How to Use Behavioral Segmentation to Increase eCommerceProfits

Behavioral segmentation creates personalized customer journeys and increases profits.

This post shares advanced behavioral segmentation tactics and strategies for eCommerce brands. Today, personalization software gives you the ability to observe and adapt to customer behavior.

Adopting these strategies will not only create a better customer experience, but also make your store more profitable. Let's get started!

What is behavioral segmentation and how can we use it? 

If you are already familiar with behavioral segmentation, feel free to skip to the next section.  


If you're not, it is helpful to define what is behavioral segmentation.

Segmentation is the process of "dividing a market into groups of customers with similar needs, and developing marketing programs that meet those needs"

Behavioral segmentation focuses on dividing customers by their past behavior.

Because actions demonstrate more about customers' intent and preferences than mere demographic information, behavioral segmentation is more predictive, and therefore effective.

“...behavioral segmentation is more predictive, and therefore effective."

Data enables behavioral segmentation.

While segmentation as a marketing strategy has long existed, it hasn't been possible to track customer behavior accurately and at scale until recently.

Personalization software like Barilliance automates data gathering for you.  Now, you can define any number of segments based on behavior.

The rest of this post will focus on successful behavior segmenting strategies. 

The base behavioral segmentation formula: (behavior) = segment

An effective segmentation identifies a distinct group of customers.

We created a variety of behavioral segmentation formulas that ensure you are creating effective segmentations.

The first is the "base" formula. It is the simplest type of behavioral segment you can create. It is defined as the behavior itself. 

  • Behavior - This can be any customer behavior you are able to record. For instance, it can customers who purchased something, or who visited the website. 

How Barilliance automates behavior segmentation

Barilliance automatically tracks user behavior on your site. To create a base behavior segmentation, simply specify which behavior you would like to create the segment on. 


Options fall into three general categories.


Engagement behaviors: This includes behaviors such as distinguishing between first time visitors to returning ones, adding specific or any number of items to their cart, or viewing a product. 

On-site behaviors: Engagement behaviors are a subsection of more general on-site behaviors. Other on-site behaviors include visiting specific URLs, how long they spend on your site, and specific queries they make on your site. 


Traffic source: The traffic source category describes previous behaviors of your visitors before they reach the site. They are excellent at providing context. Examples include what types of offer are they responding to, what mediums do they spend time on, and what if any campaigns are tied to the session. 

Visitor Insights: These are advanced cross sections, often including multiple behaviors and eCommerce KPI thresholds. We will describe these more in detail below.

Segment

Behavior

Description

Engaged shoppers

Time on site > 10:00

Users who actively shopped around the site

Returning customer

# purchased items > 0

Users who previously purchased

Adding a threshold: (behavior) + (threshold) = segment

We can greatly increase how precise our segmentation is by adding what I call a threshold.

A threshold is a  tipping point in a specific metric. It can either be a lower limit or an upper limit, and the metric can be any metric of choosing.

An example of a threshold is a minimum of $50 (lower limit) AOV (metric).

Combining a behavior with a threshold gives you greater control on who is included in the customer segment.

  • Behavior - This can be any customer behavior you are able to record. For instance, it can customers who purchased something, or who visited the website. 
  • Threshold - passes tipping point of a specified metric

Segment

Behavior

Threshold

Description

Engaged shoppers

Time on site > 10:00

#viewed items > 5 in x category

Active shoppers who expressed interest x category 

Returning customer

# purchased items > 0

AOV > $50

Users who previously purchased with an AOV > $50

One common challenge with implementing thresholds is making sure your data is unified. 

In fact, data unification is one of the primary criteria we outline in selecting a personalization software parter

In this article, we describe the challenge of data unification more deeply, but for now, realize that you want to combine purchase history from all sources to create accurate segments.

Adding a where clause: (behavior) + (threshold), (where) = segment

The last formula we will explore today adds a "where" clause. 

Recency matters. It is one of the main factors in RFM analysis, and can be incorporated into behavioral segmentations easily with the right technology. 

An often overlooked segment is one that immediately purchased or experienced your site. 

Another interesting implementation is to target holidays like Black Friday or seasonal shoppers. Below we provide a few examples of segments that implement a behavior, threshold, and where clause. 

Segment

Behavior

Threshold

Where

Description

Engaged shoppers

Time on site > 10:00

Purchase Rate > 0 

Session is within the month

Users who actively previously purchased and shopped around the site in the last month

Holiday Shopper

Bought items > 0

AOV > $50

On black Friday

Users who bought on Black Friday with > $50 AOV

How Barilliance implements where clauses for behavioral segmentation

Implementing where clauses is built into Barilliance.

Many behaviors have options to put in a specific timeframe. Below, you can see the option on how to create a behavioral segment based on purchase history. You can set time frames from their first order or from their last order. 


With this flexibility, you can easily create segments for first time customers who naturally roll out of the segment after a certain number of days have passed.   

Next Steps...

Behavioral segmentation is a powerful tool to create relevant marketing campaigns. 

By understanding what specific segments are interested in, you have the ability to build offers that resonate. I highly recommend learning about RFM analysis to have a core understanding of how to create profitable segments. 


Click here to see other tactics for improving customer experiences.

And, if you'd like to see if Barilliance is the right personalization partner for your store, click here to request a live demo