Start Your E-Commerce Behavioral Marketing Research Here

Aug 22, 2023 10:00:00 AM
11 min read

Illustration of cookie with a bite taken out of it. The days of cookie-cutter marketing strategies are a thing of the past. Today’s e-commerce brands are replacing the one-size-fits-all approach with tailored experiences that resonate with each of their customer's individual needs, and interests. And they’re achieving this through behavioral marketing.

This powerful marketing technique focuses on tracking each customer’s patterns to deliver personalized messages, offers, and recommendations based on their unique preferences.

So, what is behavioral marketing exactly? In this article, we’ll dive into the science of behavioral marketing and how to leverage this powerful tool to optimize your conversion rates and create experiences that resonate deeply with your customers. We even include some helpful resources to learn more!

Let’s get started!

What is behavioral marketing?

Person using binoculars surrounded by projected e-commerce insights Also known as behavioral targeting, behavioral marketing is a marketing strategy that uses online behavior data to classify and target website browsers. In e-commerce, behavioral marketing uses a shopper’s digital body language, such as purchase history, website visits, mouse clicks, search queries, and actions taken on a specific page, to build detailed customer profiles. These valuable insights are then used to deliver more personalized experiences, which translate to more sales.

How does behavioral marketing work?

Curious shopper looking through magnifying glass.Behavioral marketing operates on the idea that different customers have distinct behavior patterns and respond differently to marketing messages. In order for this to be successful for e-commerce businesses, three stages need to be implemented: data collection and analysis, user segmentation, and applying the data. Let’s look at each of these more closely below.

Stage 1: Data Collection & Analysis

The first step of behavioral marketing is gathering and analyzing shopper data. This information can come from numerous channels, such as websites, search engines, mobile apps, email, CRM systems, social media platforms, and other digital touchpoints. The most common types of data collected are: 

  • Demographics
  • Purchases
  • Page visits and frequencies
  • Session duration and viewing times
  • Website element interactions, such as search bars, menus, and images
  • Clicked ads or links, and landing pages
  • Wish list/Favorited items
  • Transaction progress
  • Amount of time between visits

E-tail marketers dissect the accumulated data to identify patterns, trends, and insights into user behavior. How is this valuable information collected? For the most part, it’s been through a combination of tracking technologies like cookies and pixels, and advanced AI technologies, like Granify!

Stage 2: User Segmentation

Group of people talking. Once data has been collected and analyzed, it can be used to segment customers into different groups based on common behaviors, attributes, and inclinations. For example, if an online store sells hair products for a range of hair textures, it can put shoppers who have viewed products for curly hair in one category, straight hair in another, and thinning hair in a third segment.

Depending on your e-commerce goals and the degree of available data, segments can be as broad or specific as you want, and are often based on factors like:

  • Geographic location
  • Demographics
  • Browsing behavior and history
  • Purchase history
  • Engagement level
  • Customer loyalty

Depending on the tools and technology you’re using, you should be able to select your audience’s preferences or behavior patterns, then have an algorithm automatically construct your intended audience segments.

Stage 3: Data Application

Mobile shopper being served a pop-up. In the final phase of implementing behavioral marketing, you’ll be able to design targeted ads, unique email campaigns, tailored product recommendations, and other messaging based on the insights you’ve gained about your audience and the segments you’ve created. This content is intended to trigger desired actions, such as making a purchase or signing up for a newsletter.

Messaging can come in many forms and should be utilized in as many areas as possible, including: 

  • Website content
  • Google search and display ads
  • Email marketing
  • Social media ads
  • Conversation chatbots

Not only does this add a personal touch to your e-commerce campaigns, but it also increases the chances of higher customer engagement and increased conversions.

Person with computer chip brain. An exclamation mark is seen next to them, as though they've had an idea. Besides being an advanced method of customer or market segmentation, the main distinction between behavioral marketing and other types of marketing is in what data is used. Behavioral marketing uses on-site behavior data, which can be collected without the shopper needing to register or log into your site. This can include information like browsing history, search queries, and purchase patterns.

