Data Driven Marketing: what it is and what its benefits are
Posted: Sun Dec 22, 2024 8:50 am
Data-driven marketing is the process of using company-generated or market-generated data to inform and validate actionable marketing decisions. The goal is to reduce uncertainty by generating insights and help marketing managers adapt their strategies to changing trends, unique demands of their brand audiences, and product requirements of their customers.
This means that every step in decision-making is systematically based on hard, unbiased data, as opposed to just relying on instinct or experience.
Despite the rapid technological developments in recent years, which have made it possible for machines to leverage Big Data and train complex Machine Learning models, Data Driven Decision does not necessarily translate into automatic decision-making. It is, above all, a framework for reflection, an approach to making critical decisions that may or may not be transformed into a new set of technological tools.
Their only requirement is reasonable, unbiased, and detailed data (hence the expression garbage in, garbage out). Technology can help produce more detailed analyses or automate actions. Still, if a company is already collecting data from its operations, it can start implementing a Data Driven Decision approach.
Why is Data Driven Marketing so important for today's Marketing Managers?
“You can’t control what you can’t measure,” Peter Drucker famously said. On a similar note, he code number of philippines urges executives to measure the effective use of their time on a recurring basis. When implementing a simple daily measurement routine, executives often find that reality falls far short of their initial expectations. This is a prime example of how data can impact daily decisions and how it can improve productivity, even on a small scale.
The gap between reality and expectation should be a warning that it is unwise to follow intuition alone. According to Daniel Kahneman, 2002 Nobel Prize winner in Economics, “Intuition is nothing more and nothing less than an exercise in adapting past experiences to a situation that our brain believes to be similar.”
It is essential to emphasize that Data Driven Marketing can be applied to any aspect of the marketing mix . Due to the increasing role of digital channels and e-commerce, the available literature sometimes tends to focus too much on online data, which can lead to some confusion.
Data can play a crucial role in pricing strategies (how sensitive are your customers?), place (where should you open new stores or relocate current ones?), product (which features are crucial, which should be discarded or developed?), and promotion (where should I advertise or promote?). This strategy is also known in the marketing world as the 4Ps.
Main benefits
Uncertainty plays a significant role in every executive decision. The higher the risk, the more difficult the decision and the greater the doubt. Increased confidence when faced with difficult choices should be enough incentive for every executive to consider a data-driven approach. On the topic of marketing decisions, some important benefits should be highlighted:
Avoid decision bias: Individual and collective intuition can be a dangerous advisor during the decision-making process. When faced with the unknown, our brain uses crosshairs as a comparison to situations it believes are similar or related. This mechanical biased process leads to repetitive and often poor decisions.
Target the right audience with a relevant message: The amount of information available to companies today makes it possible to identify micro-groups and implement long-tail marketing strategies.
Better product development: Every marketing department aims to know and understand the customer so well that the product or service fits them and sells. Learning about the target audience’s behavior, expectations, and business pain points helps guide the development of products and services that meet specific needs.
More efficient campaign spending: Under pressure to meet return on investment (ROI) targets, marketing managers struggle to understand the impact of their departments’ spending. Data plays a vital role in measuring and inferring campaign impacts across different customer journeys .
The proactive, rather than reactive, approach: With effective data and analytics, companies can move from reacting based on data insights to predicting future needs and market trends. “The best way to predict the future is to create it” (Peter Drucker).
Main challenges to becoming a Data Driven Marketing organization
Highly data-driven organizations are three times more likely to report significant improvements in decision-making, according to a 2016 survey. However, 62% of executives still rely more on experience and advice to make decisions (although the survey found this finding differed significantly across countries).
Analytics executives must overcome challenges in three areas: accumulation, analysis, and action. In other words, the analytics leader needs to be able to integrate more data sources easily, leverage advances in technology for faster and more sophisticated analysis, and extract insights that lead to better business performance.
However, few marketers have the experience to work with data effectively. Most don’t have a quantitative or statistical background, which could help them navigate the numbers they collect and identify patterns. Data and data analysis are only as valuable as the insights you can extract from them.
Unfortunately, it’s not uncommon these days to feel overwhelmed by the flood of information, and it can be hard to know what to do with it. So there’s a legitimate concern about investing in a new platform or technology only to find out later that the company isn’t able to effectively use it to its full potential. Given the constant pressure that marketing managers feel to deliver returns on their activities, it’s common to rely on old tried and tested formulas, even if they’re not considered optimal.
Just because a decision is based on data doesn’t mean it will always be correct. While data may show a pattern or suggest a specific outcome, if the data collection or interpretation process is flawed, it leads to poor decisions. If it’s not the right information, it won’t support great decisions.
