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What Is Behavioural Segmentation In E-Commerce?

Published onDec 4, 2024

How do you ensure customer experiences in your e-commerce business meet customer preferences?

E-commerce personalisation is now the foundation of success. Customers are now provided with such an unlimited sea of options that they rightly demand that brands know them as individuals.

Now, how does a brand offer that? They need to know their customers beyond just their demographic and geographic data. Here's where behavioural segmentation comes.

By segmenting customers according to their activity and behaviour, e-commerce companies can send more impactful marketing messages to every group.

In this article, let us explore what behavioural segmentation is and how to build effective behavioural strategies.

What Is Behavioural Segmentation?

It is a marketing technique that groups customers based on their usage patterns, past behaviours, responses to promotional offers, and perceived benefits.

  • • Compared with conventional segmentation methods, which are more often based on the analysis of relatively constant parameters such as age or gender, behavioural segmentation is interested in the actions.
  • • It needs to cause consumers to behave in a certain way. This approach reveals who the buyer is, how this buyer thinks, and why they purchase products or services.

In e-commerce, behavioural segmentation is more helpful since it enables the brand to get closer to customers whenever they are in the buying process.

Let us understand it with an example. E-commerce customers who abandon their carts should be approached with discounts for the products in their carts. This will help you re-engage them and improve customer satisfaction. At the same time, customers who have stopped purchasing for a while can be re-attracted through limited-time deals and sales.

In short, your approach should vary according to their behaviour even though you are trying to re-engage customers. This level of precision is only possible through behavioural segmentation.

What Do You Mean By Behavioural Segmentation?

As the name suggests, behavioural segmentation is a method of segmenting customers based on their behaviour. It is an analysis strategy that studies consumer behaviours, why they do specific things, and how.

Demographic segmentation may divide customers by age, geographical location, and other similar factors, but behavioural segmentation divides them by their attitudes towards your product. This more profound level of analysis helps brands construct interesting and informative campaigns.

In simple terms, behavioural segmentation answers questions like:

  • • What motivates the customers to choose one product over the other?
  • • What makes them buy?
  • • How often do they interact with your site, products, and services?

Therefore, this form of segmentation is invaluable when segmenting customers in e-commerce businesses since consumers' behavioural patterns can be explained.

It's about working with the logic of identifying repeated actions people make when shopping and how they interact to offer the most relevant experience to different groups of consumers.

Why Is Behavioural Segmentation Important?

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Focusing on behavioural segmentation is essential to effectively personalize all marketing strategies.

Here's how behavioural segmentation can be a game-changer:

  • 1. E-commerce Personalisation: This allows brands to create personalised marketing messages, promotions, and customer relationships. For instance, a regular buyer of environmentally friendly products could be targeted with suggestions and offers related to green products.
  • 2. Budget Allocation: When armed with relevant customer information, a company can decide where to allocate its marketing resources. Understanding which segments are more sensitive to particular promotions helps brands channel resources to high-impact areas, making it less expensive to market the products.
  • 3. Retention: Behavioural segmentation allows you to retarget existing customers on their behavioural patterns. The brand can leverage this customer behaviour pattern to interact with the customer on a need-basis, providing them with timely incentives, rewards, or even friendly reminders to increase loyalty.
    For example, identifying and targeting loyal customers will help the organisation retain them through incentives.
  • 4. Forecasting: Evaluating customer behaviour helps e-commerce brands strategise for future needs as they determine their wants and needs. For example, if figures prove consumers of a certain demographic are purchasing more items relevant to that season's trends, brands can plan and stock those products.
    Behavioural data enable the forecast for businesses' needs, ensuring customers' demands are met on time.

TechMonk: The Best Behavioural Segmentation Tool For E-commerce

Types Of Behavioural Segmentation

Behavioural segmentation is very flexible, and many methods depend on customer behaviour.

