As value-driven experience becomes table stakes for consumers, behavioral marketing will prove to be the go-to strategy to deliver what customers truly want.
The traditional economic theory positions us, humans, as rational beings.
When it comes to making high-stakes purchases, we come forth as rational actors who operate on logic. We make choices that add to our utility. It’s the traditional economic theory- the ‘rational man hypothesis.’
Wouldn’t it be wonderful if decision-making were this neat?
It isn’t how consumers, or human beings, in general, actually function.
Human behavior is based on specific deviations from logic-driven processes. These, according to Dan Ariely, are predictable irrational cues. From a bird’s-eye view, the choices appear illogical, but if you lay them down and then study them, there are visible patterns.
These patterns won’t make sense to another party, but to consumers, every step makes perfect sense. And follows a personal linearity.
This is what behavioral marketing leans into.
What is Behavioral Marketing?
Concisely, behavioral marketing is a significant segment of marketing psychology. And a modern framework, even though this is what marketing has been truly operating on since the olden days.
In other terms, HubSpot defines behavioral marketing as
“Behavioral marketing is the method by which companies target audiences based on their behavior, interests, intentions, geolocation, and other metrics…By finely segmenting audiences based on specific behaviors or user profiles, organizations can provide relevant content and offers rather than sending general messages.”
Behavioral marketing is how your mobile phones know which product you were searching for on Google. And then gives you ads that recommend the same products. It used to be eerie- users would doubt how their phones knew precisely what they were thinking of.
But today, it’s a substantial phase of data-driven marketing.
That’s what this marketing framework is all about- the science of customer listening.
How else do you think brands promise personalization?
It’s all about applying the basics of behavioral marketing. You are spotlighting patterns and trends in how customers behave and interact with information across devices and platforms.
The Need for Behavioral Marketing
This marketing methodology taps into the gaps left by the traditional playbook. It systematically assumes several things, such as the symmetry of decision-making.
But the truth is that there’s no symmetry to consumer decision-making. The post-pandemic market is extremely disconnected from what it used to be.
The relationship between customer sentiments and spending is untethered.
Their thought patterns rarely align with their behavior patterns. The state of consumers is fragmented. Even as buyers remain vigilant about inflation and skyrocketing prices, they made very surprising trade-offs. While they trade down in some areas, they splurge in others.
Let alone B2C, even B2B marketers cannot assume a one-dimensional buying process. First and foremost, consumers aren’t privy to the brand information that marketers entail. They see what’s right before their eyes.
It’s impossible to paint an accurate picture of the bottom line with half-baked information. There are AI tools and software that can put together different data points into a clear pie chart, but is that the whole picture?
And honestly, this whole picture lacks a vital human attribute: the tendency to be impacted by transient emotions (a trait that compulsive buying is born out of).
It begs the question- is behavioral marketing only about discerning patterns from datasets?
Not quite.
Principles of Behavioral Marketing: The Science Behind
Multiple actors influence how consumers perceive and make brand choices. The choices might not be linear, but they are predictable.
Loss Aversion
Strategic decision-making depends on avoiding loss rather than making gains. According to statistics, the “torment of loss is twice as strong as any equivalent gains.”
It’s what buyers value more, especially during high-value B2B purchases- risk (loss) avoidance.
Most marketing messages delve into this, and those are the ones that actually work. Stakeholders don’t want to hear how your solution will add to their tech stack, even though the revenue impact comes later in the conversation.
What sets the primary stage is how you can solve pain points and challenges in the business. This strategy is more proactive. Companies are inherently scared of losing market share or reputation. To avoid any negative impact, they shy away from partnerships and passion projects.
Marketing can use this bias to its benefit.
Rather than spotlighting the risks, you can underline the benefits and create a sense of gain that can mitigate the buyer’s loss.
From limited-time offers to trial periods, these marketing models leverage this principle.
And the logic? Once the buyer grows used to a product, not opting for it again feels like a downgrade. When paired with a sense of scarcity (“limited”) and urgency (“only for this period”), it helps marketers ramp up the decision-making process.
Framing
How a piece of information or an offer is presented influences their decision-making processes. The entire risk aversion and potential gains conversation builds upon framing, i.e., how do you frame your messages and questions?
There is a fundamental need for a reference point around which your entire messages and brand storytelling revolve.
A perceived value can be acted upon differently, depending on how it’s framed- as a gain or a loss. This principle builds on the psychological discomfort of facing a loss as opposed to making a gain.
