Deep Dives · 9 min read

What is behavioral data & why is it important?

Behavioral data offers a clear window into user preferences, habits, and decisions so teams can take the actions that build better business outcomes. Learn the essentials of behavioral data, tools, benefits, and challenges for those eager to harness the power of this information.

Table of Contents
  • Key Takeaways
  • What is behavioral data?
  • Where is behavioral data collected?
  • Types of behavioral data
  • Behavioral analytics tools
  • Enhance customer journey
  • Privacy and ethics
  • Applying behavioral data
  • Impact of behavioral data
  • FAQs

Key Takeaways

  • Complete, accurate, and structured behavioral data is valuable for improving customer experience (CX). It can provide insights into customer interactions, preferences, and habits through various activities like website visits, social engagements, and purchase history.

  • It's collected from sources like CRM systems, websites, mobile apps, and social media platforms, and is categorized into first-party, second-party, and third-party data, each with its own benefits and uses.

  • Utilizing behavioral data enables businesses to personalize marketing campaigns, identify and optimize customer journey friction points, develop forecasting and benchmarks, and boost engagement, although it must be managed with stringent privacy and ethical considerations.

What is behavioral data?

Behavioral data describes user interactions with digital environments, revealing detailed preferences and patterns. It stands as a foundational element for personalization and enhancing predictive models across numerous applications.

Utilizing behavioral data unlocks a treasure trove of information about how a customer moves through your business's website or app, revealing potential sentiment signals or speed bumps along the digital experience.

Alongside demographic data, this data is generated by user interactions online, such as:

  • website views

  • newsletter sign-ups

  • shopping cart activities

  • sentiment signals, like rage clicks

  • social media engagements

It’s like a digital breadcrumb trail that customers leave behind, revealing their preferences and habits, and allowing businesses to significantly improve the value of their existing systems, such as analytics, personalization, product forecasting, A/B testing, and marketing automation.

Spoke graph showcasing various examples of behavioral data

Where is behavioral data collected?

To gain a comprehensive understanding of customer behavior, businesses leverage a variety of digital platforms and tools. These systems not only track user actions but also provide valuable insights into preferences and experiences.

  • Marketing automation and CRM systems: Collect data on user interactions, purchase history, and preferences.

  • Websites and mobile apps: Utilize pixels and tracking technologies to capture browsing behaviors and user engagement metrics.

  • Billing systems: Reveal customer payment patterns and preferences, adding a financial dimension to user behavioral data.

  • Call centers: Offer direct insights into customer inquiries and service experiences.

  • Social media and surveys: Enrich understanding by capturing user preferences and feedback directly from the source.

5 icon examples of where behavioral data can be collected

Types of behavioral data

Three main types of behavioral data exist, each with a unique role in decoding customer behavior:

First-party data: Collected directly from customers, offering unparalleled reliability and insight into customer behaviors, preferences, and actions. This builds a foundation for personalized marketing and customer experience enhancement, derived from direct interactions like purchases, abandoned carts, and website visits.

Examples of first-party data:

  • Website clicks

  • App usage time

  • CRM data

Second-party data:
Acquired through partnerships, second-party data is another company's first-party data shared or sold for mutual benefit. This data extends marketing reach by accessing insights from similar customer bases therefore enriching understanding without direct collection.

Examples of second-party data:

  • Data purchases

  • Partnership data

  • Industry consortiums

Third-party data
: Sourced from external aggregators or brokers, this data provides a broad view of market trends and consumer behavior across various sources. It is valuable for broad market analysis and identifying general trends, albeit with less direct relevance to individual customer actions.

Examples of third-party data:

  • Demographic information

  • Behavioral patterns across various platforms

  • Purchase history from external vendors

three types of behavioral data including first, second, and third party with examples

Behavioral analytics tools turn data into action

Tools like Fullstory and Google Analytics function as the core components in the machinery of data-driven decision-making, facilitating behavioral analytics.

Screenshot of Fullstory's behavioral data platform with various user sentiments

Google Analytics tracks user behavior across devices, offering detailed reports.

Fullstory deciphers hidden buying behaviors, equipping data teams to boost revenue with immediate personalization and predictive analysis. It surfaces the sentiment behind the clicks, aiding businesses in crafting superior experiences that secure lifelong loyalty.

These platforms specialize in providing insights into conversion, engagement, and retention without complex queries. Behavioral data analytics tools employ advanced methods like cohort and funnel analysis to study user retention and conversion paths, enhancing customer experiences by combining qualitative feedback with quantitative data and tailoring offerings based on user activity metrics.

Behavioral data in marketing automation systems

Marketing automation systems utilize behavioral data as their powerhouse to craft personalized experiences for customers.

They trigger actions automatically following specific behaviors, thereby creating a seamless and personalized customer journey. By providing consistent messaging across multiple channels, these systems ensure a coherent brand presence, playing a vital role in customer acquisition in today’s multi-channel environment.

Behavioral data is instrumental in achieving business goals such as new customer acquisition, user retention, and minimizing churn rates. It builds trust and grows conversion rates.

Personalization campaigns that analyze behavioral data like browsing history and purchase patterns allow marketers to send messages tailored to individual customer preferences, while segmentation enables more targeted and effective marketing strategies.