Here are the primary types of behavioural segmentation commonly used in e-commerce:

1. Purchasing Behavior:

Identifying how customers make buying decisions through purchasing behaviour segmentation is typical. To be more precise, are they involved in compulsive buying or searching for information to make a perfect purchase?

Recognising these trends allows brands to adapt their strategies by extending a one-off sale for the first kind of customer or providing detailed information for the second kind of customer, who is likely to research potential purchases before making a decision.

2. User Status

User status subdivision separates customers in line with the intake into new, active, inactive, or repeat consumers.

Each group requires a different approach. It helps you understand what new users need in terms of introduction, while old users may be interested in a 'come-back' campaign.

3. Customer Loyalty

A brand's customer base is priceless, implying that clients are willing to do business consistently and promote the brand.

Segmenting by loyalty allows brands to provide particular incentives or rebates for the garnered high-value customers.

4. Benefits Sought

This segmentation type deals with the unique features customers seek from a product or service.

For instance, some customers are interested in low prices, while others consider a high quality or environmental freedom cost. Knowing which benefits appeal to different segments helps brands target and communicate correctly.

5. Occasion or Timing

Occasion-based segmentation tries to segment customers based on the events at which they use a particular product, the occasion when they buy it, and the kind of occasions that require it.

A brand can use occasions embodied in customers to promote suitable special offers to targeted customers, creating interaction and improved sales.

6. Buyer Journey Stage

Each type of message appeals to customers in some phase of the buying process, known as the buyer journey. For example, clients may have learning needs in the awareness stage, while those on the brink of purchasing will prefer promotional codes.

The concept of segments by the stage of the journey enables brand communications to get the message right for the consumer at the right time they are receptive to it.

7. Usage

Usage frequency measures the number of times consumers engage with a particular brand. Loyalty is more critical to heavy users than to light users, for whom reactivation incentives seem more compelling.

This segmentation helps brands direct resources to ensure the interaction with each segment continues.

Behavioural Segmentation Examples

Behavioural Segmentation Examples

When watching an example of behavioural segmentation, it is customary to look at some of the already renowned brands that sought to apply the strategy.

These examples demonstrate how companies in different sectors can apply behaviourally inspired approaches to improve their relationships with consumers and grow.

1. Olay: Benefits-Sought Based Segmentation

The Olay brand example focuses on segmenting benefits sought to satisfy various consumer demands. Regarding skincare, preferences can also significantly differ; some people want the product to help fight wrinkles, others want it to nourish the skin and moisturise, or it can be related to protection against the sun.

Olay divides its products according to these benefits and offers products to the relevant consumer groups accordingly. Customers engaged by this approach are more satisfied with Olay.

2. BabyCentre UK: Usage Behavior-Based Segmentation

BabyCentre UK is a parenting website that employs usage behaviour segmentation to target new and expecting parents with appropriate content.

BabyCentre realises users will require diverse information at various stages of pregnancy and early parenting.

3. Guinness: Occasions-Based Segmentation

Guinness's famous beverage brand powers occasions-based segmentation to push sales around particular events.

Recognising that its customers are likely to consume Guinness during celebrations, such as St. Patrick's Day or sporting events, the brand designs campaigns around these occasions.

Strategies for Implementing Behavioural Segmentation in E-Commerce

Implementing behavioural segmentation can feel overwhelming, but it becomes manageable and highly impactful with the right strategy.

Here are four effective strategies to get started with behavioural segmentation in e-commerce:

1. Leverage Data Analytics for Customer Insights

To segment customers based on behaviour, gather data from all available sources, such as website analytics, purchase history, and customer interactions. Analyse this data to identify critical behavioural patterns, like frequent purchase times, product preferences, and customer engagement levels.

2. Personalize Marketing with Targeted Campaigns

Once you have segmented your customers, personalise your AI-powered campaigns for each segment. For example, send exclusive discounts to loyal customers or special offers to new users who have yet to purchase.