Think about this.
There are evidently better service providers out there, mostly in terms of monetary deals. But businesses still hesitate to make a shift. It’s about the potential loss.
Most pricing strategies follow this. The emphasis on why something works 90% of the time is better than highlighting the 10% failure rate.
Focusing on how you frame value through your marketing messages highlights the strengths of your brand over its weaknesses.
Anchoring
It’s a human tendency to believe the very first piece of information you come across. This information is an anchor or reference point that influences how we perceive the rest of the narrative.
Do you remember the iPad launch presentation?
Steve Jobs’ knack for marketing storytelling had created more buzz than the product itself.
Why?
Because Jobs plays into the consumer psychology. This marked the iPad’s price reveal as one of the most dramatic reveals of all time. The pundits had thought it to be around $1000 or more, while Steve Jobs began his presentation with the reference point of $999.
This is what the audience hooked onto. And when Jobs revealed (at the end) the actual price was to be $499, it suddenly looked attractive.
It all boiled down to the anchoring bias. The initial high price served as an anchor, making the final price look more appealing.
The same applies to some of Samsung’s popular commercials, which are basically Apple diss ads.
To remind the market that Apple isn’t the only innovative device maker, it often positions itself parallel to Apple (of course, without explicitly mentioning it!). In some of its ads, Samsung actively highlights the features Apple lacks to promote its own products with features predating its rival’s.
These principles are the fundamental blocks of behavioral marketing. And the examples are living proof that diving into the qualitative, ” the why,” works.
However, a good marketing strategy requires a structure. You cannot adopt principles and duplicate them across your messages.
Quantitative + Qualitative Framework for a Balanced Behavioral Marketing Strategy
To develop a marketing plan that actually influences your target audience, you first segregate who precisely you’re targeting. Irrespective of the marketing model, precision and contextual relevance always hold precedence.
And for your behavioral marketing to make the utmost sense, you get to the very crux-
Behavioral Segmentation.
With this function, you don’t merely segment the audience based on demographic and firmographic data, but also through their behavior patterns, interests, and preferences.
This way, you’re dividing your Total Addressable Market (TAM) into customer groups based on their previous purchases, browsing data, and choices made. It also leverages their everyday search trends and spending habits to outline insights into what exactly the buyers are searching for.
These customers have a myriad of options- the market is quite a vast arena. And with the added complexity of multiple touchpoints, personalized marketing strategies have become imperative.
Behavioral segmentation will help your team craft messages that not only resonate but are also relevant to the audience segment. This means no single message will be sent to accounts with different intent levels, from cold to hot.
This approach facilitates micro-personalization such that no buyer account feels unseen or unheard.
Behavioral Marketing Example: Amazon
An exemplary behavioral marketing example is Amazon.
Amazon leverages behavioral marketing principles to offer its users personalized product suggestions. It bases the marketing model on real-time user data as well as purchasing history.
For example, if you’re searching for a mobile phone, you’ll receive notifications regarding it. Or it’ll offer you discounted (better) deals on different phones, with the same features, the next time you visit.
From “Keep shopping” to “Pick up where you left off,” Amazon tracks behavioral cues to the bone, such as the amount of time a user spends hovering on a product and what they add to the cart.
There’s so much to behavioral marketing than merely personalized product suggestions. Dynamic ads, push notifications, loyalty programs, in-app messaging, email marketing, and retargeting are all behavioral marketing examples.
It has become a mundane modern marketing model. And savvy marketers have come to rely on it-
Vamped customer experience (personalization and precise targeting) ⇒ elevated satisfaction levels ⇒ increase in retention rates and higher conversion rates.
Behavioral marketing is marketing’s crystal ball.
Several experts and veterans believe that old marketing techniques are dead. But we say that it’s merely undergoing a much-needed evolution.
Behavioral marketing is driving this next phase.
Previously, being customer-first felt like an exception. But today, it has become the norm. With data at their fingertips, businesses have opted for and made behavioral analysis of their prospects a crucial step in their overall framework.
They grasp the vitality of a customer-first, value-driven approach. And modern marketers have made it a reality. From Facebook’s dynamic ads and Spotify’s Wrapped to Amazon and Netflix, the marketplace is undergoing a drastic revolution towards what matters to the customers.
A marketing strategy that balances both qualitative and quantitative insights.
One that bridges the gap between customer sentiments and their actual behavior.
