May 10, 2023
By: Grace Lau
How can behavioral marketing help you? Well, it used to be that to market your business you’d have to create a large number of flyers and hand them out to everyone or rent an expensive billboard to ensure that as many eyes as possible could see it. A rather inefficient way of attracting customers.
With behavioral marketing, you can create better-targeted ads, more effective ads that are very likely to resonate with customers and prospective clients. Whereas we used to target consumers based on the broad actions they took, such as pages visited, now we can target users based on very specific actions they’ve taken.
Behavioral marketing is promoting and selling a product or service based on the actual behavior of the consumer. These behaviors include website activity, purchase history, social media activity, and activities from third-party applications. These behaviors offer insights into consumers’ behavior patterns and can be used to a company’s advantage.
Understanding the psychology of marketing can unlock many opportunities for your business. Check out this video on understanding buyer behavior:
Behavioral marketing allows businesses to track and measure consumers’ behavior from the moment they enter a website up to the point of purchase. This is done through the use of tools such as web analytics, heat maps, and user recordings.
The information you gather regarding consumers’ behaviors allows you to analyze the data, group consumers according to their profile, and personalize your marketing towards them.
Behavioral marketing is more effective now than ever because the internet has become a mainstay in our lives. This gives marketers access to a huge sample size of consumer behavior from the luxury of their computers.
These statistics show different facets of behavior marketing that help establish you its powerful impact on your business:
Instead of visiting physical stores first, 87% of American customers begin their product searches on the internet.
It means that a few people go to brick-and-mortar stores and compare the prices to Amazon. They shorten the process by putting their faith in online vendors who recommend products based on their previous shopping behavior.
70% of American customers want their online interactions with brands to be personalized, something businesses can do by using cookies to learn about their online behavior. In the past, this has translated to a 900% increase in the click-through rate for online advertisements using behavioral marketing.
According to McKinsey, 67% of online customers want recommendations from brands and expect these to be relevant. This relevancy happens when companies gather shopping and behavioral data using marketing mix modeling techniques to better their offerings.
Over 50% of surveyed US consumers across multiple industries are okay with companies using their media like videos and photos. Brands can use such media to understand buyers and improve their behavior marketing activities.
Recognizing its importance, US investors have pumped billions into machine learning, like $37 billion in 2019. A development in machine learning can automate and improve behavioral marketing, which can help brands understand and target customers.
40% of American companies back this statement by planning on using AI for customer experience.
We now know what behavioral marketing is and why we should leverage it, but how does behavior marketing work? Well, there are three steps to behavioral marketing: data collection and analysis, audience segmentation, and then applying the data. Let’s look at each step in more detail below.
The first step of behavioral marketing is collecting audience behavioral data. This data can come from many different channels such as:
These days, social media, large online shops, bulk email services, mobile apps, and even automatic call distribution recordings provide a wealth of behavioral data collected from their users. This data can be used by businesses to deliver more relevant content and better-targeted advertisements without businesses having to invest time and money into collecting this data themselves.
From the data collected and analyzed common demographics and behavior patterns will emerge. Using these common traits we divide the people into groups also known as audience segmentation. If we did not segment the audience then we would have to send the same message to the entire audience.
On some platforms, such as Facebook Ads, the audience segmentation process is semi-automated - meaning all you have to do is pick the audience you want to show your ads to. Choose your audience’s interests or behavior patterns and the algorithm will automatically segment your target audience.
There's also more than one kind of audience segmentation, which gives you more possibilities to go about the data collection. Here are the four types of market segmentation and their benefits:
On your own website, you can use Google Analytics to collect data about your site’s users. This data can include metrics such as how long users browse the internet, and which search queries they use. Google can use this data to target their display and retarget ads with amazing accuracy.
For email marketing campaigns, you can easily segment your mailing list based on how they engage with your send-outs. You can send emails to users who have never made a purchase from your business or to those who bought goods during the last month. Make sure to use email authentication protocols, such as SPF, DMARC, DKIM, or OAuth, to improve deliverability by validating the identity of the sender. The great thing about behavior marketing is that you can send different messages to these different segments.
In the final step of behavioral marketing, you need to create ads, emails, and other messaging based on the information and insights about your audience that you gained in the previous two steps.