Conversely, other types of online marketing rely on the user to express interest deliberately; for example, filling out an online profile, logging into their account, or placing items in their cart. How else does behavioral marketing differ?

Individualized Personalization

By emphasizing delivering tailored content and offers that resonate with each shopper, the chance of increasing conversions increases substantially—80% of consumers are more likely to buy from a company that provides a personalized experience. (Source: Startup Bonsai)

Customer-centric Approach

Rather than just relying on broad segments, behavioral marketing puts the customer at the center by understanding their preferences, interests, and actions.

Person running with a cup of coffee and a laptop. The laptop's charger is still attached, and trailing behind.Customer Journey

From initial awareness to post-purchase engagement, behavioral marketing takes the entire customer journey into account so it can optimize the whole experience.

Real-time Adaptability

Behavioral marketing can adjust in real time, according to a user's current behavior. For instance, if a customer’s on-site actions indicate that they’re going to abandon their shopping cart, it can prompt an automated personalized on-site message to encourage them to complete the purchase

Eight Advantages of Behavioral Marketing in E-commerce

1. Better Insights

Every behavior data point can be used, which removes any limitations of only knowing what logged-in users are up to.

Person looking through a telescope. 2. A Tailored Approach
Whereas other types of marketing either show the same message to every visitor or have to wait for information, behavioral marketing allows you to roll out a personalized strategy the first time an anonymous user visits your site.

3. Enhanced Customer Experience

Shoppers are more likely to respond positively because they are being met with highly personalized content that aligns with their interests and needs. This can lead to greater customer engagement, satisfaction, and loyalty.

4. Increased Conversions

When customers are presented with products or services they are interested in, they are more likely to make a purchase (and less likely to ditch their carts at checkout).

5. Reduced Ad Fatigue

By delivering relevant ads, you’ll reduce the likelihood of annoying consumers with repetitive or irrelevant advertisements.

6. Higher Average Order Value

Strategies such as upselling and cross-selling encourage customers to add more items to their cart or upgrade to higher-priced options, thereby increasing the average order value.

Illustration of a coin. 7. Improved ROI

By segmenting your customers based on their online behavior, you’ll be able to identify new opportunities and trends, while also creating more effective marketing campaigns that generate higher returns.

8. Better Inventory Management

Analyzing customer behavior can help e-commerce businesses understand which products are more popular and manage their inventory accordingly, reducing overstocking or understocking issues.

Five Disadvantages of Behavioral Marketing in E-commerce

1. Privacy Concerns

Collecting and analyzing personal data can raise ethical and legal concerns, especially if not handled transparently or responsibly.

Floating illustration of a lock.Solution: To avoid problems, make sure to adhere to relevant data protection and privacy regulations, such as GDPR or CCPA, or assign random identifiers to avoid the use of Personally Identifiable Information (PII) when collecting and using customer data for behavioral marketing.

2. Limited Traffic

While behavioral marketing doesn’t lack in the data department, it won’t drive more traffic to your website. If your KPIs are based on traffic alone, this isn’t the strategy for you.

Solution: If your KPI is about improving the quality of the traffic you bring to your site or increasing the average order value of your existing traffic, behavioral marketing technology is exactly what you need.

Shopper smiling with two shopping bags in hand. A speech bubble shows a 'thumbs-up' emoticon, conveying the shoppers satisfaction. 3. Customer Perception

Overly targeted advertising can sometimes make shoppers feel like their online behavior is being constantly monitored and analyzed, leading to a sense of discomfort or "creepiness."

Solution: Strike a balance between personalization and intrusiveness by respecting customer boundaries and monitoring your marketing efforts across all platforms.

4. Dependency on Technology

Behavioral marketing requires the right technology infrastructure, expertise, and data analysis. If you run into a technical glitch, such as website downtime or a change in algorithms, it could disrupt campaigns and negatively impact results.

Solution: Having the right technology (like Granify) with guaranteed uptimes and updates planned for when there will be minimal impacts on your customers, can help you understand and act on behavioral data in real time.

5. Costly Implementation

Collecting and analyzing customer data can be a pricy process, especially if your e-commerce business lacks the resources to invest in the required tools.

