Data-driven marketing is the use of data and technology to inform decisions about marketing strategy. Data-driven marketing strategies can be of different types, but all involve measuring and analyzing data to make informed decisions about how to market and sell your products.
Data marketing is essential to modern digital marketing, and for a good reason. It allows you to tailor your marketing efforts to people most likely to respond positively.
But what is a data-driven marketing strategy, and how can you use it? We’ll help you understand everything you need to know about data-driven marketing and how it can help your business succeed in this guide. Let’s get started!
What is Data-Driven Marketing?
Data-driven marketing is the process of using data and analytics to inform marketing decisions to increase return on investment (ROI) and build a better customer experience.
Source
Data-driven marketing relies on data from multiple sources, including customer, financial, website traffic, and other sources. The goal is to use this information to make smart marketing campaigns that help businesses grow.
Data-Driven Marketing vs Traditional Marketing: What’s The Difference?
As mentioned above, data marketing involves data and analytics to understand customers’ needs and identify trends. This helps marketers make more informed decisions.
On the other hand, traditional marketing doesn’t rely on data as much on instinct and gut feelings. However, they might use some data but not nearly as much as they should.
For example, in data-driven marketing, if a company wants to improve its conversion rate for a particular product, it will run a test on its website using two different versions. The company would then analyze the results after running this test to determine which version works better.
However, in a traditional marketing strategy, the company would create a landing page based on what marketers think would drive results based on their experience and what they believe has worked in the past.
What Are the Benefits of Data-Driven Marketing?
The key data-driven marketing benefits are that it helps better understand the target audience, build a stronger connection with customers, and determine the best marketing channels.
Let’s understand them in detail.
1. Help Gain Better Clarity About the Target Audience
Knowing your customers has been a mantra for successful marketing campaigns. However, in recent years, marketing teams have started leveraging data to increase their success rate.
The key marketing data that marketing leaders use to inform their strategies include:
- Demographic data (name, age, email addresses, location, etc.)
- Intent data (helps understand if customers want to learn or buy a product)
- Quantitative data (website clicks, event appearances, click-through rates, etc.)
- Qualitative data (interactions with sales teams, product feedback, etc.)
2. Offer the Ability To Build Stronger Connections With Potential Customers
Companies are constantly looking for new ways to build stronger connections with customers. But you need to understand what your customer wants and needs for that to happen. In this day and age, Data is the key.
As discussed above, marketing data allows you to understand your customers better than ever. What makes it one of the biggest data marketing benefits is that it gives you a clear picture of what they want, what they like, and how you can help them. It also enables you to understand how they interact with your business so that you can create more personalized offers and marketing campaigns.
This helps brands build stronger relationships with consumers by giving them what they want when they want— all while driving sales! Furthermore, with personalized campaigns, you can boost customer loyalty and increase your customer lifetime value.
3. Uncover the Best Channels for Marketing Campaigns
When you analyze customer data, you not only understand their wants, likes, and dislikes, but you also identify what channels they use the most. This insight can help marketers reach their potential customers right where they are at a cost-effective rate.
Furthermore, with the right tools, you can also find when your customers are online. For instance, social media analytics tools like Buffer highlight the best time to post to maximize your reach and engagement based on historical data.
SourceHow Data-Driven Marketing Affects Business Performance?
Did you know businesses that use data-driven strategy drive five to eight times as much ROI as businesses that don’t?
That’s because marketing data helps you create a marketing campaign that resonates with your target audience, addresses their pain points, and provides a solution. Furthermore, data analysis enables businesses to evaluate all marketing management spend to see how effective their efforts are.
SourceAnother study by McKinsey indicates that data-driven campaigns can help increase core product sales by more than 10%.
However, it isn’t as easy as it seems. Data marketing comes with its own challenges, bringing us to the next section!
Top 4 Challenges Data-Driven Marketers Face
The most common data-driven marketing challenges are collecting data, pulling the data together, analyzing the data, and building an in-house data team.
Let’s understand them in detail.
1st Challenge – Gathering the Data
One of the biggest data-driven marketing challenges is gathering data for marketing, especially since GDPR and the California Consumer Privacy Act have cut down on marketers’ ability to capture and use third-party data.
Besides, Google Chrome, Firefox, Safari, and Bing, which control over 90% of the browser market share, have stated that they intend to tighten data privacy in the future.
Marketers must rely on first-party data to create campaigns. That’s where marketing analytics tools can help. You can analyze your Google Analytics to understand your website visitors.
2nd Challenge – Pulling the Data Together
Your marketing data must be up-to-date and accurate to get the best results. If not, you’ll be creating outdated strategies that don’t drive enough ROI today.
However, the challenge is pulling and updating the Data regularly. And if you’re using spreadsheets to manage marketing data, things can quickly get complicated.
