Data-driven marketing has evolved from an innovative and novel approach to a critical part of successful marketing and business strategies. In short, it can be defined as the process of collecting and analysing data, producing insights that then inform marketing strategy and individual campaigns. There are many reasons why a business might consider a data-driven approach, but more often than not, it’s to offer a competitive edge and better experience for customers. Don’t make the mistake of thinking this approach only applies to B2C marketers either. Data-driven marketing is just as important for B2B marketers.
Why the data-driven approach is needed
Today’s customer suffers from major marketing saturation. The average person sees up to 10,000 brand messages a day. The ability to cut through the noise and gain a customer’s attention is paramount. Being able to get the best return on investment for your marketing efforts is also important. No one wants to waste resources on marketing that won’t be noticed by anyone. Here’s where data-driven marketing comes into play.
With a data-driven approach, marketers are able to focus in on the customers that are most likely to convert, understand what makes them tick, and develop messaging that directly speaks to their needs at that precise moment. It gets a business noticed by the right people at the right time.
The figures back this up. Marketers using data to optimise online ads experience 50% better performance than their less data-savvy peers. Similarly, marketing teams who exceeded their revenue goals last year were found to be using data for increased personalisation 83% of the time.
The opportunity for marketers
The raft of opportunities offered by data-driven marketing lies in the fact that it solves many marketers’ current challenges. Customer buying journeys are more complex than ever before. Someone could see an ad on the side of a bus, an online banner ad, a sponsored social media post, and have an influencer recommend a product before eventually purchasing the item. With so many possible interactions and touchpoints, how can a business possibly understand what really made a customer choose them?
Or even more importantly: understanding why a customer didn’t choose your business.
Luckily, the huge increase in marketing channels has also led to an explosive growth in customer data. Marketers have a mountain of data at their fingertips, they just need to understand how to make the most of it. By sifting through all the data from marketing campaigns, transactions, social media, mobile data, and e-commerce (to name but a few) a business can really dig deep into why a customer behaves the way that they do. In turn, this can inform marketing efforts, as well as future product/service development and the overall customer experience.
Even better news, the amount of data is set to increase dramatically again. The Internet of Things (IoT) is becoming evermore embedded our everyday lives, and devices like the Amazon Echo, AI assistants like Siri, and services like Netflix, are all adding to the amount of data that consumers produce.
Where data can drive marketing
To delve even deeper into the potential of data-driven marketing, we can consider several use-cases for the approach:
1. Greater personalisation
Getting the right message to the right person at the right time is the ultimate goal of many a marketing team. Through data-driven marketing, a business can create buyer personas for each type of their customers. This allows them to then understand a customer in granular detail, and tailor marketing messages and offers to individuals based on their unique preferences.
The type of recommendations that you get from the likes of Amazon, Netflix, and Spotify, are only possible because those companies make use of all customer data. By doing the same, a software retailer would be able to deliver timely offers to customers’ inboxes, when they are likely to be looking for a specific deal. Similarly, based on what other customers have purchased, the retailer could recommend and upsell other products.
2. Determine lifetime value
Once you know your buyer personas, you can track each type of customer over time to better understand and predict their lifetime value. This is useful in determining how much to invest in targeting and retaining each customer group. More valuable customers can be enrolled in a VIP scheme for instance, where they get exclusive events or discounts that others don’t receive.
3. Reduce the cost of acquiring new customers
Data can also help with reducing the cost of attracting new customers. Again, the buyer personas come into use here. Once you have those, you can use the insights from each persona to improve your digital, email, and social media marketing and attract/engage the right type of customer. It increases the chances of an individual becoming a customer, thereby increasing your marketing returns. You can also use this data to find similar people to your ideal persona. This look-a-like strategy increases marketing effectiveness by converting customers who are high-value to your organisation and likely to stay with you long-term.
4. Data helps multi-channel marketing
Marketing is now on multiple channels, and tracking returns across all of them can be tough. You can solve this with automated marketing campaigns that deliver a consistent message across all channels – ensuring that the right communication is sent on the right channel, to the right recipient, at the optimum time.
5. A better customer experience
A data-driven approach helps with personalisation and timing, which leads to a better overall customer experience. You can use data to identify potential customer pain-points (any issues customers encounter when checking-out online, for example). By knowing this, a business can quickly resolve any issues that might be impacting sales and annoying customers – before it becomes a major problem for the company.
6. Data-driven product development
Data-driven marketing leads to better understanding of an organisation’s target audience. Those insights can extend far beyond the marketing department, to product development. By knowing your customers, you’ll be able to create products that they really want and need.
7. Predicting marketing success
With enough data, an organisation can study what makes a person behave the way they do and once that’s known, then the likelihood of taking certain actions in the future can be predicted. This can be used to anticipate results with greater detail and for greater personalisation. It can also tell you which customers, services or products to invest in for the biggest returns.
What does it take to become data-driven?
Before you deal with the technical side of things, it’s vital to define a marketing strategy and playbook that aligns with your business strategy. Then, to obtain the results that you want from data-driven marketing, there these things you need to get right:
- First, and most important, you need the right consent for any data you plan to use. From an ethical standpoint, this is extremely important as customer privacy should be at the heart of your marketing efforts – and not just because of GDPR.
- Select the right data platform and way to store your data in the right format for analysis. This is where a data strategy really comes into its own.
- Bring together all your different customer data sources and combine with external data sets like market intelligence and weather data.
- Model the data together to develop insights.
- Make the process real-time if needed
- Look at automating the process (as much as possible) and using artificial intelligence.
- Continuously monitor results and adjust your strategy based on them.
- Tightly integrate your data platform and customer insights with your marketing channels and team.
Building a data-driven marketing team
If you want to do data-driven marketing, you’ll need a team to work on it. Most organisations will use one of three models when building a data-driven marketing team.
- Centre-of-excellence: This has a key individual leading the team who creates and documents all processes. You can see this in global organisations who centralise expertise rather than a dedicated data team in each location.
- Distributed team: This is where an analyst or other data team member is embedded in different teams across different areas and offices. Through this, the analyst gains a detailed knowledge of the team’s priorities, challenges, and how data can serve them.
- Hub-and-spoke: This is a hybrid of the other two approaches. You have a central point of contact but also embedded individual experts distributed throughout other departments/offices/regions. The core team drives the data strategy forward whilst the distributed team works on specific challenges each department/office/region is facing.
To choose the best approach for your company, you must look at factors such as your budget, company size, and geography. No matter the approach, your data quality and infrastructure is critical. Without clear access to data when needed, a data-driven marketing team cannot work effectively. Good data governance is also key so that everyone can trust in the data and the insights it provides.
Data-driven marketing is the new marketing
Data-driven marketing is the future of all marketing. Its ability to supercharge marketing ROI and drive huge results means that it’s gaining a lot of buy-in – not just in leading marketing teams, but also in the boardroom. 63% of marketing teams have stated that their data use is growing, and 88% of companies have used data in some way to improve customer understanding. So, can you afford to be one of the 12% that doesn’t?
Jason Foster – Founder & CEO