As a business owner, regardless of your company’s size, you should be aware of what your customers want. Knowing this can help ensure the success of new products and services, and ultimately increase your sales. Customer insights also allow you to adapt your business model to accommodate market trends and changes. But how do you find these insights?
Data-driven marketing is your secret weapon to achieving intimate knowledge of your customers’ preferences and buying habits. In fact, as most of our business practices are performed online, data should become the core informant to your marketing campaigns.
Wondering how? Learn more about data-driven marketing and how it can benefit your business in our guide.
What is Data-Driven Marketing?
This strategy uses customer information to optimize how a brand communicates with its audience.
Marketers who rely on data-driven strategies use customer information to predict their audience’s:
- Future habits
These three important insights will help your business develop effective marketing campaigns, with the ultimate goal being to achieve the most optimal return on investment (ROI). It makes sense: if you’re aware of what your customers want, need, and will need, you can plan your marketing and product lines accordingly.
Data-Driven Marketing vs. Traditional Marketing: What’s the Difference?
Essentially, data-driven marketing is the automation of traditional marketing processes. Let’s start with definitions of both:
Traditional marketing involves communicating and exchanging deals that hold value for clients. It’s a broad definition that encompasses any marketing activity used by companies pre-internet.
Traditional marketing relies on two factors to achieve an increased ROI:
- Market studies. Before we used computers to gather data, we did it by hand. Market studies were conducted via interviews, consumer testing, and client feedback. They are lengthy and expensive to perform, so in the past were not repeated or updated fast enough to keep up with changes in the market. They weren’t always the most accurate – but do still offer interesting insights.
- Assumptions. A large part of traditional marketing relies on assumptions – guessing what customers want. For instance, a florist might assume that because their pink bouquet was a best-seller, customers might also like the same flower in blue. This isn’t always the case and can give a mistaken idea of a company’s ideal target audience.
Enter data-driven marketing, which almost eradicates the limitations of traditional marketing. Consumer data instantly shows marketers what people are buying, how much they’re willing to spend, and gives valuable insights into trends and market gaps.
The use of data in marketing can be traced back to the invention of the first CRM (Customer Relationship Management) system. First rolled out in the 1970s, early CRMs allowed companies to collect and store customer information. They began to track and use that data to create custom approaches to marketing.
With the use of CRMs in full swing in the 1980s and 1990s, companies began to mass-adopt methods like sales force automation and hotline numbers. These practices were essential to understanding and attracting different consumer demographics.
Data-driven marketing has slowly-but-surely allowed companies to create a personalized channel of communication with their customers. CRMs have evolved in a big way since, but their main purpose remains consistent: to reach and engage consumers with customized messages that turn leads into sales.
The most crucial distinction between traditional and data-driven marketing is the latter’s emphasis on targeted advertising techniques.
Traditional marketing aims to appeal to the masses.
Data-driven marketing hones in on making the most of a marketer’s efforts.
The Benefits of Data-Driven Marketing
Data-driven marketing is a complex process. There’s no formulaic way of implementing it that guarantees results. And, because of its versatile nature, it may be challenging to get on board with. However, when interpreted and used well, it works a charm.
Here’s why it’s worth crunching data into your marketing strategies:
- It creates personal relationships. This may seem counter-intuitive – using computer data to establish human relationships? But hear us out. It grants you a deeper understanding of your customer profile. It lets you create unique campaigns that speak directly to them. Despite our automated world, consumers still respond better to personal and human-like connections, like targeted ads, than blind advertising.
- It helps you define your target audience. Backed with facts, you definitively know who to target. Without them, you’re left guessing and wasting your time and resources trying to reach the wrong crowd.
- It encourages product development. Armed with data about what your customers are buying, you can pinpoint what to improve and develop. Use this data to inform your product development processes and predict trends before they even emerge.
- It improves customers’ experiences. Enhance your customers’ experience with your company by encouraging the completion of customer satisfaction surveys. This highlights critical areas that you can improve on.
- It promotes the use of multiple channels. With insightful consumer data at your disposal, you can determine which channels are best to reach them. Through the use of automated marketing campaigns (email, social media, paid ads), you can deliver a consistent message that reaches each demographic through the ideal medium.
Possible Challenges to Data-Driven Marketing
Though often effective, data-driven marketing is not a straightforward way of improving your marketing. It’s important not to neglect some of the challenges that come with it, such as:
- Ensuring you have clean and complete data. Improving data quality is always at the forefront of data marketers’ minds. Data can be incomplete, duplicated, or just incorrect. You must create a reliable process that keeps inconsistencies at bay. A good strategy also ensures your information doesn’t become outdated.
- Collecting data from several platforms. An effective marketing strategy involves integrating data from more than one platform. This can present issues because different sources have varying formats. You may end up with inconsistent and duplicated information. You must identify variables that skew information and form discrepancies between your different data collection methods.
