How Can Behavioral Segmentation Benefit Ecommerce?

By Author: Onceptual Business Solutions
Total Articles: 15
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Digitization has reinvented marketing for eCommerce ventures. Instead of aimlessly advertising to everyone and reaching only a few, connecting to a personalized target audience is now possible. Even McKinsey, a global management firm revealed how targeted marketing drives a higher ROI and boosts sales.

We can segment the market basically in terms of audience demography, psychography, behavior, and geography. Every type of segmentation is vital for a healthy marketing state.

However, the audience’s demography, psychography, and geography can be studied or assumed initially when creating personas. It’s not the case in behaviour segmentation. This can be analyzed only over time while advertising to a targeted audience.

Let’s understand behavioural segmentation with this blog.

Behavioural segmentation: An outline

Behavioural segmentation can be done based on a plethora of parameters including time of purchase, preferred products, frequency, sequence of actions, and so on. Based on the current goal and niche of a brand, the audience can be segmented.

The required segmentation in consumer ...
... behavior is possible through performance marketing tools like Google Analytics, Kissmetrics, and so on. These platforms provide a trend of consumer behavior statistics to interpret as per your business goals.

Insights, including Click Through Rates(CTRs) and Cost Per Click(CPC), help eCommerce start-ups understand their consumer preferences. The metrics assist in evaluating creatives, conveying message, and developing targeted marketing campaigns.

An eCommerce can evaluate the quality of the audience reached and the success of the campaigns through metrics like ROI indicators, bounce rates, and other engagement statistics.

Modern Segmentation Strategy: Touchpoints

In the latest sense, the optimal segmentation in consumer behavior is done in stages. It involves identifying and mapping out your marketing touchpoints.

Every buyer, in their journey from prospect to customer, interacts with your brand in more than one digital stage. A consumer may come across a Google Ad at one stage (1st touchpoint) and interact with your website next (2nd touchpoint).

On average, a buyer interacts with 2-3 touchpoints before conversion. However, performance marketing tools only consider the final conversion touchpoint, disregarding the rest.

For instance, if the conversion occurred from the 3rd touchpoint of a FaceBook Ad, the 2 other touchpoints will be neglected in the analysis. But these touchpoints are equally relevant and crucial in consumer conversion as they also helped the prospect to convert. Hence, we cannot disable them based on only the report.

Identifying the crucial touchpoints is vital for optimal market segmentation in consumer behavior. Building strategic mapping plans to describe and brighten a consumer’s touchpoints journey with your brand is essential. Channeling efforts for segmentation should be crafted around this touchpoint analysis.

Segmenting as per Audience Affinity

Audience affinity means, a group of people that has similar behavioural purchase patterns or other behaviourial parameters.

Google’s network reaches 90% of internet users worldwide. However, in eCommerce marketing, quality supersedes quantity. Segmenting based on audience affinity allows you to implement organized marketing to buyers who show genuine interest in your product.

For example, segmenting repeat purchasers or high-frequency buyers helps you run personalized schemes or offers for building connections further. Announcing targeted promotional offers to repeat customers saves acquisition costs and boosts sales.

Capturing insights into the purchase behavior of buyers also provides upselling or cross-selling opportunities. Segmentation according to in-demand categories helps align marketing goals. Cross-selling per category is a more strategic option, leading to higher ROIs.

Similarly, one can segment buyers as per their Average Order Values (AOVs). The technique separates high and low-value customers for targeted upselling outreaches. AOV Segmentation in consumer behavior paves the way for increasing Return on Ad Spends(ROAS).

With a bounce rate analysis, we can thoroughly understand the results of your marketing campaigns and online reputation. Studying the website behavior also defines the situation in detail. The information recorded from the above analysis aids proper Conversion Rate Optimization (CRO).

CRO marketing shifts the focus from simply driving more visitors to converting more prospects. The average conversion rate for US eCommerce sites stands at 2.57%. With efficient consumer segmentation, CRO marketing could make more accurate and user-centric, catalyzing positive returns.

Verdict
The advantages of behavioral segmentation are subjective to the industry and consideration of the consumer market. Consumers react differently to FMCG ads when compared to luxury brands.

Results from segmentation will vary across industries, demographics, and even time. For instance, the conversion rate for the food and beverage sector is 5.5%, whereas that of the hair care sector is 3.5%.

The idea is to identify the type of segmentation which best suits your brand. One can conclude with careful consideration of conversion rates, consumer responses, and website heatmap analysis.

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