Enhance user journey using customer data

Enhancing the customer journey stands out as a key application of behavioral data. It involves using personalization strategies, identifying friction points, and boosting user engagement to improve overall customer experience.

Let’s dive a bit deeper.

Personalization strategies

Personalization is no longer a luxury, but a necessity.

Customers expect brands to understand their preferences and buying habits, and deliver personalized experiences. Organizations leverage behavioral data to understand customer behavior and create targeted segments, enhancing personalized marketing campaigns and improving customer experience.

Take Coca-Cola’s use of image recognition for targeted ads as an example.

This strategy has succeeded in increasing engagement, cautioning against over-personalization and emphasizing the importance of allowing opt-out from personalized experiences. Product recommendations tailored to customers based on their past behaviors exemplify an effective personalization tactic that contributes to increased interest and potentially higher sales.

Identifying friction points

Potential friction points, areas causing discomfort or frustration, are inherent in every customer journey. By analyzing behavioral data and surfacing the customer sentiment behind the clicks, businesses can work towards optimizing these friction points.

Behavioral data platforms like Fullstory offer the following benefits:

  • Collect data on user behavior patterns

  • Identify and alert about user friction in a user experience

  • Improve customer satisfaction and engagement

  • Lead to a more successful customer journey

Spoke graph showcasing common user frustration signals with examples of behavioral data

Boosting user engagement

Boosting user engagement is a critical goal for many businesses, and behavioral data is often the missing link that breaks down the barrier to success.

Heatmap tools, for instance, provide visual illustrations of user behavior on a website, which are critical in identifying areas that receive the most engagement and those that are ignored.

Feedback and voice of the customer tools offer insights that may not be apparent through quantitative data alone. Constantly enhancing the user experience based on insights from behavioral analytics plays a key role in fostering user loyalty and improving engagement.

Privacy and ethical considerations in behavioral data collection

As is true for any form of data collection, gathering behavioral data carries its own privacy and ethical considerations. Behavioral tracking is governed by stringent regulations such as GDPR in Europe, CCPA in California, and PIPEDA in Canada, which mandate explicit consumer consent and the protection of personal information.

Around 40% of consumers lack trust in how brands handle their data, underscoring an urgent need for complete transparency and ethical practices in the use of behavioral data to prevent loss of brand trust.

Practices like data manipulation or lack of transparency can lead to severe outcomes, including legal repercussions and fines, as well as a tarnished brand reputation.

Examples of businesses using behavioral data

To fully grasp the potential of behavioral data, let's consider some real-world examples.

Organizations leveraging behavioral data analytics see 85% more sales growth and a more than 25% increase in gross margin. By analyzing data, they can make informed decisions and optimize their strategies.

Stat box explaining that organizations using behavioral data can see 85% more sales growth

McDonald’s, for instance, has used behavioral data acquired from Dynamic Yield to optimize their high-volume business, effectively increasing customer satisfaction and sales.

DBS Bank’s investment in technology, including AI and data analytics, has transformed it into a data-driven organization, significantly improving the user experience.

Starbucks and Netflix have also benefited from the strategic use of behavioral data, tailoring offers, shaping product development, and strengthening customer relationships.

Applying behavioral data

Behavioral data unlocks the power of true personalization by revealing valuable insights into customer sentiment patterns.

By understanding the personalities of your consumers through their actions, you can tailor your strategies not just to meet but match their moods, making every interaction deeply personalized and effective.

Improve customer engagement

Businesses use behavioral data to understand customer patterns such as page views and interactions. By analyzing how customers engage with digital platforms, companies can create personalized experiences.

Tools like recommendation engines leverage this data to suggest products, enhancing the customer's journey and interaction with the brand.

Data-driven product development

Product development is significantly enhanced by insights into customer behavior, with companies leveraging feedback and purchase patterns to refine new features or products. Integrating AI with a behavioral data platform further sharpens this targeted approach.

AI engines process and analyze data more deeply, revealing trends and sentiments that inform development strategies. This ensures efforts are not just aligned with, but also predictive of, actual customer preferences and needs, making development more responsive and tailored.

Optimize sales and marketing

Sales and marketing campaigns are tailored using predictive lead scoring and segmentation based on customer activity. This targeted approach can result in more effective campaigns and higher conversion rates. Marketing automation systems utilize behavioral data to fine-tune advertising and lead-generation strategies.

Enhance customer retention and loyalty

The analysis of customer interactions and purchase history informs strategies aimed at increasing lifetime value and reducing churn. Personalized email sign-ups and newsletter subscriptions are examples of how a Customer Data Platform (CDP) can foster loyalty and encourage repeat business.

By strategically applying behavioral data across various facets of a business, companies can enhance customer experiences, resulting in improved engagement, more efficient product development, and increased sales and customer loyalty.

Maximize impact with behavioral data

Behavioral data is pivotal today, revealing customer preferences and guiding marketing strategies. It enhances customer journeys and campaign effectiveness while upholding ethical standards.

Leveraging this data effectively drives informed decisions and business success.

Frequently asked questions about behavioral data

What is an example of user behavior data?

What is data behaviorism?

What is behavioral data in CRM?

Who should use behavioral data?

What are the privacy and ethical considerations in behavioral data collection?