Not so long ago, marketing was quite a simple proposition; marketing executives would create advertising campaigns for “brand-building” and as long as this generated some leads, and then (directly or indirectly) drove sales, their job was done.
Then, in a quantum evolutionary leap emerged digital, and simultaneously brought a deluge of disruption to the marketer’s life, challenging and changing his role in the business.
The move to online channels and the explosion of customer engagement data led to an increased focus on data and measurement, and started the cries for more accountability from marketing. There is no question that the modern marketer is on the hot seat and every marketing dollar he spends is under intense scrutiny.
What is therefore irrefutable now is this: data is the fuel that drives the modern marketing engine. And the winning marketer will be the one who can analyze & act on this data to glean actionable insights that produce measurable business impact. (Also Read more on how Analytics are applied successfully in the Banking sector).
Enter data-driven marketing.
How can data-driven marketing improve your marketing results?
Beyond the obvious lead generation and sales applications, marketing analytics can offer profound insights into customer behavior and preferences.
By harnessing the insights locked in customer data, it tells marketers what customers want. It removes the guesswork from marketing campaigns and helps define the right messages for their customers. Additionally, it ensures the use of optimal mix of channels among today’s wide variety of media types and frees up marketing budget. (Read more on how to improve the Digital Ad-campaigns).
Not Quite There Yet!
A study by RedShift Research revealed that 97% of marketers using analytics acknowledge that it does improve marketing results.
But, despite compelling benefits, a majority of companies don’t succeed at realizing the potential of applying analytics-based insights to their marketing efforts.
The infographic below highlights the usage rate of analytics across various areas of marketing.
So, clearly organizations are not quite there yet. And there is still plenty of room for improvement.
How the Pros Do it
What does it take to get the marketing engine to the next level? It is worthwhile to delve into how today’s successful marketers are using analytics to deliver best practice data-driven marketing and overcoming top data-related challenges.
- Bust The Silos with Analytics through “Nexus” Systems
A customer on a retailer’s website asks a question about a certain product and soon after, starts getting bombarded with aggressive marketing messaging that has no relevance whatsoever to his last interaction with the company.
The above scenario could be one of the several negative outcomes of data silos that prevent marketers from getting a comprehensive view of customers and campaigns across channels.
Data sitting in fragments across disparate systems and diverse formats cannot be analyzed to glean business insight. It is therefore imperative to break down data and marketing silos.
The best data-driven marketers are increasingly leveraging what Gartner calls “Nexus” systems to de-silo data. These technologies help to blend data from multiple internal and external sources and automate data quality processes. By putting analytics to work within the marketing ecosystem, they help to build a unified system based on data connectivity and openness.
Ramping up “nexus” tools and techniques like Data Integration Platforms, Data Management Platforms, Tag Management Systems and the emerging digital marketing hubs is an absolute precondition to good data-driven marketing.
- Make every effort to capture first-party data
First-party data is the most valuable data of all, because it represents the unique data set that a company directly collects from its customers. It is the customer information that resides in systems such as CRM, e-commerce platform, POS etc., and is easily the most accurate and relevant source of information. Therefore, it is absolutely critical for marketers to make every effort to capture first party data of their prospects.
Retailers such as Walmart rely on an analytics driven culture that captures customer data across every conceivable touchpoint to run effective data-driven campaigns.
From analyzing every clickable action on their site and what is trending on Twitter to collecting data from their email system, POS, loyalty system and camera videos, the data Scientists at Walmart Labs do their utmost to figure out the prospect as an individual and optimize the shopping experience.
- Challenge Assumptions
Savvy marketers do not take anything for granted. They constantly challenge assumptions and existing hypotheses by putting analytics to work.
An example worth mentioning here is again that of retail behemoth Walmart which leverages analytics to understand its customers more holistically. A few years ago Walmart Labs studied local weather deviations and arrived at interesting insights about how they affected the buying pattern of shoppers. From their data analysis it turned out that in hurricane season, in addition to regular items like batteries and flashlights, people stock up on strawberry pop tarts! This insight was used to inform stocking decisions, and led to strong sales.
Similarly, retailers can analyze social chatter in various geographic locations and extract insights about the “voice of the customer” to implement strategic changes in store assortment, pricing etc.
- Factor in both short- and long-term outcomes
By tying marketing metrics to marketing strategies, data driven marketing helps determine the allowable cost for both acquiring and retaining customers and the level of response needed to meet profit targets. Metrics such as cost-per-acquisition (CPA) and return on ad spend (ROAS) are commonly used by the business to gauge performance.
However, marketers need to use data to go beyond the immediate gratification of lower CPA and improved conversions, and focus on long-term goals such as driving customer retention and loyalty as well as building brand equity. This will, in turn, boost Customer Lifetime Value and shore up the bottom lines, albeit in a less direct way. (Read more on how to boost sales with our MBA-Market Basket Analysis technique).
The savvy marketer’s marketing mix models therefore needs to factor in estimates related to long-term brand impact.
- Leverage Attribution Analysis
In an omni-channel world where shoppers use a wide variety of channels to interact with a brand, figuring out the right amount to invest in each channel perhaps represents one of the toughest challenges for marketers.
Every marketer knows that getting the elusive attribution model right isn’t easy-even with the massive amounts of data around. However, it is important to get a handle on the basics first by asking the right questions.
One way to develop the right attribution model is to dig through customer experience data to create different buyer personas and then, map each buyer’s journey to derive insights into their path to purchase. This can help marketers get a sense of how they can allocate their spending for better results.
- Don’t use Off the Shelf Metrics
The best marketers are more likely to create their own metrics which are customized to suit specific requirements. KPIs such as Site visit depth (desirable actions per visitor), Social engagement (weighted by time spent per action), Channel Engagement (weighted by correlation with outcomes) etc. can be tested and used to draw intelligent insights and make useful decisions about who, when and where to market.
It’s clear that marketing analytics can have substantial impact on building and sustaining excellence in MROI. However, unless marketers figure out how to make the best use of it, in the end, it’s just another expense.