Piggy bank with a coin being slotted into it. Solution: The benefits of behavioral segmentation compensate for the costs, with brands that implement dynamic content reporting an ROI of 42:1 . What’s more, the shopper insights obtained often lead to increased profits and improved customer satisfaction.

How can behavioral marketing be used in e-commerce?

The beauty of behavioral marketing for online retailers is that it can be used in a plethora of ways, both on your site and beyond. Here are some of the best ways to implement this must-have tool into your e-commerce strategy:

Personalized Product Recommendations

Use the behavioral data you’ve accumulated to generate personalized
product recommendations that can be displayed on product pages, in shopping carts, or via email.

Segmented Email Campaigns

Two letters traveling through the air. Increase your e-commerce sales with targeted email campaigns. These can be implemented based on various factors – from tailored emails featuring products related to a user’s online behaviors to sending a "thank you" email after a customer has bought something, with an incentive for a future purchase.

Abandoned Cart Recovery

cart - emptyTo continue from the last point, behavioral marketing helps e-commerce businesses recover abandoned carts by sending personalized messages or email reminders or incentives to users who added items to their carts but did not complete the purchase.

Loyalty Programs

If you offer a loyalty program, you can tailor rewards to customers based on their behavior, such as repeat purchases or referrals, which can incentivize customers to engage with your brand consistently.

Behavioral Triggers for Pop-ups and Overlays

Display pop-ups or overlays based on user behavior, such as exit-intent pop-ups offering discounts to prevent cart abandonment, or time-sensitive offers activated by prolonged browsing.

Additional Resources About Behavioral Marketing and E-Commerce

Now that you know the basics of behavioral marketing, you may want to dig even deeper. Here are some suggested reads for the e-commerce professional with an interest in marketing and data. 

Behavioral Marketing:
Delivering Personalized Experiences At Scale
by Dave Walters

This book is the tactical guide to understanding and implementing behavioral marketing in your online marketing strategy.

The 95% of Behavior Marketers Ignore
by Neale Martin

This book is great if you want to understand why behavior is important to marketing in the first place. Apply this to e-commerce, and you’ll find that on-site behavior data can be understood and used in creative ways.

The Smarter Screen:
Surprising Ways to Influence and Improve Online Behavior
by Shlomo Benartzi and Jonah Lehrer

Written by a leading behavioral economist, this book talks about how to influence online behavior, contrasting it with offline behavior. Read this book if you want to learn the science behind why certain interface elements can make a huge impact and why others don’t.

Predictably Irrational:
The Hidden Forces That Shape Our Decisions
by Dan Ariely

This book delves into the irrational behaviors that drive our decision-making and how marketers can leverage these insights.

Conversion Optimization:
The Art and Science of Converting Prospects into Customers
by Khalid Saleh and Ayat Shukairy

This book covers the principles of conversion optimization, including behavioral psychology and user experience design.

Using Behavioral Science in Marketing:
Drive Customer Action and Loyalty by Prompting Instinctive Responses
by Nancy Harhut

This book shows how to apply behavioral science principles in key areas of marketing, including marketing communications, email, ad campaigns, social media, and sales funnel conversion strategies.

E-Commerce's Evolutionary Tool

Illustration of a rocket ship taking off.The integration of behavioral marketing into e-commerce practices is essential for forging deeper, more meaningful connections with customers. By leveraging powerful machine-learning technology, data-driven insights, and personalized approaches, you’ll be able to craft tailored experiences that resonate with individual shoppers—ultimately leading to increased customer engagement and conversion rates. 

As the e-commerce landscape continues to evolve, those who harness the potential of behavioral marketing are poised to thrive in a world where understanding and catering to consumers through consumer psychology is paramount. All it takes is the right technology (and a lot of real-time data) for it to make a colossal impact.

Unleash Your Revenue Potential

A brain full of creativity waiting to be unleashedGranify has helped the world’s largest e-commerce brands supercharge their conversion rates and customer satisfaction. And it all comes down to our innovative machine-learning technology, backed by 10 years of shopper data. Talk to one of our expert team members today to find out how behavioral marketing technology can make an immediate impact on your revenue.

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