Data-driven marketing is the method that optimizes message-media mix based on several data points. Marketer leverage to understand the following:
- What are the needs of the customers? What customer problem does their product solve?
- How can the product solve it? How do they frame the message, and through what media mix reach out to the customer?
- When to communicate?
- Where to communicate?
- Why should customers believe their message?
Any seasoned marketer would recognize the above as 4 or 6 or 8 Ps of marketing. It is equally applicable to traditional marketing as well.
How is data-driven marketing different from traditional marketing?
Traditional marketing too relied on gaining an understanding of the customer needs and problems. The only difference lies in the sources traditional marketers used and the depth of understanding those provided.
Until the dawn of digital marketing, market research studies were the only source of data. Marketers used it in combination with a healthy dose of assumption. Understandably, this was a trial and error method, which had its fair share of hits and misses. Consequently, the process was neither cost-effective nor efficient all the time.
Digital marketing helps fix the inefficiencies of traditional marketing at two levels:
- Campaign planning
- Measuring impact
At the campaign planning level, digital platforms and ad networks like Google ads, Facebook ads, and others provide insight into consumer behavior and segments.
Using a combination of consumer personas and segment sizes, marketers can target the right audience with a relevant message-media mix.
Once you run the campaign, you can also track the impact on various parameters. For instance, if you are running a brand awareness campaign, your brand-related searches go up. If you are running a sales campaign, your product sales improve. Numerous tools help you track the improvement on your baseline.
Advantages of data-driven marketing
Data-driven marketing is the order of the day because of the advantages it offers. Following are its most common benefits:
1. You get to know more about your consumers
Even as you start with a hypothesis about your audience, data-driven marketing helps you validate it. Suppose you hypothesize that your customers are price sensitive, you can run a test where the control group sees no price change, but the test group gets a considerable discount. If the test group shows significantly better traction, with everything else constant, your hypothesis is valid. If not, you can reject it. You can have the results within a week without having repercussions on the brand value.
2. Helps you personalize messaging and connect with your customers better
Knowing customer needs and understanding their stage of the journey helps you personalize and time the message better.
3. You can choose and focus on few channels
In traditional marketing, most small and mid-size companies find marketing channels cost prohibitively expensive. Not knowing whether a channel works for them makes media purchase decisions more difficult.
Data-driven marketing helps reduce these uncertainties. Marketers can start with a few channels, and they can continue to focus on ones working. Say, if you are not sure whether Google Display Ads or Facebook ads work best for your consumer brand, you can start with equal spending on both. Once you have the data coming in, you would know which ones are working better for you. You can distribute your budget accordingly.
What are the challenges in Data-driven marketing?
If your organization is new to data-driven marketing, you will find challenges at three levels.
1. Collecting data scattered at various levels and locations
Collecting data and deciding what’s relevant is the number one problem for most businesses. It might be distributed across sales channels, the marketing department, and the customer support team. The C-suite could have some of it.
Moreover, most of this data would be in an unstructured form such as pdf, social media comments, call recordings, and so on. Collecting all of it and structuring it takes time and effort.
2. Single-point view of all data
Marketers often find it difficult to pull and compare data from various sources. It gets more challenging when you are running a big-budget multi-channel marketing campaign. Each of the platforms would have different names for the metrics. A few may use varied calculated fields too. That’s where Windsor.ai comes in.
Windsor.ai connectors help integrate multiple data sources into a BI tool of your choice – Data Studio, Power BI, Tableau – you name it. It also provides you customizable templates to track metrics relevant to your business.
3. Building a team and data-driven culture
The culture of a company often decides whether a positive change sustains. As you move to become a data-driven company, overcoming the hunch or intuition-based decision-making processed would be a challenge.
With the right set of tools, like Windsor.ai, you can bring transparency into the system to accelerate the transition.