3. Use A/B Testing to Optimize Messaging

Occasion-based marketing is another nutritious method Guinness, a famous beverage brand, adopted to sell its products around the occasion. A fact that needs to be kept in mind is that its patronage will drink Guinness during festive occasions like St. Patrick's Day or watching a game of rugby, which is how Guinness positions its campaigns around such events.

4. Implement Automated Segmentation with AI Tools

This means that automating the data segmentation process may not be effective for e-commerce brands that process a lot of data. AI tools that adapt segments on the fly as customers' behaviour evolves can perform the often complex behavioural segmentation.

This way, creating a seamless and personalised marketing experience at scale is more manageable as the possible emerging patterns of customer behaviour can be noticed and addressed with appropriately tailored marketing actions much quicker with the help of automated segmentation.

TechMonk: The Best Tool For Behavioural Segmentation in E-Commerce

Do you know why most e-commerce businesses fail at effective behavioural segmentation? This is because they don’t have a 360-degree view of their customers. The customer data they have is scattered across various data and intelligent silos, blocking complete visibility.

Now, how does TechMonk overcome that? TechMonk makes behavioural segmentation effortless by combining all customer data from various sources in its customer data platform and integrating it with different tools. It also contributes to not creating more data silos by being a single source of all tools for e-commerce businesses.

For behaviour user segmentation, TechMonk’s RFM segmentation is the best tool. RFM (Recency, Frequency, Monetary) segmentation categorises customers based on how recently they purchased, how often they bought, and how much they spent.

TechMonk allows you to define Recency and Frequency events and time periods separately for more precise analysis. Our platform automatically groups customers into 9 RFM segments, making targeting each group with tailored strategies easy. You can also add event attributes like loyalty points, total orders, or recent time spent on specific products for deeper insights.

This detailed segmentation helps businesses create better campaigns, improve retention, and drive repeat purchases effectively.

Here’s how you can perform an RFM segmentation on TechMonk.

  • 1. Launch thae RFM tab from the sidebar on TechMonk's and click the Create RFM button.
  • 2. Type in your segment's name and select the event for which you want to create the RFM segmentation under Select Recency & Frequency Event field.
  • 3. Type in the Start Date and End Date and complete the remaining fields.
  • 4. Select the Next button and you can now see the user segments based on the RFM Event as follows.
    • a. About to sleep
    • b. Price-sensitive
    • c. Loyal customers
    • d. Promising customers
    • e. Recent customers
    • f. Customers who need attention
    TechMonk’s RFM Segmentation
  • 5. Finally, click the Save section button.

TechMonk is not just a tool for customer segmentation. Its incredible features bring outstanding results to your e-commerce business.

  • Gen AI Bot: TechMonk’s Gen AI Bot ensures that your customers' queries are always answered and that they receive personalised recommendations on their favourite communication channel.
  • Journey Orchestration: Orchestrate your customer journey by automating a series of actions triggered by your customer’s behaviour.
  • Omnichannel Communication: Reach your customers with personalised offers and messages through the web, WhatsApp, Email, and social media.

Do you wish to achieve these amazing results in your campaigns? Get on a call with us to know how!

Boost The Effectiveness of Your Campaigns By Targeting The Right Customers.

Takeaway

Regarding e-commerce marketing, don't be fooled: behavioural segmentation is not simply the latest buzzword — it's a valuable approach that can help brands understand their customers even more profoundly.

Using customer behaviours, choices, and needs, companies can design promotional activities that improve customer relations, convert them into repeat buyers, and make them loyal.

Whether offering solutions based on the benefits sought or launching campaigns for a particular event, behavioural segmentation gives businesses complete control over their decisions, making them people-friendly.

FAQs

  • What are four types of behavioural segmentation?

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  • How does behavioural segmentation benefit e-commerce brands?

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  • What's the difference between behavioural segmentation and demographic segmentation?

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