Behavioral Targeting and the Bottom Line

Think back to the last really great shopping experience you had at a brick and mortar store. Odds are good it involved a great associate who noticed what you were looking at, made recommendations based on your input and browsing, and gently but intelligently guided you towards exactly what you wanted and liked. Or an even better example, how about going to your favorite restaurant and having the hostess take you to your favorite table, the waiter knowing what your favorite appetizer is, and the sommelier already pairing the perfect wine for your meal before you’re even finished ordering? That’s behavioral targeting, and just as in face-to-face interactions, it can make a huge impact in online marketing.

Consider for example an anecdote here about how a small modification to a mailing list segmentation strategy impacted the bottom line in a big way: targeting by specific prior click behaviors more than doubled conversion rate over simply targeting by mailing list identification. A tiny change in the way they segmented lists (by monitoring past behavior rather than by letting the customer self-identify abstractly) allowed PostMasterDirect to boost conversion rates by over 100%.

But that’s just the tip of the iceberg. Just about every major email marketing technology allows you to segment your list based on clicks. The real question is where do you go from here? And how do you do it intelligently?

First things first, you have to look at your capacity for implementing a powerful behavioral marketing program. It will take a degree of time, energy and effort. Secondly, you have to strike the balance between getting your triggers and behavioral followup conditions right and creating a caring and engaging experience (“we are serving you”), or getting them wrong and coming off as either slightly creepy (“we are watching you”) or worse, confusing and annoying (spammy). My personal experience with a large telecommunications company is a great example: every other day, they send me an email about the latest free phone promotion, if I sign a new two year contract. Problem? My contract doesn’t run out for another year –and that is in their database.

If you are ready to make the plunge and you have a team in place to make the transition, whether internal or contracted, you need to make sure your entire analytics set up is ready. It’s not enough to monitor click-through rates, nor to keep track of which links they click on. You need to have a full understanding of your customers entire buying cycle, from the time they hear about your company or product, to the first time they visit your page, to the second they hit the “checkout” button. Otherwise, you’re leaving money on the table, and that can turn a promotion-winning ROI into just another mediocre-or-worse marketing initiative that fails to perform.

After all, going back to that restaurant example, if your waiter knows you love the fried calamari, but the hostess keeps seating you near the kitchen (your least favorite spot), how good will your experience be? Email marketing is the same. If your customer clicked on a particular promotion, and you lump him into that product category without paying attention to the rest of his online history, you would be likely to miss the mark. If he buys a teddy bear for his daughters birthday, and you send him emails about the latest stuffed animal deals, ignoring that he generally shops in the power-tools section of your online store, how long do you think he’s going to stay on your mailing list?

If, on the other hand, you notice that he buys a new pair of work boots every 6 months, you have the chance for some serious up-selling.

Most of all, remember: Behavioral marketing is a fantastic tool that can be used to wring incremental opportunity and dollars from of your email list, and to push your conversion rate to its maximum. But as this excellent post by our friend Avinash points out: trying to squeeze a fraction of a percent out of your conversion rate while alienating potential customers is never a good decision.

Your customer doesn’t care about the shiny new technology you just rolled out. They care about the experience they have with you. They don’t only expect, but outright require, that you know what your talking about when you talk to them –that means you achieve relevancy in your communication.

Lose sight of that and you may be losing your customer’s permission –and opportunity only email marketing provides: the single highest ROI of any online marketing. So when it comes to behavioral targeting –it pays to “behave” as a marketer and deliver not just messages, but “a pleasant little experience” to the inbox.