Behavioral Segmentation: How to Make the Most of Your Data

  |  April 4, 2012   |  Comments

In order to deliver a tailored experience to different shoppers, retailers must be able to segment their visitors effectively.

From Hello Kitty Band-Aids to artist-licensed iPhone skins and Subaru's First Car Story animation app, the consumer demand for customization continues to increase across all industries. Advertisers in every industry are looking for ways to create unique user experiences that appeal to the different personalities of their customers.

In order to deliver a tailored experience to different shoppers, retailers must be able to segment their visitors effectively. Capturing data about how many people are visiting your site and how many pages they visit does nothing to inform you about the types of buying behaviors they exhibit and what factors actually play a role in their converting to paying customers. This is where behavioral segmentation becomes crucial in optimizing your marketing efforts.

Real-time data about the purchasing triggers for different segments of shoppers is essential when marketing teams are working to increase purchase conversion rates and average order values. This behavioral data is also extremely helpful for increasing engagement rates for your brand loyalty program and email/newsletter sign-up efforts.

When you know what people are seeking in an experience with your brand, or if you can narrow down shopping patterns or ingrained behaviors within a particular segment of site visitors, then you are able to serve ads and offers that are specifically designed to direct each segment's behavior with the best possible conversion rates.

Last month I wrote a column about 10 unique online shopping personalities, and while information like this is definitely interesting, it doesn't directly do anything for your sales efforts. You must have the capability to launch campaigns based on this behavioral insight while your visitors are still shopping.

This desire for personalization becomes very clear when you look at the numbers from the June 2011 e-tailing group and MyBuys "Closing the Cross-Channel Gap" survey:

  • 66 percent of respondents think that stores where they are part of the loyalty program should deliver them a more personalized shopping experience than those where they don't participate in their programs.
  • 50 percent think retailers where they shop should offer promotions and merchandising tailored to their past purchasing and browsing behavior.
  • 42 percent said they would value a retailer or brand more if it remembered their buying and browsing behavior from where they have shopped before.

These responses, however, only call for the most basic level of user experience customization and are only the beginning of what's possible if you choose to get creative with behavioral segmentation.

Think about what might happen to conversion rates in the following hypothetical situations:

  • A swimwear company that could present a "Sunshine State 15% Off Bikini Sale" for all the women currently on their site who are living in Florida and have put $75 or more worth of bikinis into their shopping cart.
  • An electronics retailer that could message a special "$10 off your next purchase if you write a product review" to all the visitors on their site who have looked at a product three times or more in the last week.
  • A car rental company that could offer an "Upgrade Now and Gas is Free" deal to anyone who has visited their site two or more times in the last week and reviewed Economy Class cars.

By being able to granularly narrow in and segment these specific shoppers, the possibility for conversion campaigns, whether it be through the use of retargeting, display ads, or live offers, is endless. Behavioral segmentation is not only a proven way to narrow in on your audience, but it's essential to your overall conversion optimization success.

One of my colleague's clients, a prominent online hat retailer, wanted a way to target their "toe-in-the-water shoppers" - shoppers who placed a relatively low dollar item in their cart and then proceeded to shop on the site. By using behavioral segmentation, the retailer easily segmented these shoppers and then targeted them with an offer of 15 percent off any order over $75. In doing so, the retailer increased their average order value from $53.67 to $104.16 - a 95 percent jump.

The possibilities are literally limitless when you begin to creatively segment behavioral data.

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ABOUT THE AUTHOR

Aubrey Beck

Aubrey is the director of marketing programs at Salted Stone, a digital marketing agency in Southern California. She specializes in brand strategy and inbound marketing, working with emerging tech companies and B2B providers to identify their voice and create revenue-driving content plans.

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