Only 40% of marketers think they have their marketing in place. If you are part of the other 60%, this article is exactly what you need. Read on to know all about behavioural segmentation and how it can help you create a drive growth. It’s time to stop being spammy, stop throwing money on every single user and stop burying your head in the sand.
My mom loves floral prints and on the other hand, I detest it. If I get bombarded with messages related to floral prints, puff! you have just lost me.
I have the marketers curse. I read every subject line. Open every email. Even the one's that land in my promotions folder. I closely observe display ads. Even the spammy one's on SMS. I keep an eye out on stuff that stands out. I look through the clutter to find gems. This is a part of my job and I love it.
The frustrating though, is experiencing One-Size-Fits-All marketing. When my colleague gets the same email as my mom. Back in 1998, this would have felt wrong. The shotgun approach is
dying. In fact, it is already dead. Concepts such as maximum reach, maximum awareness and maximum distribution appealed to big companies in the pre-internet world because data was limited, targeting was non-existent and shelf space for products was a limiting factor. Big companies, back then could survive funnel inefficiencies. Not anymore.
Thanks to the internet, brands today have access to unlimited shelf space and fragmented media outlets. Consumers are less tolerant to spam and unsubscribe the first chance they get if you piss them off. Consumers can buy anything, at any time.
In this era, relevancy takes a higher pedestal, ruling the entire user experience, making it almost mandatory for brands to start building super-serve niche audiences.
The need to acknowledge unique individuality and target the right users with the right message has become crucial. And yet 76% businesses do not use behavioral segmentation.
“In this world of information overload, marketing messages must be targeted and relevant to be effective” - Vijay Pullur, CEO of SocialTwist
Digital marketers have access to "an endless supply of actionable data which presents an opportunity for continuous improvement”. Adam Schwartz, General Manager, BustedTees
Marketing stacks are becoming sophisticated day by day and developing insights on customer behavior is easier than ever before. But more than often, insights are rarely utilized and taking along with it an opportunity to create a personalized experience.
Every user has a pattern that reflects in their purchase decisions. Understanding these patterns and segmenting users according to their behavior will help in targeting them better the next time.
Why behavioral segmentation is not working out for you
Already using behavioral segmentation you say?
“The most costly segmentation and personalization mistake people make is not taking advantage of their customer’s behavioral data and getting distracted by outdated batch-and-blast methods.” - Janet Choi, Customer.io
Here are some classic mistakes that marketers commit while planning and executing behaviorally targeted campaigns -
Biased Decision-Making Process
There is always a baggage of biases we carry, backed up by self-made assumptions. In reality, it would far from true. But you continue to practice it without realizing your inclination to a specific predefined concept you have been believing in.
“You need the kind of objectivity that makes you forget everything you’ve heard, clear the table, and do a factual study like a scientist would.” - Steve Woznaik, Co- founder of Apple
Correlation and causation are yet another bias marketers fall prey to; connecting dots that are not related to each other. For example, it could be a mere coincidence that the increase in the sale of superhero t-shirts are due to the ‘save the forests’ campaigns going on. This leads to incorrect behavioral segmentation and your campaigns fail to take off. First and foremost you need to realize you are biased and work towards being open to other possibilities as well.
Targeting Broad Behavioral Segments
The point of segmenting is to dive deep into a user's behavior to target them intelligently. What is the point of having broad behavioral segmentation in which almost everyone fits into? That's not why you segmented them did you? For example, during festivals, a hike is usually observed in the number of purchases a user makes, and the amount of money they spend. This might not hold true during usual days. The time frame needs to be taken into account, keeping in mind other unusual behavior, to zero down to the right sizeable segment.
Your Segments Are Too Small
Holding on to just one main characteristic can lead to lost opportunities. Behavioral segmentation based on what users liked during the sale can make you lose out on other things that they like as well. Broadening your segment a bit more can give you better results and give the users a better experience.