These messages can come in the form of:
People are more likely to turn into loyalists if they have a connection with your brand. This can happen if you understand their needs, priorities, and how they perceive your products and services. If this seems like an enormous task, let the brands mentioned in this article be your guiding light to behavioral marketing.
Netflix’s most prominent behavioral marketing practice is its expert recommendations, which are so accurate that the engine they run on is valued at $1 billion. These suggestions lead to prolonged viewing, which results in a positive feedback loop of customer loyalty and continued subscription.
How does Netflix do it? It’s a combination of a few things, some of which include:
Netflix keeps a tab of how you behave on the service, specifically what you watch, which it uses to suggest similar titles. Netflix goes a step further than simply recording the titles you see; the service notes down what time the users watch shows and movies, how long they watch the content, and the devices they use.
These three metrics elevate Netflix’s recommendations from being generic. For example, if you like watching horror films early in the morning on TV, you best believe Netflix will suggest those to you when you log in to the platform.
Netflix’s behavioral marketing strategies include sending recommendations based on what other customers with similar tastes are watching. It’d be easy to miss a hidden gem of a show or movie — especially if it is an international title — but this tactic makes new and otherwise less-seen content accessible to customers.
People typically spend a minute to a minute-and-thirty seconds looking for titles before dropping off a streaming platform. That is why Netflix doesn’t display its recommendations randomly but instead ranks them.
A clear example is Netflix’s rows, which generate suggestions based on genres, awards, type of content, similar actors, and other factors. The rows placed higher on the interface have the shows and movies Netflix thinks you’re most likely to watch.
Twitter has built its reputation as being a hub of open discussion; a place where brands and customers can interact. Companies like Netflix, Wendy’s, and others have used the platform to express their tone of voice and have one-on-one chats with users.
The social media giant is aware of the role it plays and did a behavioral study on how customers felt about brands. Rather than using it internally, Twitter made this information public, which can provide companies with insight into how people perceive them.
Twitter released a report, known as #RealTalk, which had an analysis of 5000 voluntary tweets about brands. The data can give brands ideas on improving their behavioral marketing strategy and communicating better with their customers. These were some of the lessons learned:
Companies should take note of these learnings to improve their behavioral marketing practices on and beyond the platform.
Mental health awareness has gone up considerably in recent years, with Google searches for the topic peaking in 2021. Beauty standards can adversely affect mental health, especially with social media propagating unrealistic expectations. Olay tackled this with two campaigns in two different parts of the world:
Search engines are accessible platforms to compare yourself with others, which can lead to mental health issues. Olay’s research revealed that women of color were less prominent in search results relating to good looks. Olay wasn’t okay with this and decided to take this head-on with their #DecodeTheBias campaign in the US.
Olay used behavioral marketing by understanding customer actions on the internet and solving a societally evident problem. This is unlike brands that play on insecurities caused by the media and the internet to their advantage.
According to a study by Leiden University, over 41% of Chinese women use social media to compare themselves to others, including prominent celebrities. Their solution to appearance anxiety is rigorous weight loss, surgery, and make-up.
Olay tackled this societal issue with the “Fearless of judgment, I’m just beautiful” campaign in China by working with actress Jackie Li.
The campaign included a talk show in which the actress talked about her challenges with make-up and how people perceive her appearance, which doesn’t adhere to common beauty standards.
The campaign’s simple message of accepting yourself got hundreds of millions of views and had women engaging with each other about appearance and beauty.
Sephora’s use of behavioral marketing is simple: they observe customer actions and provide non-complicated solutions in-house to create loyalty and retention. Two examples of this stand out:
It is common for people to use apps when shopping offline to compare products and services with online retailers. 75% do that even before visiting brick-and-mortar stores.
Sephora understood this and created an app that provides customers with recommendations, advice, staff picks, product ratings, and everything else that can ease customer decision-making, online or offline.
The brand also tied for first place in Sailthru’s 2022 Personalization Index — meaning the app collects behavioral data like purchase history and likes to give each customer a unique experience.
Sephora uses behavioral marketing by giving customers the right promotional items based on their browsing history. For example, customers that look at products in sales are sent sales-based emails and promotions.
Similarly, Sephora sends promotional emails from certain brands to customers that prefer those products. It keeps customers engaged and interested as their behaviors are being addressed by the beauty giant. It also helps to use a professional email-finding tool. This affects the number of attracted customers.
