Introduction: Why should I read The Blueprint to Behavioral Marketing?
Let’s get to the point. You should read this Behavioral Marketing guide if you want to understand how to make more money for your business while getting more value from each dollar you’re already spending.
There are few events in history that represented a paradigm shift for business growth: The
introduction of Mail, Radio, Television, DoubleClick, Google, and Facebook, to name a few.
It’s about time we add another business-changing development to that list, wouldn’t you say?
Introducing Behavioral Marketing.
Behavioral Marketing is a new, top-performing marketing channel based around the action of
identifying your previously anonymous website traffic and enabling businesses to target that
traffic on a people-based level. With Behavioral Marketing software, businesses can identify
and address the friction points throughout the conversion funnel as visitors experience them
in real-time, both on and off your website, driving incremental value and revenue across all
marketing efforts in the process.
While I realize that is a complex and multifaceted definition, by the end of this guide, you’ll fully understand what Behavioral Marketing is, why it’s the direction your company should be headed (if it’s not already on its way there) and how Behavioral Marketing will not only elevate your business but allow it to continue growing and adapting to the ever-evolving world around it.
*Please note, this is a complimentary excerpt. To unlock the full guide, click here.*
Table of Contents
Part 1: Marketing Today, The Current State of Affairs
Part 2: Behavioral Marketing, The Definition and The People-Based Approach
Part 3: Behavioral Marketing, Addressing The Current State of Affairs
Part 4: Behavioral Marketing, The Business Case
Part 5: Behavioral Marketing, The Purchase Process
Part 1: Marketing Today, The Current State of Affairs
Let’s begin with the world of marketing as it exists today. As Marketers, you should be frustrated. Your current marketing strategies aren’t cutting it anymore. With “digital” and “mobile” being all the rage right now, you’ve worked to ensure your business, along with its marketing strategies, adapt across various digital platforms. Still, in spite of the amount of money you’re funneling into it, your business growth has essentially plateaued.
Until this point, however, the current state of affairs has been out of your control. Now, with Behavioral Marketing, you finally have the tools at your disposal to rejuvenate your business.
In this section, we’ll walk through the 3 key common problems faced by Marketers today and reveal how they’re currently impeding your business growth.
- You Website: It’s sabotaging your conversion rate
- Your Acquisition Channels: They’re maxed out
- Your Retargeting Channels: They’re ROI negative
Problem 1: Your Website (It’s sabotaging your conversion rate)
Let’s start with your goals as a marketer. I think we can all agree that our ultimate goal as marketers is to drive revenue for our businesses. There are 2 ways to do that:
Until now, only the first of those options has been possible: Increasing your quantity of traffic.
Marketers have been focused on this method of increasing their revenue even prior to the existence of the World Wide Web and Digital Marketing. Brick & Mortar Marketers relied on the “Spray & Pray” technique: Companies would spray their money around various advertising options and pray that those options worked in their favor, whether via billboards, print ads, or direct mail.
Today, with the World Wide Web, marketers are armed with new marketing tactics that not only drive traffic but also allow you to really understand the results of your efforts with real and trackable data behind them—Google AdWords, Facebook, and Twitter, to name a few.
At this point, there are an endless number of ways for marketers to drive new and qualified traffic to their businesses for continued returns on their ad spend. In fact, by 2017, digital media ad spend in the US is projected to surpass television for the first time in history and by 2020 is expected to represent nearly 50% of total US media spend.
Considering the market share held by digital, it’s not surprising that for every $92 spent on digital ads driving traffic to a website, only $1 is spent actually guiding that traffic toward conversion once it’s on the website.
Of course marketers continue to rely on that ratio. They focus their attention on the variable of the equation they know they can control, the traffic, and leave the variable that has historically been untapped by technology, the website, untouched.
What does this mean for your digital business? It means that today, your website is comparable to a store devoid of any maps, any store associates, and anything to help your visitors through the conversion journey. And your conversions? Well, they’re suffering as a result.
Right now, your marketing funnel looks like this—what we like to call The Myopic Funnel, or a crude view of your website’s conversion funnel.
Let’s say you’re pushing 10 million monthly unique visitors to your website. You’re treating the majority of those visitors, if not all of them, exactly the same, regardless of how deep into the funnel they might reach or how much purchase intent they are exhibiting. You’re simply leaving them alone on your website to either convert or not convert.
Back in the early days of the internet—back when we, as marketers, didn’t have access to the data available to us today, when our ability to make actionable decisions from this data was limited and our ability to measure the effectiveness of marketing campaigns was thwarted—treating all that website traffic the same way made sense. We had no other choice. The levers that we could adjust to drive more traffic to our websites were turned all the way up, and we were left hoping and praying that our digital stores “fit” the needs of the vast majority of our website visitors.
