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Marketing has undergone a fundamental shift in recent times. We are moving further and further away from the old approach - working on assumptions or gut feelings. Today, marketers are turning to the most reliable source of information - customer data.
Unfortunately, we see that many still struggle with the data-driven approach. Many often ask us where to find relevant data. Others complain about the lack of tools. And the biggest problem is not knowing how to access, analyze and compare the information you have.
In this post, we'll go a bit deeper into what data-driven marketing is and how it differs from traditional marketing, as well as how you can start working on a data-driven strategy and what the benefits are.
What is data-driven marketing?
The term "data-driven" was already used in the late 1990s, when it was used to describe how companies used databases to analyse their customers' behavior. In the early 2000s, this concept became more popular as companies realized they could use these databases for customer relationship management (CRM) and customer insight management (CIM). More recently, it has been realized that the same data can be used to streamline and optimize our marketing efforts.
In short, data-driven marketing is the process of analyzing past, present and emerging customer data to identify key trends in consumer behavior, predict future consumer behavior and generate insights that can be used as a basis for making better business decisions. The key here is that these analyses need to result in actionable insights, i.e. knowledge that we can use to optimize our marketing strategies.
How is data-driven marketing different from traditional marketing?
With data-driven marketing, you move from using your gut feeling and personal assumptions to building actionable insights from customer data.
Here is a concrete example:
Traditional marketing:
You want to send out a Christmas greeting/promotion to your customers, but "no one reads their email on Christmas Eve", so you send the greeting/promotion on Boxing Day instead.
Data-driven marketing:
Either we look at data from previous years to see to what extent customers open their email on Christmas Eve, and especially how well they convert. If we have no data from before, we do a test, to half of the customer base we send on Christmas Eve and the rest on Boxing Day. Then the most important thing is that we analyze the results and learn from this, i.e. build on our insights to be able to work smarter in the future.
What are the benefits of data-driven marketing?
If you apply a data-driven marketing strategy in the right way, some of the benefits can be
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Increased return on investment
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Increased customer satisfaction
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Reduced churn
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A better understanding of customers
Data-driven marketing helps marketers to be more targeted with their campaigns and reach out to their customers with relevant messages. It also helps them understand their customers better and make decisions based on that understanding.
It gives marketers a way to measure the performance of their content and ads, helping them know what works and what doesn't. This way, money can be saved by eliminating wasted spending on ads and campaigns that don't work.
The good news is also that this can be used by businesses of all sizes and industries.
Start small, it's better than doing nothing!
How to work with data-driven marketing:
To succeed with your data-driven marketing strategy, you can use a variety of tech tools that can collect and analyze data from different sources. For example, you can use Google Analytics to track website visitors' demographic information and online behaviors, CRM and Marketing Automation for how they interact with your communications, and various social media tools to analyze how they interact with your organic and paid posts.
Start by analyzing the customer data you already have and try to identify patterns. Then use these insights to personalize your marketing efforts.
Here are some examples:
1.
Insight: You see that 50% of people who visit your website never come back. Investigate what campaigns are driving traffic to your site, obviously 50% of that traffic doesn't think your site was relevant to them.
What you can do with that insight: Maybe it's worth trying to advertise in new channels, and find out which audience your products/services are most relevant to.
2.
Insight: You see that your most profitable customers (those who spend the most) are usually those who have been recommended by another customer or have come in via a referral campaign.
What you can do with this insight: Think about how you can increase your referral marketing? Can you reward those customers who refer you on something sweet to encourage that behavior further?
3.
Insight: You see that the email campaigns sent on payday don't convert as well for the under 18 audience. Instead, this audience converts best in the middle of the month.
What you can do with this insight: personalize your communication to this audience by changing the timing of your campaigns. This will ensure that you are relevant to that specific audience. This might mean more work, but also higher conversion, so consider whether it is worth it in your case.
The most important takeaway is: don't forget to test. What your long experience in the industry has proven to work over the years, may not work now, or not for your specific audience. Something that worked two years ago may not work the same way today. The success of data-driven marketing is to combine gut feeling and experience with data. Don't be afraid to challenge your own assumptions.
Read more about how we can help you get started with data-driven marketing here.
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