Behavioral marketing is one of the most effective ways to get more of your customers buying what you’re selling. And not just any old customers; we’re talking about quality customers — those high-value prospects who will spend more, buy more often, and boost your business.
The good news is that behavioral marketing isn’t a “black box” solution that you have to spend big bucks on before it works. Instead, it can be a relatively simple process that helps you better target your customers and reach them on whatever devices they are using.
Behavioral marketing is an excellent way for companies to improve their return on investment and increase sales. Let’s look at how behavioral marketing works, how it benefits your customers, and some examples of common behavior.
What is behavioral marketing?
Behavioral marketing is the process of targeting specific groups of people based on their behaviors. This approach gives you a better idea of marketing your products and services, leading to higher conversion rates and more sales.
Behavioral marketing has many benefits for both consumers and companies alike:
- It helps you reach your target audience with personalized messaging.
- You can create targeted campaigns specific to your customer’s interests, needs, and preferences.
- It allows you to deliver messages across multiple channels (e.g., email, mobile device notifications).
In addition to helping you improve your sales and marketing efforts, behavioral marketing can also help you increase customer loyalty and retention because you’re providing them with content that they’ll find helpful and relevant.
This approach helps prevent customers from churning (leaving your company) because they receive relevant messages.
Here are some examples of how behavioral marketing works:
Personalized ads.
Behavioral marketing involves using data from your website to target potential customers with personalized ads on other websites.
For example, if someone visits your site and signs up for an email newsletter, you can use that information to target them with ads for similar products elsewhere online.
This type of targeted advertising is very effective because it doesn’t just appear on random websites; instead, it reaches out only to people who have expressed interest in your products or services.
Targeted emails.
Suppose the person visiting your site doesn’t sign up for an email newsletter but does purchase something from you. In that case, you can send them a follow-up email asking if they’d like to receive more information about related items or services that might interest them (again, using data gathered from previous purchases).
This can be effective because those who’ve already purchased something from you are more likely to buy from you again.
How does behavioral marketing work?
Companies use cookies, pixels, and other technologies to track your online activity when you visit their websites or use their apps or other digital services. This information can then be used to target you with relevant advertising that might be more effective than untargeted ads.
For example, if you’re browsing for vacation destinations on Google Flights, the site may serve up ads for Hawaii hotels on other websites you visit afterward. If you’ve been looking at bathing suits on Target’s website, there may be an ad for sunscreen when you next log in to Facebook.
The exact process happens offline as well: If you’ve been searching for gas prices on your phone while driving past gas stations, those companies will also serve up ads when they see your location in the future.
Types of behavioral segmentation to help with behavioral marketing
Behavioral segmentation is based on the understanding that each consumer has unique needs and preferences. It’s a way to understand how different groups respond to various products and services. It uses research to identify groups with similar buying behaviors and tailor marketing messages and offers to those groups.
There are several types of behavioral segmentation:
Based on Purchase Behavior:
Purchase behavior is a behavioral segmentation used to identify and analyze customers who have already purchased a product or service. This information can help marketers predict the likelihood that other customers will buy from them and how much they will spend.
Purchase behavior is helpful because it allows companies to determine which products are most popular among current customers, what characteristics those products share, and what factors influence people’s decision-making when buying those products or services.
Based on Occasion and Timing:
Occasion-based behavioral segmentation divides customers into groups based on when they make purchases, such as holiday shoppers or vacationers who buy souvenirs and other items for friends and family. Occasion segmentation can also be used to create different groups of customers who purchase similar products.
For example, there are many occasions throughout the year when people purchase gifts, but they’re all still gifts.
Timing segmentation is a method of dividing customers by the time they make purchases. This type of behavioral segmentation can be useful when determining trends in consumer behavior over time or within specific periods throughout the year (such as back-to-school shopping).
Based on Benefits Sought:
The most common approach is to segment consumers based on the benefit they seek from your product or service. For example, some consumers may seek high quality while others may be more concerned with price.
You can also use this method to divide customers into groups with similar needs.
Based on Customer Loyalty:
Customer loyalty is an important factor in deciding how to segment a market. Loyal customers are likely to buy more of the same product, which makes them less price sensitive. They may also be more willing to try new products from the same company so that they can be used as a test market for new products.
How do your customers benefit from behavioral marketing
Behavioral marketing aims to understand what your customers like and don’t like so they can be targeted with ads and offers that are more likely to resonate with them. This type of marketing has been around for decades, but it only recently became possible because of the growth in the amount and type of data available.
The benefits of behavioral marketing include the following:
1. Behavioral marketing offers a personal touch
Customers benefit from personalized content because it makes them feel special. Behavioral marketing can help brands provide offers or information based on what customers have previously viewed or purchased.
And if you look at the statistics, 80% of customers say they are more likely to buy from brands that offer a personalized experience.
