Retailers today operate in a highly competitive environment. This situation has become more intense since the last decade where revolutions in technology and ever-changing customer expectations have propelled competition on a scale never seen before. This situation has even prompted some economists to compare business to war. Taking this comparison forward, in war, the general who has the information about various aspects like the lay of the land, the mindset, and level of motivation of his soldiers and that of the enemy forces, the strength of the armies, weapons employed by the soldiers, etc. has a unique and distinctive advantage. Similarly, in business, marketers having data about the consumers and competition have a unique advantage in crafting their marketing strategy. Data is the secret sauce and game-changer in converting the consumers of today into the brand’s fans of tomorrow. Insights-driven marketing is one such weapon in the marketer’s arsenal that can tap into data and leverage its power to propel the business towards stratospheric growth.
Insights-Driven Marketing: What is it?
Insight-driven marketing is the creation of marketing strategies that work in the current business and competitive environment using insights derived from business and customer data. Data Management Platforms (DMP) plays a key role in the development of such strategies. Examples of top DMPs are Salesforce DMP (part of Salesforce Marketing Cloud), Cloudera, Lotame, Nielsen, etc. Google has recently released the long-awaited Google Audience 360 with many new advanced capabilities. Oracle has a DMP called Oracle Data Management Platform (Oracle DMP) in the Oracle Cloud for enterprise customers. The importance of the right DMP is highlighted by the fact that in a Neilson CMO Report, 63 % of marketers have admitted that Data Management Platforms are crucial to formulate and execute their Insight-driven marketing strategies. Basically, marketers should build a cohesive and complete 360-degree profile of the customer by analyzing the customer data from first, second, and third party sources in the DMP. This process generates the marketing strategies to target specific groups of customers with the right products and services, at the right time, at the right place, and at the right price. The importance of Insight-driven Marketing can be highlighted from the fact that 44 % of marketers interviewed in a survey by V12 said that have been increasing their investment in Insight-driven marketing.
Campaign Efficiency through Insights-Driven Marketing
Marketing campaign efficiency involves getting the right content at the right time, at the right place, and at the right cost. Marketers use several metrics and KPIs (Key Performance Indicators) to track the efficiency of their campaigns and strategies. These metrics depend on the type and industry the campaigns are involved in and also change with various factors such as platform, target audience, marketing channel, etc. Insight-driven Marketing brings about efficiency in various factors right from the productivity of the marketers to the organizational structure of the business, resource allocation, and the proper usage of the budget. According to Micro Strategy, companies that focus on applying Insight-driven marketing strategies gain improvement in:
Benefits of Insights Driven Marketing
- Improved Operational Efficiency and Decision-Making: Operational Efficiency can be boosted by the high growth in productivity and streamlining marketing projects. Data Analytics and reporting can help identify potential problems and taking the necessary decisions to get rid of unwanted processes and implementing the proper marketing strategies based on the evidence provided by data insights to see which areas are error-prone and need improvement.There is a need for a strategy anchor for every marketing campaign, without which, companies allocate marketing dollars based on the previous year’s budget or the recent products and services which have performed well in the recent quarters. Using insights, however, they get better alternatives to invest in. One of the possible approaches would be to measure the marketing proposals based on their strategic return, economic value, payback window, and other such scores. Insights-driven marketing provides information about these and other such scores which play a crucial role in the decision-making process. For example, one home appliance company used to spend a large portion of its marketing budget on television, print, and display advertising to get the attention of its target customers. Data Analytics showed that most people looking for home appliances browsed retailers’ websites rather than depending on television, print, and other outbound advertising and fewer than 9 percent visited the appliance manufacturer’s website. This shows the power of Insight-driven marketing in the decision-making process.
- Better Financial Performance: Insight-driven marketing drives financial performance with financial accountability. Insight-driven marketing increases sales with smarter fund allocation by providing evidence for marketing strategies. As in the example earlier, it can reduce marketing costs without sacrificing the effectiveness of the strategy. Moreover, Insight-driven marketing is based on quantified metrics and KPIs which strengthens the role of marketing in the organization. All these features and characteristics bring about increased financial performance.
- Competitive Advantage: Insight-driven Marketing with customer data can help to build competitive defenses. By leveraging data, businesses get high and lasting value when it is proprietary and leads to improvements that can’t be easily replicated. It generates insights that can get incorporated quickly. These characteristics of Insight-driven marketing along with network effects lead to moats of competitive advantage. Amazon in particular is an example of how Insights-Driven Marketing leads to competitive advantage. Amazon’s marketing team uses the item-to-item collaborative filtering algorithm to recommend the next product the customer is likely to purchase. It also tracks the entire customer journey and uses this data to generate spot-on offerings which are rightly targeted with emails, notifications, etc. This enables personalization which differentiates Amazon from others. Statistics indicate that this approach has enabled Amazon to garner 35 % of its revenue.
- Improvements in Customer Acquisition, Retention and Experience: According to research by marketing firms, customer experience is one of the top two differentiators in new customer acquisition and customer retention. According to a study conducted by Forrester Consulting, 64 % of marketers believe that customer acquisition and retention are necessary for a healthy and successful business. Without a positive customer experience, all the marketing strategies are limited to no use. Data enhances the ability of retailers by tracking the prospect’s purchase history, product usage patterns, and social media behavior. Using Insight-driven marketing intelligence, the business can better capture the customer’s purchase journey to learn the expectations of the customers and help in the experience enhancement. For example, ELOQUII, an internet retailer once noticed that a high proportion of customers were returning white dresses. Initially, the marketing team assumed that the fit and/or design of the dresses were not quite right. But through data analysis, they discovered that many women were actually shopping for wedding dresses, and were returning after having purchased multiple white dresses. ELOQUII used this insight and conducted series of productive conversations with its customers, which helped them in gaining a better understanding of what their expectations are from the brand and to know how they perceive the brand as in ELOQUII case the customers were perceiving it as a matrimonial marketplace.
- Creation of New Product/Revenue Stream: Product strategy is guided by the data indicating what the customers are most likely to be interested in. Data allows the business to understand its customers’ needs and why they need them. This allows a business to create new products that will resonate with customer needs, which the existing product line-up is unable to meet. For example, Netflix subscribers got tripled between 2011 and 2015; by doing advanced analysis of subscribers’ and generating insights related to their past viewing behavior, Netflix was able to create hit shows such as House of Cards.
To conclude, Insights-driven marketing strategies can help build a business on many levels such as efficiency and productivity, financial performance, identification and creation of new revenue streams, customer experience of its products and services. Employing Insight-driven marketing strategies can help a business achieve a competitive edge and acquire and retain customers.
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