Data-driven marketing has transformed from an innovative approach to a fundamental part of advertising and business strategy; it can now be defined in several ways, but at the most basic level, it can be explained as follows:
Data-driven marketing refers to strategies built on insights pulled from the analysis of big data, collected through consumer interactions and engagements, to form predictions about future behaviors. This involves understanding the data you already have, the data you can get, and how to organize, analyze, and apply that data to better marketing efforts.
Although there are many reasons why companies use data-driven marketing, more often than not, its intended goal is to enhance and personalize the customer experience.
To provide more clarity around the topic, we’ve outlined key benefits and common challenges of data-driven marketing, in addition to example applications.
The Benefits of Data-Driven Marketing
Both businesses and consumers can gain a lot from taking a data-driven approach to marketing. When strategies are implemented successfully, such benefits include:
- Personalized Marketing. It’s essential that companies convey the right message, to the right audience, at the right time. Data-driven marketing allows brands to create a customized campaign that converts leads through a deeper understanding of the customer profile.
- Clear-Cut Clarity. With a wealth of information in their database, marketers can sift through to determine the most accurate and actionable information about customers and prospects. With a data-driven approach, it becomes much easier to separate and group the target audiences that you’re trying to reach.
- Multi-Channel Experience. Marketers can leverage data to extend reach across multiple networks, and take communication beyond just email. Distributing data-driven ads across channels, through automated marketing campaigns, will ensure that your message is consistent, aligned, and reaches each recipient in the perfect place and at the perfect time.
- Refined Customer Experience. Many popular brands use data-driven marketing to enhance their customer experiences. They’ll often orchestrate customer satisfaction surveys and pinpoint specific areas for improvement.
- Better Product Development. Data-driven marketing considerably diminishes product failure rates. Companies can establish a better understanding of their target audiences, which leads to the development of better-suited products for that particular market.
Challenges of Data-Driven Marketing
Like most valuable business strategies, there are challenges to successful data-driven marketing. Let’s take a look at some of the most common struggles:
- The Right Team: Due to the niche nature of the job, and the skills required, it can be challenging to attract the right type of staff that specializes in predictive analytics or audience amplification. Learning more about being data-driven (or becoming a data scientist) may benefit you and your team.
- Departmental Silos: The success of data-driven marketing is largely dependent on having high-quality and integrated data, which is no easy task to obtain. Frequently, different departments will acquire data with goals that contradict one another.
- Commitment: It would seem foolish to incorporate a data-driven marketing strategy if you aren’t completely committed to it, yet there are some companies that continue to make that mistake. Even though they might possess a defined strategy, it won’t mean much if they aren’t acclimated with the tools needed to succeed.
- Integration: If a company fails at the integration process, marketers will struggle to gather the right data needed for a unified customer view. For example, retail companies and e-commerce websites are often challenged with the task of collecting and structuring data from social media and mobile devices.
How to Take a Data-Driven Approach to Marketing
Whether you’re just getting started, or are looking to improve your existing marketing strategy, there are certain elements that should be considered. These include:
- Automate and Integrate: Integrating new tools and technology into your marketing strategy can be overwhelming at times. By creating an automated process that still allows for personalization, you’ll stay true to your objectives and avoid complicating results.
- Collaboration Across Teams: Because data is something that needs to be managed across an entire organization, marketers must ensure information is being shared across departments and teams.
- Monitor Industry Changes: Keep a close eye on the competition so you can either follow suit, or learn from their mistakes. Like every other area in this industry, data-driven marketing is constantly changing. Staying up-to-date on the latest trends will only help with your own brand strategy.
- Continued Measurement: Data-driven marketing is not a one-size-fits-all solution. It should be constantly monitored and adjusted based on the results (successes or failures) that you’re seeing. This will help identify which tactics are working and encourage buy-in from organizational leaders.
Examples of Data-Driven Marketing
If you’re still unsure how data-driven marketing might fit into your business strategy, here are a few examples that should offer some inspiration:
- Retargeting. Retargeting is important for all digital marketers. If someone has previously purchased from your e-commerce site, or shown significant interest, why not look for them again? Let’s pretend a member of your target audience is a travel enthusiast who recently booked a vacation ski trip in Vermont. From this data, you could automatically offer relevant deals on ski lessons, lodging, airfare, and similar vacation ideas that would appeal to that target audience.
- Dynamic Advertising. Use social media to your advantage by creating ads across Facebook, Twitter, and Instagram. Connect with your audience by allowing them to sign up and receive more information with just one click. By turning your social media outlets into two-way communication channels, you’ve now obtained valuable information that feeds directly into your database.
- Optimized Paid Search. Analyze your preferred customers based on the types of keywords they search for, and consider what the competition is targeting as well. Leverage this data to position yourself at the top of the most relevant search results and drive valuable traffic to your website.
- Targeted Email Campaigns. Is email marketing a part of your existing strategy? Take a data-driven approach to email campaigns by grouping together your desired target audiences. While this data will allow for automation, you’ll also be able to easily personalize messages to make one-to-one connections with each and every customer.
The future remains very bright for data-driven marketing. Along with predictive and artificial intelligence marketing, data-driven solutions are becoming an essential part of successful marketing campaigns. In large part, this is due to the progressive needs of customers and their expectations for more personalized experiences.