Data Driven Marketing: What, Why, & How
In recent years, marketing has undergone a fundamental shift. Where traditional marketing worked on consumer assumption and clever advertising, today’s marketers are turning to a new tool: consumer data.
Data-driven marketing delivers higher returns on investment by using data to target the right consumers with the right products or services in the right manner.
In this blog, we’ll define the ‘what’, explain the ‘why’, and show you the ‘how’, so that you too can implement a data-driven approach designed for success.
What is data driven marketing?
Data driven marketing is a marketing approach whereby communications are optimized using consumer data.
Marketers adopting data driven marketing strategies use customer data to identify customer desires and needs and create or adapt marketing plans around them. These insights are then developed into personalized, targeted marketing strategies which offer the highest possible level of return of investment (ROI) because of their relevance and accuracy.
Why use data driven marketing?
Data driven marketing is preferred to ‘traditional’ marketing because it allows marketers to connect with consumers at the right time, on the right channel, and with the right offering. But there are a wealth of other important reasons to use it, including the following:
1) Data provides clarity about the target audience
Consumer data allows marketers to gain a better understanding of who they’re targeting and who would be most likely to convert based on historical data.
Data gathered from collection points such as forms, subscriptions, or even collated through the interactions a user has with a website or product can help marketers to better understand their consumers’ demographics, interests, and behaviors. This results in marketing campaigns that contain the right messaging aimed at the right audience.
2) Data builds stronger connections with potential consumers
Data gives marketers a unique opportunity to strengthen customer relations by providing relevant offers, products, and communications.
This data, collected from a combination of channels, platforms, media, and even devices, also allows marketers to deliver personalized, often 1-to-1 customer experiences on a huge scale.
Furthermore, individual customer preferences, such as website visits or most frequently bought items, can help further a brand’s understanding of its customer and thereby offer an even more personalized experience.
3) Data identifies the best channels
Data doesn’t only reveal what consumers want, it also helps reveal which channels they favor. This enables marketers to optimize their campaign delivery to channels that are proven to yield higher engagement and conversion rates.
How to implement data driven marketing
Data driven strategies are comprehensive and involve a lot of different factors, such as the business type, sector, its products and services, and its target audience.
Getting started with your data driven strategy, although daunting, can be achieved through the below steps:
1. Define use cases
A good customer data strategy will align with the company’s objectives and determine how data can be used to achieve those goals. The data uses identified in the strategy are what are called ‘use cases, and these will be your key data priorities.
It’s advisable to use 3-5 data use cases else your strategy can risk becoming cluttered, and use cases will vary from company to company, depending on the business’s strategy.
Use case examples might include:
- Improving customer retention rates
- Delivering personalized customer experiences
- Optimizing product strategies
- Reflecting consumer privacy preferences in communications
2. Ingest and organize the data
Once you’ve determined what you want to achieve, it will be easier to understand which data sources you need to draw upon. This is only the first step though.
The successful use of customer data starts with how you organize it. There are plenty of platforms you can use, for instance a CDP or DMP, or you might have a CRM. Embarking on a data driven marketing strategy investing in a Customer Intelligence Platform – otherwise known as a ‘next-gen’ CDP – such as Zeotap could have a big impact on your business.
A Customer Intelligence platform not only allows you to unify your data in one place, but also to enhance your data by performing third party identity resolution and adding additional enrichment data to your first party data.
These added benefits will give you deep insights into your customers for next best offers/actions.
3. Unify identities
By its nature, most data is fragmented because it is scattered across the company and divided into different data silos which are used by different departments and teams.
Unifying data is a way in which companies can merge their fragmented data sources into a central and singular view. Unified data provides a more comprehensive and accurate picture of customer data, and unifying identities enables companies to create better segmentations with which to target specific groups of customers with relevant messaging.
To do so, companies will need to enlist the use of a CDP in order to manage and organise the data most effectively.
4. Create smart segments
Segments are groups of customers who are categorised by demographic, psychographic, geographical, or behavioral characteristics.
Smart segments enable for much more targeted marketing and personalization because they allow marketers to deliver messaging which is relevant to the customer’s needs and interests. This results in subsequent marketing efforts having a higher chance of conversion and success.
Strong segmentation strategies are also pivotal for ensuring the advertising is targeted efficiently and not wasted – in a world where CPAs are rising, reducing this wasted spend is crucial.
5. Measure results
The final step is to decide on KPIs that will measure the success of your data driven strategies. Clear, recorded metrics will not only help you to optimize future campaigns but also to refine existing campaigns by identifying areas of improvement. These metrics will also form your basis for reporting on your data driven campaigns–a source of insight for all key stakeholders.
Conclusion: Data boosts your business performance
It doesn’t matter if you’re an Omnichannel retailer, or in the B2B industry you’ll benefit from making the most use of your data. Data driven marketing and its ability to deliver extremely personalized experiences naturally boosts business performance through increased sales and higher customer lifetime value. Business advantages include:
- Improved customer loyalty
- Lowered customer acquisition costs
- Heightened customer satisfaction
- Boosted sales and conversion figures
- Competitive advantage opportunities through delivering superior customer experiences
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