Therefore, investing in a robust analytics tool that syncs with various marketing channels you use and can pull data regularly is essential. It should also be able to show the information in an easy-to-understand dashboard.
3rd Challenge – Overcoming the Data Silos To Analyze the Data
50% of companies say integrating data across platforms is the most significant barrier to achieving data-driven marketing success.
SourceThat’s because most departments within an organization use data silos, making it difficult to provide a unified customer view. As a result, it gets difficult for marketers to create hyper-personalized campaigns.
The best way to overcome this is by setting up data exchange SOPs and leveraging the marketing analytics tools, as discussed in the last point.
4th Challenge – Building an In-House Data Team
Do you know one person generates 49.8 GB of IP traffic monthly?
And when you have thousands (if not tens of thousands) of customers, processing their data could become next to impossible without an in-house data team.
You’ll need to hire data scientists and analysts to ensure you’re using the data for marketing as much as possible.
How to Develop a Data-Driven Marketing Strategy?
You can create a robust data-driven marketing strategy by setting up data objectives, gathering the data, organizing the data, building a team, involving the management, and measuring and optimizing the progress.
Let’s understand them in detail.
1. Setting Up Objectives for the Data
Before you even plan for your data marketing strategy, setting up the objectives is essential. For instance, do you want to:
- Target customers in a specific region
- Find upsell opportunities
- Understand buying patterns
2. Gathering the Data
Once you’ve set the goals, it’s time to identify the marketing data you need to collect. For instance, if you want to target an audience in a specific region, you’ll need to collect:
- Customers’ information so you can categorize them based on location.
- Their browsing history and past purchases.
However, if you are looking for upsell opportunities, you will need to know.
- What product(s) is the customer using?
- How often does the customer use the product?
- Does the product solve customers’ pain points, or will an upgraded version be best suited?
3. Organizing the Data
The next step is to collect and organize the data for marketing from different sources. As mentioned above, you will need an in-house data team and analytics tools to capture and structure raw data. Finally, make sure you are collecting accurate, up-to-date data.
4. Building the Team or In-House/External Capabilities
Depending on your business size, you might need a team to analyze marketing data and provide key insights based on them. You can then use that information to make smart marketing decisions.
5. Getting Organizational Buy-In
Since you will need tools and human resources to make your data-driven marketing strategy a success, organizational buy-in is essential. Therefore, they should support you at every stage of the campaign.
6. Measuring and Tracking Progress
Lastly, measuring and tracking progress fuels your data-driven strategy to boost the ROI further. This will also help you prove your return on investment to the management team and further increase their support.
5 Best Data-Driven Marketing Tools
There is no single tool that offers all the data for marketing. Therefore, it is essential to invest in multiple data-driven marketing tools, so you get the most out of your efforts.
- Google Analytics to understand your website visitors and their behavior
- Google Data Studio to create customizable reports and dashboards
- Power BI for business intelligence
- Crazy Egg for heatmap analysis
- SEMrush for understanding search intent
Best Data-Driven Marketing Examples
Modern businesses use data marketing to become industry leaders. Here are some data-driven marketing examples.
1. Using demographic data to send personalized offers
DirectTV used demographic marketing data, such as a person’s age, gender, job, and location, to understand their interests. They identified a specific target market – people who have recently moved to a new home.
They then created a personalized homepage version and tested it against the standard homepage. Again, the data-driven, customized homepage outperformed the other one.
2. Combining sales and behavior data to improve advertising ROI
A winter apparel store used sales and behavior data to create a custom dashboard that included sales data (time of purchase and customers’ location) and weather data across those locations. This helped the company identify when their customers would start planning their winter gear purchases to run ads at the right time.
Frequently Asked Questions
Data-driven creatives are marketing resources that use data to inform creative decisions. It involves using information about a customer to craft creative messaging. This can be done at the individual level, using data from a particular customer’s digital footprint, or at the aggregate level, using data from many customers.
Data-driven marketing decisions are made with the help of analytical tools and statistical models that help measure the performance of different marketing strategies.
A data-driven marketing approach is a process of creating and implementing marketing strategies based on insights derived from data. However, the data should be accurate and up-to-date to get the best results.
Marketing data analytics helps businesses understand their customers at an individual level so they can create hyper-personalized marketing campaigns and increase conversion rates.
Big data provides marketers with a 360-degree view of their customers, empowering them to present customer-specific content at the right channel at the right time. It also helps identify trends and understand patterns behind data for marketing.
The key foundational building blocks of data-driven digital marketing are campaign management, analytics and reporting, and attribution and optimization.
Updated : November 26, 2023
Rohit Rajpal is an accomplished content writer with nearly 5 years of experience in the SaaS industry. He is passionate about staying up-to-date with the latest trends and best practices in the field. In addition, Rohit’s expertise in SEO enables him to craft blogs, case studies, and whitepapers that not only drive traffic but also generate leads.
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