For example, if you segment a user based on ‘Male who likes blue branded t-shirts with white buttons, has pockets and only shops on weekends’ is creating a segment that is too narrow. Only few may fit into it if they do, and it is an injustice to the user as well. He might not receive updates when a new blue shirt is up for sale due to the multiple filters he has against himself.
Relying On Static Segments
Behaviors are subject to change. You can’t hold onto age-old data and state them as valid. Outdated data might not only lead you to wrong marketing decisions but also create an unpleasant user experience. Something the users like right now, might not hold true in a few years to come. The need to keep the data updated is a must if you want to market to the right segments with behavioral segmentation.
Hyundai realized that market change and the change in the user's behavior went hand in hand. Users were no longer on a lookout for mileage performance. The main reason to why users were not buying a car was related to their fear of losing their jobs in the recession. This finding, helped them pave their next steps by releasing an assurance programme for customers by giving them an option to make payments without losing their credit score.
What their ads stated - "We're introducing Hyundai Assurance to show you the faith we have in you. Right now, finance or lease any new Hyundai, and if in the next year you lose your income we'll let you return it. That's the Hyundai Assurance."
Getting Started with Behavioral Segmentation - Optimizing marketing
“It is critical today that marketers think about the context of their customers on the path of purchase: where they are, what devices they are on, what their likely mindset is in that given moment.” - Dan Ariely, behavioral economist
Levels of segmentation
A preliminary segmentation it necessary to make sure you are reaching out to the right crowd. This layer of segmentation should definitely not be ignored.
Tier 1 segmentation
The demographic segmentation covers age, gender, income, education. You don't want to end up selling diapers to 15-year-olds, do you? Geography takes care of the region in which your users are in so that you don't end up promoting products that do not make sense for a particular region. For example, you can’t sell beef jerkies to users in India.
Some businesses even tweak their ads according to the user’s location to make it more relevant. It is also seen that location targeting in mobile, increases the ad performance by two folds.
Paramore provides users with a seamless browsing experience by showing them different homepage styles according to geolocation data. It also helps users to convert quicker as the prices are also converted according to the currency of the country.
And segmenting users according to time zones makes sure that you can time your promotions better.
But, the first layer of segmentation does not define
- User’s product and brand preference
- Device preference for browsing and purchase
- Timing and the device in which users usually transact
- Average order value of the user
Opening the Pandora's box with Behavioral Segmentation
“Knowing who your customers are is great, but knowing how they behave is even better.” - Jon Miller, CEO Engagio
Dell’s realization of the importance of behavioral segmentation, helped them convert most of the traffic that they received. They started targeting users according to benefit sought, products viewed, who added what to cart and who went ahead with the transaction. Users who added to cart and did not purchase were re-targeted via customized ads while on other websites. Due to this cross-selling has also become a piece of cake for them.
Objective behind behavioral segmentation is simple
- Focused funnel optimization efforts
- Doubling down on select acquisition channels
- Creating a better onsite experience
Focused funnel optimization efforts
Behavioral segmentation gives you an exact idea as to what will engage the users and when they would convert. Users can be observed as to how they behave on the homepage, the product page and when do they tend to drop off. The idea here is to come up with an exciting offer to increase the chances of conversion. It could be via a chatbot, exit intent pop up, or even a push notification, which can be sent later on according to the activities they perform on the website. See how you can leverage segmentation in web push notifications. The flow becomes easy to predict and thus help in creating a concrete sales funnel.
For example, you have observed that some users add an item to their cart and then convert in two days. If they still haven't converted, you can create filters like ‘who added to cart’ but did not proceed to purchase in last two days’. And send them a notification with offers encouraging them to convert.
Doubling down on select acquisition channels
Behavioral segmentation also helps you choose the right channels to market in, helping you to put all your efforts on major channels. Keep track on what channel brings in the best traffic; the traffic that gives you amazing results is the one where you need to put your army. Dive into analytics and check your top traffic. See which campaigns are showering you with customers and double down the efforts on those.