For example, if someone has been viewing products in your store all day but has yet to make any purchases, you could email them a discount offer before they leave the site. This might encourage them to make a purchase they hadn’t planned to make while there – and maybe even come back again!
For instance, the personalized email below from Brooks was crafted based on the location users give out while logging into their accounts.
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The two versions are created on a single template but have different offers that target users from different climate zones.
2. Behavioral marketing keeps your brand in front of your customers
Good marketing is about more than just making a sale. It’s about keeping your brand in front of your customers so they continue to buy from you and recommend you to others.
Behavioral marketing is the process of using data to identify and target consumers based on their online habits and preferences. Behavioral marketing allows you to reach people ready to buy rather than spending money on advertising that may not reach this audience.
Behavioral marketing allows you to reach people who are ready to buy rather than spending money on advertising that may not reach this audience.
As per McKinsey, you can outperform your competitors by 85% in sales growth and over 25% in gross margins by leveraging consumer data.
Here are some examples of how you can use behavioral marketing to keep your brand in front of your customers:
If a customer visits a retail store and buys something but doesn’t complete the transaction, you can follow up via email or SMS with an offer of 10% off their next purchase. This will help you recover the sales that might have otherwise gone elsewhere.
If a customer shares an article from one of your blogs on Facebook or Twitter, you could reach out with information about related products or services that would interest them based on the content they liked.
You can target ads based on specific keywords (paid search) or specific websites (display). This way, when someone types “apple watches” into Google or clicks on an ad for Apple Watch starts appearing at the top of search results. They’ll be more likely to click through because it’s relevant to what they were looking for.
Take a real-life example: Zuji, an international travel site, uses customers’ past searches and behavior to offer personalized offers.
The brand displays these ads based on users’ past page behavior and considers how many times the user has visited the page to push personalized offers. It increases the likelihood of conversions.
3. Behavioral marketing strengthens customer relationships
Behavioral marketing is a powerful tool for strengthening customer relationships. It’s based on the idea that people are creatures of habit and that if you can identify consumers’ routines, you’ll be able to market to them more effectively.
It allows you to connect with customers more meaningfully because it’s based on their actual behavior, not just their demographics or general interests. It’s about learning about your customers to meet their needs better — not just selling them something based on demographics alone.
For example, if you know that a customer visits your website every Tuesday at 8:00 AM, it’s reasonable to assume that they will visit again on Tuesday at 8:00 AM next week. If you want to drive more traffic to your website, send an email on Monday night reminding customers about your product promotion on Tuesday at 8:00 AM so they remember to visit the site then.
Here’s a real-life example.
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This ad that promotes the efficiency of fuel of the Toyota Prius is targeted toward environmentally friendly customers looking for ways to lessen their environmental impact.
4. Behavioral marketing increases transparency
88% of customers say that authenticity is a determining factor when deciding what brands they like and support. This indicates that your target audience should be aware of when their data is being collected. And if they’re not aware of it beforehand, you must disclose that you intend to collect data for behavioral marketing.
Behavioral data is collected through clicks, scrolls, and other actions when people interact with a website or app. This data can be used to understand user behavior better and inform decisions about what content should be shown or promoted in your app or website.
For example, let’s say you have a mobile game that gets many users playing for several days before losing interest. You might want to know why this happens so that you can improve your retention rate by showing them different messages at different times of the day or promoting certain features at different points in time.
To increase transparency around behavioral marketing, here are some things you can do:
- Disclose the source of your data. If you’re using third-party platforms for behavioral marketing, make sure you disclose where the data is coming from so customers understand how it’s being used. This could be through an opt-out button or a link on your website that explains what the company does with this data and how consumers can opt out if they prefer not to receive targeted ads from that platform.
- Clearly state what type of behavioral targeting is being used in each ad. For example, if you’re showing an ad for shoes based on someone’s search history for “running shoes,” then make sure you include this information in all your ads so people know why they’re seeing them.
And since behavioral marketing entails understanding what your customers want before you can offer them something that will meet those needs, you can ask questions or survey them directly or monitor their online activity using behavioral marketing software Hotjar, FigPii, Google Analytics, and more.
5. Opportunities for cross-sells and upsells
One way that behavioral marketing can be applied is through cross-selling, which is the practice of suggesting additional products or services to existing customers who are already buying something from you. For example, if you’re ordering flowers online and choose same-day delivery, you might get an offer on cupcakes or balloons to send along with the flowers.
Another way that behavioral marketing can be applied is through upselling, which involves persuading customers who have already bought something from you to buy something more expensive or better quality than they originally intended. This could mean persuading someone buying a mid-range TV set to spend a little extra money on a high-end 4K model instead.
But how does that benefit your customers?
Cross-selling and upselling are two of the most effective ways to increase sales, but they aren’t just good for the bottom line. These strategies can also benefit your customers by providing them with more options and keeping them from leaving your site.