We’ve finally come out of the dark age. We’ve reached a new digital era, where data is readily accessible, the ability to make informed decisions from this data is conceivable, and the technology to execute on these data-driven decisions is available.
Specific to your digital store-front, the ability to track and understand the behavior of website visitors as they engage with your website at various stages of the conversion funnel is at our fingertips, and the ability to, in real-time, create digital experiences that adjust based on this behavior is finally available. Game-changer.
With that in mind, I have a question for you: If I told you that currently, browsing on your website, are lots of not-so-hidden treasure chests just waiting to be unlocked, would you believe me?
You should. Your Digital Goldmine exists. With the visibility, actionability and measurability I described above, you’ll have the means to unlock that goldmine. And with Behavioral Marketing, you can now confidently dedicate more money to increasing your revenue per session (that $1 in the 92:1 Ratio). You’ll have the means to identify and build individualized conversations between you and your most valuable traffic, growing your business in the process.
Problem 2: Your Acquisition Channels (They’re maxed out)
The majority of marketers rely on Google and Facebook to drive new traffic to their websites (remember that 92:1 ratio—here’s where the majority of that $92 is spent). . . and they should! With Google’s immense audience and Facebook’s extensive reach and granular level of targeting, there’s no doubt that these advertising channels are crucial to growing your business.
However, since you’re reading this book, we can assume that even with that extensive reach and targeted approach, your traffic is not converting at its highest potential. Google and Facebook along with all your other acquisition marketing channels are maxed out.
In other words, you’ve optimized your ads and you’re hyper-targeting to your most profitable audience. You’ve run out of impactful testing options and ideas. Your business can’t afford to spend more toward these channels, as the results won’t net out.
This same ROAS curve can be applied to more traditional forms of advertising. Whether billboards, print ads, or direct mail, you already have a good idea of the target spend for each ad and how much revenue you can expect as a result.
Let’s assume that as a sophisticated marketer, you’ve already captured the most value from your major advertising channels; what’s the next step?
Why not shift the curve upward instead? By elevating the Acquisition ROAS curve, you’ll create more space beneath it.
More space beneath that curve means more revenue for you while maintaining that peak efficiency you’re currently achieving.
But how do I do that, you ask? Behavioral Marketing, of course. Behavioral Marketing will unlock incremental revenue for your business by driving higher returns on the expensive traffic you’ve already managed to bring to your website, shifting that acquisition ROAS curve upward in the process.
Problem 3: Your Retargeting Channels (They’re ROI negative)
Email and ads represent the two retargeting channels businesses rely on to continue an off-site dialogue with abandoning traffic. Via these channels, businesses have the real estate to convince their abandoning visitors to return to their websites and complete their journey to conversion. That said, today, both retargeting methods are ROI negative—regardless of what your analytics might tell you. Let’s take a look at why.
We’ll start with email.
As the primary retargeting channel for the majority of businesses, email is often mistaken for being the most effective channel, since you have control over the full lifecycle of what you’re sending, when you’re sending it, and who you’re sending to.
However, when human capital is included in the equation, email is actually a negative true ROI channel. Human capital should not be overlooked, considering 90% or more of marketing emails are created by internal teams. The process for creating a standard marketing email is arduous, to say the least.
Think about the stages of email creation: strategy, copy, design, coding, QA, deployment—all of this for one single email. And most businesses undergo this process anywhere from 3 to 10 times per week; you are paying for teams of teams to dedicate themselves to building a single email to be sent. With the amount of time and human capital that goes into this channel, email actually represents one of the most expensive channels for most businesses.
Is it worth it? With the current state of affairs, hell no.
The majority of email marketers still rely heavily on the “Batch and Blast” approach. They’re sending everyone on their email lists what is basically the same email. Why not? It’s easy to do, it’s easy to do often, and your analytics are telling you it’s killin’ it.
Correction: It’s killin’ your business growth.
Vice President of Marketing Insights at Adestra, Ryan Phelan, describes one of the major consequences of today’s email marketing approach, as it applies to eCommerce:
“The lack of sophistication drives higher reliance on discount to drive performance. Over time, you end up eroding your margin, because you have to drive a higher or more creative promotional structure to get the person to engage.”
That is to say, in the world of eCommerce, because you’re sending the same emails to everyone on your email list, regardless of their expressed interest or past behaviors, you’re forced to create something more compelling that will pique their interest—a discount, aka The Destroyer of Business Growth.
It doesn’t begin and end with eCommerce. This lack of sophistication permeates almost all verticals and industries.
Think about it this way. By blasting marketing emails to everyone on your list, not only do you have to make the email more appealing to those not interested by including a can’t-be-beat incentive, but you also have to simultaneously ensure that your audience is opening your emails in the first place. How do you do that? You send a lot of emails. You send a lot of emails with the hope that at some point during that week, one of the emails will be relevant to someone.
