, 52% of consumers would switch brands if they felt like they weren’t being offered a personalised service. Similarly, in another report by Accenture, 91% of consumers prefer to shop with brands that offer relevant offers and recommendations. It’s clear that when you segment your customers into targeted groups and create tailored experiences, your eCommerce business will be more successful.

Some of the benefits of using behavioural segmentation in eCommerce include:

●     The ability to create personalised experiences that are relevant and engaging.

●     Increase customer engagement by targeting products to relevant needs.

●     Improve the accuracy of your outreach and marketing campaigns by only targeting customers who have a genuine interest in your product/service.

●     Improved customer awareness that can fuel future campaigns, product launches, and digital marketing efforts.

●     Track customers at every point of their journey and find opportunities for improvement.

●     Get more from your budget by no longer wasting resources on leads that won’t turn into customers.

If it wasn’t obvious already that behavioural segmentation is important for eCommerce businesses, we’ll draw your attention to a study by McKinsey. It found that when companies implement behavioural segmentation strategies, they typically see revenue uplifted by 5% -10% and reduce acquisition costs by 15% - 30%.

Types of behavioural segmentation

As we’ve discussed, there are many different ways you can segment the customers of your eCommerce business, but here are some of the most popular methods that eCommerce businesses use:

Customer purchasing behaviour

This strategy looks at how different customers act during the decision-making process. It analyses how buyers approach their decision, any barriers they face during the process, their role in the purchase, and what behaviours lead to making a purchase.

There are four main categories of purchasing behaviour that eCommerce businesses should be aware of:

Specific benefits

Before customers make a purchase, they want to feel knowledgeable about the benefits, features and use cases of your product or service. Depending on the customer, different benefits will be a priority and will determine their purchasing decision.

For example, a shopper is on the hunt for a new face wash. Some people may be looking for something to clear up acne, whereas others want to hydrate dry skin – these are two very different benefits that usually won’t be found in the same product.

If the cleanser your company sells is perfect for dry skin, you should focus on segmenting the customers with dry skin and marketing your product to them, rather than wasting marketing spend on people who are trying to clear up acne. You could do this manually through customer surveys and studying purchase history.  

Or, you could use QUIN and achieve more accurate segmentation in a fraction of the time. Calling on the behavioural data collected from thousands of users, QUIN can build a clear understanding of your audience and the patterns of behaviour they exhibit. Knowing that your audience is following the same path of those looking for similar products, QUIN can then help them to find exactly the item they need more easily.

Stages of the customer journey

When you segment customers based on where they are in the customer journey, you can create tailored experiences that focus on converting website viewers to paying customers.

You can use this strategy to identify areas where customers leave your website and stop progressing in the customer journey – which are opportunities to improve your marketing strategies.

Customers at different points of the purchase journey have very different needs. For example, if a customer has landed on your website for the first time, they want to learn more about you and your product. On the other hand, a customer that has an item in their cart may need an incentive to make them hit that ‘buy now’ button (such as an offer or discount code).

How customers use your product

It doesn’t matter how much market research you do; most business owners are left surprised when they learn how different customers use their products.

With this strategy, you can look at how often customers use your product, how much time they spend with it, what features they use most or least frequently, and how many people use your product at one time.

Occasion-based purchasing patterns

Using this strategy, you’ll usually group purchases into one of three categories:

  1. Universal occasions: patterns that apply to all your customers. This covers things like seasonal demand and national holidays.
  2. Recurring-personal occasions. These are patterns that individual customers repeat consistently, like buying birthday cards, buying a ticket for the train, etc.
  3. Rare-personal occasions. These are patterns that are irregular and normally can’t be predicted, like going on holiday, starting a new job, or buying a new house.

Having a clear understanding of buyer behaviours can help you target customers that fit those patterns - meaning you can predict what they’re likely to do and when. You could use this insight to forecast when a buyer is likely to return to make a repeat purchase - and what that purchase might be. 

Armed with that knowledge, it’s much easier to personalise their online experience and refine your messaging to reflect their needs more closely. This doesn’t just deliver on the personalised experience expectation that today’s consumers hold near and dear. It also gives you a chance to stay top of mind, reducing the risk they’ll forget about you and shop with a competitor.

How loyal your customers are

When you have amassed a group of loyal customers, you can rely on them to make consistent purchases from your eCommerce company.

It’s important to segment your customers into groups of those who are loyal to your company and require minimal marketing outreach, and those who need a bit more of a push to make a purchase. Doing this can help you allocate your marketing budget successfully and maximise the value of all different types of customers.

Is segmentation the same as classification?

Although segmentation and classification seem like related concepts, you shouldn’t get them confused.

Segmentation is all about grouping people or data into specific segments to improve your understanding of them and provide a tailored service. When you’re looking at customer segmentation based on demographics vs behaviours, you’re considering how different factors can influence someone’s decision to buy, as well as how actions vs individual qualities determine a customer’s habits.

On the other hand, classification relates to assigning categories to people or data based on attributes and features to help identify patterns and trends.

How AI and machine learning can enhance behavioural segmentation

AI and machine learning is becoming a crucial aspect of behavioural segmentation as it helps to create more accurate and effective strategies.

AI-enabled audience engines (like QUIN!) that help eCommerce businesses with segmentation can process vast amounts of data very quickly and effectively to provide advanced analytics. With this data, you could identify specific segments, uncover patterns in customer trends, and understand your customers’ preferences – data you can use to create tailored products and campaigns.

Through the use of AI, these audience engines can also make accurate predictions about your customers and deliver personalised recommendations in real time that drive sales and engagement.

Some of the biggest businesses are great examples of how behavioural segmentation in eCommerce can work. For example, Netflix uses AI to understand what movies and TV shows its customers like to watch. Their audience engines are constantly looking at viewing patterns and ratings to provide more relevant recommendations.

It’s the same story for Spotify which uses powerful audience engines to analyse the type of songs, genres, and artists their subscribers listen to. It then segments users based on their music preferences and provides relevant recommendations in the form of  ‘Discover Weekly’ playlists which are carefully curated for each customer through AI. One recent Spotify innovation takes this a stage further - its AI DJ uses your own musical tastes to curate the perfect playlist for you, with a dash of personality thrown in for good measure. 

Give your customers what they want

If you run an eCommerce business and want to take the next step toward providing unique, tailored experiences for your customers, get in touch with a member of our team today to discuss how you can effectively use behavioural segmentation.

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