Here’s how cross-selling and upselling can benefit your customers:
- Cross-sells help customers find items that they might not have considered
- Upsells give customers a chance to spend more money on their original purchase
- Cross-selling and upselling provide value to your customers by helping them find products that complement their needs
When customers are about to make a purchase, they easily get caught up in the excitement of buying something new — so much so that they forget about other options available to them. A little cross-selling can go a long way in reminding them of these different possibilities without being too pushy or interruptive.
A great example is Amazon’s “Frequently Bought Together” section or a similar functionality on many other sites (eBay, Walmart).
Another example could be – let’s say you’re considering purchasing a new pair of shoes and have previously bought running shoes from this site. In that case, it makes sense for the site to recommend that you also purchase some insoles or socks along with your new shoes.
6. Behavioral marketing provides tailored content to customers
Behavioral marketing allows companies to tailor their messages to the needs and interests of their customers. This is done by collecting data about customers’ activities and interests and using it to determine the types of products or services they are more likely to buy.
Behavioral marketing aims to provide tailored content that speaks directly to the needs and interests of each customer. For example, if you’re a retailer selling clothing, you may want to send an email advertisement for a new line of winter coats to someone whose purchase history shows that they have recently bought several pairs of gloves.
Behavioral marketing is also used to determine which products or services are most likely to be purchased by people with specific characteristics. For example, if your company sells insurance policies, you may want to know whether younger people tend to buy more accident coverage than older people do. If so, then you can tailor your advertising campaigns accordingly.
For example, if you look at Mariah Coz’s blog, she does a fantastic job of offering her best tips and strategies.
(Source)
She empathizes with the readers’ pain points, talks about the benefits of buying her course, and uses distinctive sales techniques like debunking myths.
Behavioral marketing helps her in making the reader feel like she’s directly talking to them.
Over to You!
Online marketing is an ever-changing and innovative space. Ensuring a lasting customer experience requires brands to take advantage of the latest resources and technology, including behavioral marketing tools, to provide tailored content to each customer.
We are already seeing a surge of campaigns that utilize individual consumers’ information, including their profiles and interests, to offer great deals and promotions when necessary.
Behavioral marketing technology will help brands connect with consumers by personalizing their experience. This trend will continue rising as more companies learn how to leverage more personalized marketing techniques.
Ultimately, it’s a matter of semantics. The important thing to remember is that behavioral marketing takes a more direct approach to using data to target customers with tailored content. This strategy opens up many new opportunities for marketers and may even dent the aggressive growth rate we discussed above.\
Behavioral Marketing FAQs
What are the steps of behavioral marketing?
- Data Collection: The first step involves gathering data on customer behavior, such as browsing history, purchase history, and engagement with emails or social media.
- Segmentation: Once you have enough data, segment your audience based on their behavior. This could be as simple as separating frequent buyers from occasional ones or as complex as identifying behavior patterns that indicate a readiness to buy.
- Targeting: Use the segmented data to target different groups with tailored marketing messages. This could involve personalized emails, retargeted ads, or even customized web experiences.
- Implementation: Deploy your targeted marketing strategies using various channels like email, social media, or PPC ads.
What Types of Businesses Benefit Most from Behavioral Marketing?
Behavioral marketing is versatile and can benefit a wide range of businesses. However, it’s particularly effective for:
- E-commerce Businesses: With a wealth of data on customer behavior, e-commerce platforms can highly personalize the shopping experience.
- SaaS Companies: Understanding user behavior can help SaaS companies improve their product and reduce churn.
- Content Publishers: Websites that rely on ad revenue can use behavioral marketing to increase engagement and, consequently, ad impressions.
- Service Providers: Whether it’s a travel agency or a local spa, understanding customer behavior can help service providers offer the right packages to the right people at the right time.
How can businesses measure the Effectiveness of Behavioral Marketing?
- Conversion Rate: One of the most direct ways to measure effectiveness is through the conversion rate. Are more people taking the action you want them to take?
- Customer Retention: Behavioral marketing isn’t just about making a sale; it’s about building a relationship. Are customers coming back?
- ROI: Calculate the return on investment by comparing the revenue generated through the campaign against the costs.
- Engagement Metrics: Look at metrics like click-through rates, time spent on a page, and social shares to gauge how engaged your audience is.
- Customer Feedback: Sometimes, the best way to know if your behavioral marketing is effective is to ask. Customer surveys can provide valuable insights.
Is Behavioral Marketing Ethical?
The ethics of behavioral marketing largely depend on how businesses collect, store, and use data:
- Transparency: Businesses should be transparent about what data they’re collecting and how they’re using it.
- Consent: It’s crucial to obtain explicit consent from users before collecting their data.
- Data Security: Businesses must take steps to store and protect the collected data securely.
- Regulations: Adhering to data protection laws like GDPR and CCPA is not just good practice; it’s also a legal requirement.
Businesses can implement behavioral marketing in a way that is both effective and respectful of consumer privacy.