So let’s recap how you’re currently wasting money:
• You’re sending the same email to the same people.
• You’re sending the same email to the same people.
• You’re sending the same email to the same people all the time.
What’s the consequence of all this wastefulness? List Fatigue. People feel like they’re getting spammed with emails that aren’t relevant to them. So, what do they do? Best case: They unsubscribe. Worst case: Your emails get marked as spam.
According to Silverpop’s 2016 benchmark study, the average unsubscribe rate for email across all industries was roughly 0.13%3 . Let’s see what this looks like for your email list over time:
After sending 361 emails (time being an arbitrary metric here), your email list will drop by 40%. In other words, your current email marketing strategy is destroying your email list, which ultimately will eradicate email as a revenue channel for your business. In order to outpace this decline, you either have to grow your email list quicker or become smarter about your email marketing strategy. . . or both!
To be clear, I’m not telling you to stop sending emails. I’m simply saying you should be smarter about how you’re sending. What does a smarter email marketing strategy entail? Behavioral Marketing.
With Behavioral Marketing, your emails will no longer simply become more archived marketing emails. They’ll be part of a conversation—an ongoing conversation with your individual website visitors based on their relationship to your business, both on and off your website.
Now for ads.
Ads, the secondary channel for retargeting, utilizes real estate across the Internet to continue that offsite conversation with your abandoning traffic. And today, like email, retargeting is likely a negative ROI channel for your business.
Let’s start here: The majority of retargeting vendors outside of Google and Facebook markup the costs of their ads by 100%. You’re paying double what they’re paying for your ads.
Considering the expensive markup, you’d expect your retargeting ads to be among the top-performing channels in your analytics. They’re not. In fact, retargeting ads (outside of Google and Facebook) typically don’t even make it into your top 5 channels if you take a look at your analytics.
But according to my retargeting vendor’s analytics, my ads are performing—so what’s the deal?
The deal, my friends, is that retargeting, as it stands today, is one the industry’s “most overvalued and under-optimized tactics,” according to Ad Exchanger:
“At its best, first-party segmentation, of which retargeting is one branch, can transform digital display, turning advertising into conversation. This is the beginning of a new level of personal relevance and contextualization in media. At its worst, however, the same technology creates a zero-sum game where audiences are hammered with repetitive ads desperately trying to intercept a purchase and earn some credit for something that was going to happen anyway.”
And right now, we’re seeing the worst situation across the board. That is to say, while according to your retargeting vendor, your ads are getting traction—they’re getting clicks and driving traffic to your website—anywhere between 20 to 75% of your spend on those ads is actually wasted. Those clicks, that traffic being driven to your website, they would have completed a conversion anyway. (Pro Tip: Run control groups for your ads to ensure the conversions you’re getting are in fact incremental.)
So, again, what’s the deal? To put it simply, you’re paying far too much for something doing far too little for your business.
There is hope, though.
Let’s return to that first part of Ad Exchanger’s discussion on retargeting:
“At its best, first-party segmentation, of which retargeting is one branch, can transform digital display, turning advertising into conversation. This is the beginning of a new level of personal relevance and contextualization in media.”
Segmentation. It’s all about segmentation. Today, your ads are likely treating all your abandoning visitors the same—a method not so dissimilar from that “batch and blast” approach to email (and how’s that working out for ya?).
Consider the fact that prospects, those visitors who have never completed a conversion on your website, convert at a rate 5X lower than your returning customers.
That’s frustrating. But, it doesn’t end there. These prospects also require far more than a single session or 2 to convert—usually they need up to 9 sessions before they complete that first conversion with your business.
Suddenly, you should understand 2 key facts:
- Retargeting is crucial for your abandoning prospects
- Segmentation between prospects & returning customers is essential
So, to summarize what you’re currently doing wrong when it comes to your retargeting ads strategy:
• You’re paying too much for too little returns.
• You’re treating all your abandoning traffic exactly the same.
• You’re spending too little on prospects and too much on returning customers.
Don’t stress, though. There’s still time to turn your retargeting ads strategy into a ROI-positive channel for your business. It all boils down to focusing on your most valuable prospects first and creating a tailored and segmented ads strategy based on how they’ve interacted with your business.
With Behavioral Marketing, you’ll grow your business by sophisticating your retargeting channels. With its identification-first approach, Behavioral Marketing empowers you to understand your abandoning traffic on an individual basis. Whether prospects or returning customers, you’ll unlock the ability to create a seamless conversation with those individuals across any and every channel they might be in. This holistic approach to Behavioral Marketing, or the people-based approach, will ultimately make your retargeting spend more efficient and worth every penny.
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