Behavioral Marketing: What It Is and How To Use It for Higher ROI (2024)

How many minutes of exercise did you get last week? How many servings of vegetables? Research shows your answers aren’t reliable: Social desirability bias is the tendency to exaggerate preferred behaviors, and it’s just one of the factors known to distort self-reported data.

Researchers account for reporting bias by analyzing survey results alongside data gathered through experimentation and observation. Marketers take a similar approach with behavioral marketing. Behavioral marketing strategies focus on what customers do—not what they say they’re going to do—to help you better understand your customers and run more effective marketing campaigns. 

What is behavioral marketing?

Behavioral marketing is the practice of gathering information about customer behavior, analyzing it, and using these findings to serve current and potential customers with more relevant marketing messages. It can help you personalize your customer experience, boost conversion rates, and improve return on investment (ROI) on marketing spend.

Types of data used in behavioral marketing

Common types of customer behavioral data include:

• First-party data. First-party data refers to information captured on digital marketing channels you own, like your website or a mobile app. It includes information from site visitors (e.g., clicks, views, purchase history, and on-site search history) and data from past interactions with your business, like service calls or in-store transactions.

• Second-party data. Second-party data comes from business-to-business data-sharing partnerships. A running apparel company and a sports drink company might agree to share information about purchases, for example.

• Third-party data. Businesses purchase third-party data from data aggregators or other customer data providers, like a search engine or social media platform. It includes browsing history, search history, and information related to online purchasing behavior. 

Types of behavioral marketing

Behavioral marketing can provide granular, real-time data about what motivates your customer base. Here are behavioral marketing tactics that could help to increase sales:

Product recommendations

Use behavioral marketing data to offer personalized product suggestions. Product recommendation tools can simplify the process by integrating with your online store, analyzing behavioral data to identify products that an individual customer might want or need, and automatically targeting them with messages like “Suggested for you” or “See your personalized recommendations.” 

You can also use personalized suggestions to target customers as they shop. Two popular strategies are upselling and cross-selling, which analyze session data and cart contents and invite customers to add complementary or higher-tier items to their orders. Apps like Frequently Bought Together use behavioral data to suggest products customers are likely to find interesting.

A beauty company might suggest that a customer upgrade their morning skin care set to the more expensive day and night package, for example. Or, an apparel company might recommend a three-pack of dress socks to go with a new pair of oxfords.

Email marketing

Email marketing campaigns can use behavioral data to deliver targeted messaging. Take abandoned cart emails: You configure a marketing automation platform to follow up with customers who add a product to their cart but don’t complete a purchase.

You can also monitor user engagement with emails to determine what relevant content looks like for a customer. For instance, a pet supply company might incentivize email sign ups with an introductory promo code, and then send a welcome email that includes links to four resources: a guide for new puppy owners, a list of tips to minimize cat-litter tracking, an article on canine chew toy safety, and a guide to enrichment activities for gerbils, ferrets, and mice. 

The business can then automatically tailor subsequent emails based on user clicks. A customer who visits the new puppy guide receives articles and product suggestions designed for aspiring puppy owners, and a customer who selects the small-animal option receives your monthly rodent-focused dispatch.

Targeted ads

Some ad vendors, including Google and Facebook, let you create ads for specific user groups and serve them based on behavioral criteria, like search, browsing, and purchase history. 

Retargeting ads, for example, serve users with content featuring products they’ve already viewed online. A company installs cookies on its site that attach to a visitor’s browser. When the user moves on to other sites, the installed cookies tell ad platforms like Google Ads to promote products from recently visited pages. 

Search engine marketing (SEM)—which is the practice of paying to rank highly for strategic keywords—is also a form of behavioral marketing. Search behavior is a valuable data point for marketers because it can indicate consumer intent to buy products. A cutting-edge headphones brand can pay to appear at the top of the search engine results page for high-intent searches like “best noise-canceling headphones.”

How to identify the most important behavioral signals

Lars Lofgren, co-founder and chief growth officer of performance marketing agency Stone Press, stresses the importance of knowing the behavioral data points that drive value for your company. 

“When I think of actions that are really important, there are really only two that matter,” Lars says. The first, he says, is whether a person has previously purchased within your category: “If you’re selling hiking shoes, you want someone who’s bought another hiking product. They’ve just shown that they’re very receptive.” Even better? Lars recommends looking for people who have bought in your category very recently and asking: “How do I get them to buy something else?”

Of course, Lars cautions: It’s really hard to kind of get that concentrated buyer segment. So you can broaden your lens with the second signal, which is about broader search behavior. According to Lars, anyone doing a product search is demonstrating high intent. That’s why he pays special attention to searches for specific product types and reviews. The buyer conducting these searches has already decided to purchase something. They’re not looking for persuasion—they’re in the funnel and actively searching. “If I can somehow get my marketing in front of those people, then away we go,” Lars says.

Tips for using behavioral marketing

These tips can help you design and run effective marketing campaigns:

Use behavioral data to segment audiences

You can leverage behavioral data to segment both prospects and current customers into specific audience groups based on the intent they signal with their actions. Then, you can target them with marketing messages tailored to that intent. This is known as behavioral targeting. 

While demographic targeting makes broad assumptions about customers based on factors like age or geographic location, behavioral targeting responds to specific customer actions, like clicking a “Learn more” button or enrolling in a free webinar. You can even combine behavioral and demographic data to create hyper-specific customer groups and target them with niche content.

Personalize, personalize, personalize

Behavioral data improves your understanding of customers, which can help you personalize the customer experience and boost satisfaction. Research shows that personalization is a key driver of satisfaction and loyalty: 71% of consumers expect personalization, which they define as brand experiences that make them “feel special” or demonstrate a company’s commitment to relationship-building. Additionally, 78% of consumers say that personalization makes them more likely to repurchase from a company and that it increases the likelihood they’ll recommend a company to others. 

Personalization work could encompass serving tailored product recommendations, marketing messages, targeted promotions, and post-purchase follow-ups. You can use AI marketing tools to support these efforts, but just make sure to keep a human in the loop to ensure that your content is both accurate and appropriate.

Be transparent about tracking

Asking customers for their consent to track behavioral data and explaining how you plan to use it can help you build and maintain trust with them. Disclosure is also mandatory for businesses with customers in the European Union and an increasing number of US states. 

Build trust and maintain compliance by greeting new site visitors with a privacy and preferences pop-up window that informs them of their information-sharing options. 

Use specialized software

Marketing automation software can maximize the value of behavioral data and simplify the work of running behaviorally targeted campaigns. Here are a few types to consider: 

• Segmentation tools. Tools like Shopify segmentation can automatically segment customers based on user behavior and demographic data, letting you create distinct groups like repeat clients or high-value customers. They can also analyze behavioral patterns and uncover factors linked to purchasing behavior.

• Artificial intelligence (AI) tools. AI-powered personalization softwarecan automate behavioral marketing processes like data collection and sentiment analysis. You can then use that data to automate personalized product recommendations and upsells.

• Customer feedback tools. Feedback tools streamline and automate the process of collecting feedback, helping you evaluate the impacts of your behavioral marketing efforts. Some tools can also analyze feedback and integrate with your CRM to store information about customer preferences, which you can use to improve your personalization efforts.