“You want to catch people at the best time of day. Half of our customers open on mobile, but not many people purchase on mobile. We want to try to reach them at a better time, when they’re ready to buy.” - Chuck Melber, Marketing Director, Nomad
A homepage is a page that receives the maximum amount of traffic - which until a few years was absolutely true. It is actually the product page that the user directly lands on nowadays. With email, web push notifications and SMS, users directly land on a page they desire to have a look.
With ads on Facebook, users click on a product they like and directly land on the product page. These users could be first time users who might be visiting your site for the first time. They do not land on your homepage and therefore have no idea what else you have to offer.
Creating a better onsite experience
Make sure that you show users other products they might like, create a category to show ‘People who bought this product also purchased’, ‘People who saw this product also liked’ and so on to make sure that they retain on your website.
Live chat plays a crucial role in engaging and retaining users. Check where is it that the users usually drop off. You could probably provide them support and help them in purchasing. You can also add a chatbot to encourage them to chat with you. Chatbots have proven to enhance user experience and increase sales.
Key Audience Segments For e-commerce marketers To Create, Track and Engage
Homepage, product pages and users abandoning cart
Users need to be segmented according to their intent and inclination towards actually making a purchase. Behavioral segmentation according to User behavior on homepage
- Do they usually click on pages with sale
- Which categories do they browse
- The products that they look at
- The brands that they have an inclination towards etc.
"We did things with no rhyme or reason; just sent everything to everybody on our list and called it a day," Justin Hiltz, Media Futurist, Johnny Cupcakes said. It was later that they understood the importance of behavioral segmentation to make their business successful. They then segmented users based on gender, customer interests, and brand preference and received 141% increase in revenue per campaign.
When they are on a product page,
- What filters do they use
- Do they click on recommended products
- Do they add products to wishlist
- What items are added to cart
- Do they click on the chat option and so on
BedBathStore.com crafts its banner ads according to user behavior on product pages, and via behavioral segmentation, increased conversion by 10%. “Now, if a person is searching for bedding, we can do a targeted banner for the bedding category. The offer can appear in the bedding category on our site and can say anything from 'Shop our Luxury Bedding and Save 10 Percent,' to 'Free Shipping on All Bedding Orders Over $75.” Mike Reichman, Co-founder, and COO, BedBathStore.com
The time taken for a user to convert also plays an important thing to track. If the user is a new user, is it more likely that they convert in their own time?
- How long do regular users take to purchase a product
- Does price play a role in users abandon the carts
- Is there a high chance of users abandoning the cart by the end of the month
- Do they add to cart or directly purchase,
- How do they respond to offers and discounts etc.
Fashion Store started segmenting users who had previously made a purchase but not returned to the website. They re-targeted users by sending them an email- thanking them and providing them with an offer, encouraging them to buy something else. This behavioral segmentation helped them in increasing sales by 5.5X.
Identifying their Foot in the Door Category
Find a product which the users would willingly buy without a second thought; something simple and low on cost. Once they convert, you have them under your grasp. Now you can slowly unfold other options that they should give a try. Once they gain their trust on the products they receive, they will not hesitate to buy more. For first-timers, expecting them to purchase an expensive product is not viable. Feed users bits by bits to lead them to the product you ultimately want to sell. This approach makes sure that the users do not leave your website in the first go. Show them options that they need to buy and then attack them with the bigger products.
For example, you can't expect a user to buy a $152 necklace on their first visit. Show them the $4 earrings and then once they buy, show them other products you have that they should pair it up with. And gradually, just like that, you have upsold to a customer.
Understanding drivers for repeat transactions
Identify the trigger that encourages users to make repeat transactions. Is it the special offers you are providing, the coupons that you provide during the purchase process, the card benefits you provide during transactions etc. Segment users based on who opt for offers and what offers do they select. Once you know the categories that they usually opt for, you can update them about the other exciting things that they would be interested in. This also encourages them to choose your site over your competitors.
For example, if a user books a ticket for an upcoming movie, you could give them coupons for snacks that they can have during/ after the movie. Food Stalls at theaters get an 85% profit! Which increases the chances of users opting for booking from your site, as they get coupons.