An oft-discussed topic in marketing classes is the 2012 New York Times article about how Target used an algorithm based on a customer’s behavior to figure out her pregnancy before her family did. Except she was a teenager, and her parents didn’t know nor appreciate the pregnancy coupons by the company.
Some people have questioned the truth of this story, but it does show how Target is known for using algorithms and behavioral marketing to serve its customers.
These are some methods Target uses to understand and cater to its customers:
Like other retailers, Target has a loyalty program: the RedCard, which customers can apply for as a credit or debit card. The card offers a 5% discount and other benefits, but what’s in it for Target?
The retailer uses in-store purchases on the card, customer queries, and online brand interactions to gather behavioral data about customers. For example, it tells Target that a 35-year-old man in Pennsylvania is looking at sports sneakers for running.
Target can use this data to send coupons, offers, and personal promotions to that customer, which will keep them engaged with the brand and encourage them to make future purchases.
Target understands that a consumer’s interests don’t change even though their platforms do; you’ll still want the same things whether you’re using a smartphone or a laptop.
That is why Target combines customer behavior data from its apps, websites, and other sources, barring a few exceptions. The company uses this data to give customers relevant information across devices.
This includes syncing your cart between the website and your smartphone, advertising the right items, and not displaying products you’ve already bought. It makes every customer’s experience personalized; instead of seeing generic things on Target, they get precisely what they need.
Behavioral marketing is a very powerful tool but how exactly can you use it? There are a few ways that behavioral marketing can be used with these methods being available across multiple channels.
With the retargeting or remarketing method, the pages, and products customers have viewed are taken into consideration. Behavioral marketing will then show those pages or products to the customer again even if they are not on your website.
Both Google Ads and Facebook ads offer retargeting options. Learn the difference between the two in this short guide:
On both platforms, you can create a campaign and specify to retarget an audience who has interacted with your products. You will need to plan your remarketing campaigns accordingly. Who exactly do you want to target?
One example may be people who looked at a certain product, possibly added it to their cart, but didn’t make the purchase. You may benefit by sending them a retargeted ad offering a discount. Retargeting ads on social media can really help in building a brand on social media.
You can also retarget customers through email. One common example is if a customer visits a website, adds some products to their cart, but then abandons their shopping cart. You can encourage the customer by sending them a retargeted email reminding them to complete the purchase or even offer a discount.
Today, audiences want to see content relevant to them. Sending messages to your audience with irrelevant content will just irritate them.
However, you can make the content you send to your audience more relevant through personalization. With personalization, you can send the right content to the right audience at exactly the right time. Your sales team could use behavioral marketing and VoIP applications to call customers with personalized offers.
Content personalization can be straightforward with the right data and solutions. This short guide gives you the know-how on delivering the right content to the right visitor at the right time:
You can personalize marketing campaigns using data about users’ gender, location, income level, past purchases, and more. Creating a positive experience with your brand thanks to personalized content will go a long way to increasing your brand equity.
Ever used Amazon? Noticed the “related products” or “bought together” messages you see when looking at an item? This is an example of using behavioral marketing through suggested products.
Customers are becoming frustrated when they receive advertisements and content that is based on their interests. By focusing on the individual instead of the mass segment, you can send product recommendations that convert to sales.
Machine learning and AI allows marketers to use behavioral marketing as a way to trigger automated marketing campaigns based on a customer’s past and current interactions with the business. So, a business can use the insights gained from previous campaigns to send a message to customers that have unique product combinations that also take into account the purchasing trends of other customers.
Before you decide to leverage behavioral marketing in your next advertising campaign, you should consider these best practices for better success:
Imagine a world where the ads you make go out to consumers who are actually looking for what you are selling. Very efficient, effective, and cost-efficient. This world doesn’t exist just yet, but we are getting closer to it thanks to behavioral marketing.
Behavioral marketing is a very powerful tool in a business’s marketing and sales arsenal. Using the data gathered about customer engagement you can retarget, personalize, and give customized suggestions to your audience across multiple channels leading to more sales. Behavioral marketing can even be used in brand marketing to better highlight your brand as a whole.
Grace Lau is the Director of Growth Content at Dialpad, an AI-powered cloud communication platform and enterprise VoIP solution for better and easier team collaboration. She has over 10 years of experience in content writing and strategy. Currently, she is responsible for leading branded and editorial content strategies, partnering with SEO and Ops teams to build and nurture content. This is her LinkedIn.