- Tracking the right key performance indicators (KPIs). When you first dive into data-driven marketing, it can be tempting to track every piece of data you can. This is a waste of your time and resources. To find KPIs that are worthwhile to track, you should identify your company’s big-picture goals. Determine what types of data contribute to them. From there, you can reconsider the KPIs your company measures. Add new KPIs or get rid of irrelevant ones. Determining which KPIs to keep track of is a never-ending process. You should always be willing to revisit your plan and make adjustments as needed.
When faced with these challenges, don’t be discouraged. They are surmountable with the right commitment and team by your side.
How to Implement a Data-Driven Marketing Strategy
Now for the action: here’s how to plan and implement a data-driven marketing strategy. Keep in mind that this is just an outline. Don’t hesitate to alter these steps to fit your company’s and customers’ needs best.
1) Collect Data
You will need the right customer information to use as a launching point.
An easy way to collect data is to take advantage of every interaction your customer has with your company. Collect data every time a customer comes into contact with your brand. For example, capturing email addresses through creating account profiles, or, if a customer requests to join your webinar, require them to complete a form that includes information like their location of work and job title.
Another way could be asking a buyer to fill out a post-purchase survey that asks for additional information you would otherwise miss out on, such as their age and gender. Small requests like these to collect data about your consumer demographics are essential. They will go a long way for your future marketing efforts and help you better perform the steps to come.
2) Build Unique Customer Personas
With your data coming in, you can start to build customer profiles. Doing so will provide you with a good idea of your customer base and the different segments that compose it.
Some companies use CRM systems to build their customer profiles. If you want a more accessible option, there are customer persona tools available to you. These kinds of tools do require more manual data entry. However, they still allow you to organize and store your data for the long term. Smaller companies tend to benefit more from manual data entry.
Remember that this step should be adaptable. Your customers are real people with changing interests and demands. If you use the tools at your disposal, you will be able to keep them satisfied and increase the number of sales your company closes.
Focus on Your Loyal Customer Base
While you want to draw in new customers, you must dedicate attention to your current ones as well. Ensure no one is neglected once they’ve completed a purchase.
Use these tips to retain the interest of someone who has purchased from your company:
- Implement a loyalty program with regular promotions
- Thank a paying customer for their business with a personalized message or small gift certificate
You can send these messages out via email, which you should’ve collected during the customers’ ordering process. If you have no way of contacting a customer post-purchase, create a way for you to do so in the future.
3) Collaborate with Other Departments in Your Company
Don’t isolate your data-driven marketing strategy in its own bubble. This method needs to be maintained and understood by your entire company. As a marketer, you must communicate your approach to all departments in your business.
With that in mind, be sure to monitor industry changes that are taking place. Staff members from other departments can be a big help when keeping up with the latest trends in your industry.
4) Measure Your Progress
A data-driven marketing approach that works one year may fail miserably in the next one. Always keep an eye on your strategy. Be honest about what is and isn’t working. Track your KPIs. Don’t ignore an influx of new customer data. It could be just what you need to make positive changes to your company’s operations and its reputation.
Two Examples of Data-Driven Marketing
The above outline can help you get started with building a data-driven marketing plan of your own. It may be helpful to view two real-world examples of data-driven marketing:
1) Update Your Messaging
Some companies fall victim to using decorative language in their advertising, alienating a mass audience. For example, if you’re trying to market your software to a specific audience, avoid long taglines on your company’s home page:
- We implement an integrated computing framework to create more profitable client relationships.
Instead, opt for something simpler that still conveys meaning:
- Our software cuts your scheduling time in half.
You can update your message by collecting information about your audience like:
- How they discovered your company
- What they like and dislike about your software
- What made them decide to buy it
- What they were using before they bought your software
Collecting this kind of data will help you better tailor a message that captures the attention of new and returning customers.
Retargeting is an extremely effective data-driven strategy. It involves displaying your adverts to a customer as they make purchases from or casually browse different, unrelated websites.
With retargeting, you can even get the attention of potential customers who have made their way to a competing website. It improves your brand’s visibility. It can also push an indecisive customer to secure a final sale with your company. To get started, you will inevitably need more than one marketing channel.
For example, if you advertise your housecleaning service on Facebook and Twitter, you can seek out customers who have been searching for this particular service via other mediums. If they have been performing web research over the past several days, they will start to see ads targeted towards them on social media.
You can set up specific retargeting campaigns through platforms like Facebook, LinkedIn, and Twitter. Another option is using third-party platforms that specialize in web and social retargeting. Either way, this method allows you to increase brand awareness and skyrocket conversions.
Data-Driven Marketing’s Success and Outlook
As a digital marketer, you should be excited about the future of data-driven marketing. It has been the driving force in a lot of successful marketing campaigns and will only go on to inform more and more of our marketing efforts.
With the right tools and knowledge, a data-driven approach works wonders for new and established companies alike. It will increase your ROI, help you close more sales, and allow you to create more meaningful connections with new and recurrent customers.