Identifying seasonal trends and maximising on them
Observe who definitely purchase during a sale. Target them specifically with offers that they won’t be able to resist. Is there a particular season that the users shop? What are the trends going on in the market, what is that the users are buying? For example, during FIFA, products related to football get sold like hot cakes. Identifying the trend and proving users with related offers is what you need to do.
Giving users precisely what they want by segmenting based on
1. Benefits sought
What is it that the users are looking for in a product? What benefit do they seek out for? For example, while buying a toothpaste, what qualities do users look for? Is it the whiter teeth. is it the cavity-fighting qualities, is it stronger gums or fresher breath? What you need to realize is, people, seek varied benefits from the same product.
Let's take shampoo for instance, every user users a different shampoo according to their needs, some use anti-dandruff, some use it to make their hair silkier, some want to make their hair smell like lavender and so on. This behavioral segmentation also gives you a glimpse at the problems they are trying to solve by buying the products. You get one more step closer to knowing them better. The point here is to identify what they are looking out for and segmenting them accordingly. This makes sure that the offers you send out are relevant, thus increasing the chances of them transacting.
NIVEA segmented users according to benefits sought like -UV protection, beauty care, creams according to different skin types has made them tap the right spot. This has made NIVEA Sun, provide the right value proposition to the users and is in the number one spot in the UK.
2. User activity
Keeping track of the pages the user visits and the number of times that they visit will give you an idea of what they prefer to browse. The clicks will tell you what interests them, the categories that they usually go through if they add to cart or add to the wish list first or do they directly proceed to purchase. You can also keep track of the products that they click on and if they choose to see the recommended products as well. Where do the users usually drop off? Does price have a role to play in this, if yes how would they respond to a discount offer?
All this data helps you in retargeting users effectively with behavioral segmentation. You can segment them based on their activities. Slip in a discount for the products in the cart, inform them about the availability of sizes they were looking for etc. You can also make use of behavioral segmentation to target them according to the cards they use during a transaction and provide them with offers accordingly.
For example, PUMA identified customers who were on a verge of becoming inactive and targeted customers who did no transactions in 9 months. They observed users purchase history, assigned different discounts according to their previous purchases and received a 4% CTR by implementing behavioral segmentation.
3. Purchasing behavior
Shopping behavior of a user might depend on external factors as well, such as the changes in the weather and the money they have in their wallet. The beginning of the month when the salaries are deposited in the bank accounts, there is a higher chance of users converting quicker.
Users are usually ready to splurge during festive seasons, weddings, birthdays, especially if they have to gift something. Check what products do they usually purchase, if there is a pattern to it and how much are they are willing to spend.
Another behavioral segmentation can be based on time of purchase. Some users are willing to make a purchase right away as soon a new product that they like is added. For example, when a new model of the iPhone is launched, some users buy it the very same day. While the others might take time, analyze, read the comments, check the ratings and then make a purchase. This assures you that even if you don't have a great sale the first day, few users will take their time to convert.
4. User status
Users need to be segmented in the stages that they are in. Are they a new user or have they been with you for quite some time now? You need to treat users differently based on the stage they are in. You could actually create drip campaigns to attract the new users and share all that they might have missed.
Behavioral segmentation can also be done based on heavy user, light user and zombie user. Heavy users are usually loyal users who depend on you when it comes to an online purchase. A light user is someone who would buy something when an occasion arises; usually an event based purchase. Zombie users are those who have created an account but have transacted once or twice, or not gone ahead with a purchase at all. All these users should be targeted differently with different messages.
Amazon had experimented by showing different prices to different users according to the users status. Dynamic pricing was primarily adopted to give loyal customers better deals. Behavioral segmentation for them not only increased trust but also increased loyal customers.
I agree that it is a lot of work. No one said it was going to be easy. But once you are done with these segmentations, you will start seeing amazing results. To achieve excellence in marketing, behavioral segmentation is a must. You might have to break your head, but it, in the end, it will all be worth it. I promise.