By Mark Gibson
Using behavioral marketing for better response and ROI.
Marketing and advertising techniques have been rapidly evolving away from demographic and attitudinal segmentation—and towards behavioral segmentation.
This follows a much broader trend in economics: As everyone remembers from Econ 101, classical economics explains the way rational people and markets should behave. But now we have behavioral economics to explain why things actually do happen, using insights from:
- Microeconomic theory
The benefit of using actual customer behavior in marketing is clear—if a prospect has exhibited behavior that suggests interest in your product, the probability of a purchase is much higher. As a result, your response rate and marketing ROI are much higher.
This makes perfect sense, but it raises important questions. How do we identify and tap into important customer and prospect behaviors? And how do we translate insights into actionable and profitable marketing programs?
Gaining insight into customer behaviors.
Identifying and understanding actual consumer behaviors is not as difficult as it sounds. If you’re like most organizations, you have much of this data at your disposal—if you know how to access it. But it all starts with knowing what insights you need and which data will provide those insights.
Example 2: How do you perform relative to competitors?
Insights into the primary drivers of purchase motivation are important, but they aren’t enough. Managers also need to understand how their organizations perform compared to the alternatives available to prospective customers.
Analyzing performance on key drivers of purchase motivation—relative to the performance of other financial institutions—enables clarity on the strengths that can be immediately leveraged to improve sales results.
Example 3: What are your customers’ pain points?
Insights into customer pain points can also enable a bank to address critical business processes and increase buyer response and service, not to mention increasing satisfaction of existing clients.
This diagram illustrates a process mapping exercise that identifies which steps are working well for customers and colleagues, and which are causing friction, wasted time, or customer frustration. Improvements and key learnings are gained at each step of the process, and can be used to improve the process.
Quicken’s Rocket Mortgage program provides a strong example of a better buying experience through process improvement and elimination of classic buyer pain points. With Rocket Mortgage, buyers no longer have to gather and submit 50 pages of financial documents. Instead, the buyer gives Quicken permission to go and electronically “scrape” bank and lender data, so the application takes less than an hour, and the decision happens within 24 hours.
How do you obtain this kind of valuable buying behavior insight? In the purchase decision examples, the organization conducted a survey of customers and prospects. In the case of pain points, it examined and categorized client complaints that had already been received. Both techniques were relatively inexpensive and only required a few hours of analyst time to aggregate results.
Understanding your customer’s buying process.
Once you understand how to make your product and buying process more attractive to customers, it’s time to examine how your target customer learns about your product. This helps you tailor your message and serve it up in the right way at the right time so it’s noticed and acted upon.
There are syndicated surveys from companies like Scarborough that will tell you what media a specific demographic group uses to learn about and buy certain products. But you can also use basic or more sophisticated attribution tools to see how your own customers and prospects behave.
Example 1: What media do your customers engage with?
In this example, the numbers below each of the radio stations represent an index that measures the likelihood of a bank’s audience to listen to that particular format. For example, the bank’s audience is 69% more likely than the average population to listen to “98.9 WCLZ.” In this case, the client is able to make a more effective radio station selection based on its consumers’ behavior, as opposed to selecting stations based on ranking of general audience size.
Example 2: How does media move prospects through a buyer’s journey?
These specific media insights can also be combined to build a more comprehensive view of the “buyer’s journey,” all the way from prospect awareness to client retention and advocacy. Understanding this journey helps you and your team select the right media and create a relevant message for each stage in the learning and buying process.
This diagram illustrates the media a certain target customer demographic uses at each stage of the buyer’s journey. Messages as well as media could differ to move the customer through each stage of the process.
Leveraging consumer behavior at the point of purchase.
The real power of behavioral marketing comes when a customer or prospect exhibits a behavior that indicates he or she is interested in or actively shopping for a product you sell. This can be done in two basic ways.
Method 1: Trigger-event or signal-based marketing.
Consumers send important signals about their purchase intents all the time. As marketers, we need to get better at listening and acting on those signals. For instance, if a client makes a large deposit, something important may have just happened in his or her life that justifies a conversation. Similarly, if one of your best customers experiences an unresolved issue with your organization, some type of service recovery action may be needed.
In the financial industry, several service providers have packaged loan trigger event programs, based on credit bureau alerts. At some FIs, alerts are generated based on pre-defined client behaviors within their CRM systems.
But you don’t need to employ either of these third-party solutions if resources are an issue. Using your knowledge of how customers use your product, identify “out of pattern” behaviors, and set up a process to distribute client events as alerts to the salesperson or relationship manager responsible for that customer.
This approach also needs to be used in your customer email marketing programs. The days of “spray and pray” email bursts are over. These daily or weekly campaigns where the same message goes to everyone have become annoying to most consumers. Witness the increased rate of opt outs. Targeted messages that are relevant to a client based on all the information you know about them are much more valuable to clients, and effective for marketers.
Method 2: Behavior-driven advertising.
Much has been discussed about digital advertising, with regard to its efficiency and measurability. But its most important breakthrough has been its “targetability” based on actual exhibited behavior of the client or prospect.
You are able to watch what your website visitor is interested in—and serve it up to that individual, either on your website, or on other sites they visit later that day or on subsequent days.
You are also able to observe behavior even if the person doesn’t visit your website. (There is a reason Google’s searches are free!) Every time a user searches for a particular item, Google immediately sells that information to providers of that item. So no matter what business you’re in, Google, Facebook and others will provide you with a list of people who are actively interested in that topic or product within the past 24 hours.
Method 3: Artificial intelligence.
Artificial intelligence is already used in digital media placement. AI uses cloud computing and machine learning to model the optimal ad exposure to incite a desired consumer action. Many digital platforms are evolving to use AI for predictive modeling to bid and serve display inventory. This approach is becoming an alternative to human media managers who optimize in and out of publishers, based on that publisher’s performance.
Some platforms even track consumers across multiple media channels, stitching together:
- Connected TV
- Over-the-top TV solutions
- Streaming radio
- Online display
- Mobile advertising
- Even digital billboards
These are all folded into one solution, which is then targeted to an audience segment, based on past behavior as predictive of future intent. In this example, instead of a media team manually creating separate buys from each channel, the media team defines a target audience segment, and lets the AI platform find that audience, regardless of media channel. The AI platform can then bid and serve inventory in real time.
This can all seem overwhelming to a small marketing team or creative agency. Fortunately, advertising networks and buying services have sprung up that—in an automated manner—gather this information and place targeted ads almost in real time. Just as important, you can view and evaluate your campaign on a daily basis, changing it or even discontinuing it. And you can set a daily or monthly dollar amount based on your budget.
Behavioral marketing overcomes many of the limitations of traditional marketing. Just make sure you are leveraging the behavioral tools at your disposal to answer the following questions:
- How do your prospects choose a provider, and how do you stack up? How do you use this insight to improve your new customer growth rate?
- How can you turn customer insights into new product or revenue opportunities? How can you eliminate pain points to increase customer satisfaction and retention?
- How do your prospects learn about and buy your product? What media do they use, and at what stage of the buyers’ journey?
- How can you take advantage of actual shopping and searching behaviors to serve ads when consumers are actually interested in buying? How much will this improve the effectiveness of your advertising?
Answering these questions will increase the value and utility that you and your team provide to the organization, and will help to transform marketing from a necessary expense to an important investment in revenue growth.
Mark Gibson is senior consultant at Capital Performance Group, a management consulting firm that provides advisory, planning, analytic, and project management services to the financial services industry. Email: email@example.com. LinkedIn.
Mark presented these and other insights at the ABA Bank Marketing Conference in New Orleans.