Final Insights
Putting the focus on data can be daunting at a time when consumers have real-time expectations and needs. It’s a path that often leads to significant change and requires significant soul-searching. Challenging and questioning intuition and collective wisdom isn’t easy, but the growing number of game-changers who have adopted a data-driven strategy should be a testament to the fact that it’s worth it.
When companies understand who, what, where, when and why customers are engaging with marketing efforts, they can make better decisions.
At MATH Marketing , we help companies around the world implement Data Driven Marketing processes, both online and offline. We pride ourselves on answering questions through data insights. Some of the biggest brands share their data challenges with us and rely on our insights to drive daily operational and strategic decisions.
This means that every step in decision-making is systematically based on hard, unbiased data, as opposed to just relying on instinct or experience.
Despite the rapid technological developments in recent years, which have made it possible for machines to leverage Big Data and train complex Machine Learning models, Data Driven Decision does not necessarily translate into automatic decision-making. It is, above all, a framework for reflection, an approach to making critical decisions that may or may not be transformed into a new set of technological tools.
Their only requirement is reasonable, unbiased, and detailed data (hence the expression garbage in, garbage out). Technology can help produce more detailed analyses or automate actions. Still, if a company is already collecting data from its operations, it can start implementing a Data Driven Decision approach.
Why is Data Driven Marketing so important for today's Marketing Managers?
“You can’t control what you can’t measure,” Peter Drucker famously said. On a similar note, he code number of philippines urges executives to measure the effective use of their time on a recurring basis. When implementing a simple daily measurement routine, executives often find that reality falls far short of their initial expectations. This is a prime example of how data can impact daily decisions and how it can improve productivity, even on a small scale.
The gap between reality and expectation should be a warning that it is unwise to follow intuition alone. According to Daniel Kahneman, 2002 Nobel Prize winner in Economics, “Intuition is nothing more and nothing less than an exercise in adapting past experiences to a situation that our brain believes to be similar.”
It is essential to emphasize that Data Driven Marketing can be applied to any aspect of the marketing mix . Due to the increasing role of digital channels and e-commerce, the available literature sometimes tends to focus too much on online data, which can lead to some confusion.
Data can play a crucial role in pricing strategies (how sensitive are your customers?), place (where should you open new stores or relocate current ones?), product (which features are crucial, which should be discarded or developed?), and promotion (where should I advertise or promote?). This strategy is also known in the marketing world as the 4Ps.
Main benefits
Uncertainty plays a significant role in every executive decision. The higher the risk, the more difficult the decision and the greater the doubt. Increased confidence when faced with difficult choices should be enough incentive for every executive to consider a data-driven approach. On the topic of marketing decisions, some important benefits should be highlighted:
Avoid decision bias: Individual and collective intuition can be a dangerous advisor during the decision-making process. When faced with the unknown, our brain uses crosshairs as a comparison to situations it believes are similar or related. This mechanical biased process leads to repetitive and often poor decisions.
Target the right audience with a relevant message: The amount of information available to companies today makes it possible to identify micro-groups and implement long-tail marketing strategies.
Better product development: Every marketing department aims to know and understand the customer so well that the product or service fits them and sells. Learning about the target audience’s behavior, expectations, and business pain points helps guide the development of products and services that meet specific needs.
More efficient campaign spending: Under pressure to meet return on investment (ROI) targets, marketing managers struggle to understand the impact of their departments’ spending. Data plays a vital role in measuring and inferring campaign impacts across different customer journeys .
The proactive, rather than reactive, approach: With effective data and analytics, companies can move from reacting based on data insights to predicting future needs and market trends. “The best way to predict the future is to create it” (Peter Drucker).
Main challenges to becoming a Data Driven Marketing organization
Highly data-driven organizations are three times more likely to report significant improvements in decision-making, according to a 2016 survey. However, 62% of executives still rely more on experience and advice to make decisions (although the survey found this finding differed significantly across countries).
Analytics executives must overcome challenges in three areas: accumulation, analysis, and action. In other words, the analytics leader needs to be able to integrate more data sources easily, leverage advances in technology for faster and more sophisticated analysis, and extract insights that lead to better business performance.
However, few marketers have the experience to work with data effectively. Most don’t have a quantitative or statistical background, which could help them navigate the numbers they collect and identify patterns. Data and data analysis are only as valuable as the insights you can extract from them.
Unfortunately, it’s not uncommon these days to feel overwhelmed by the flood of information, and it can be hard to know what to do with it. So there’s a legitimate concern about investing in a new platform or technology only to find out later that the company isn’t able to effectively use it to its full potential. Given the constant pressure that marketing managers feel to deliver returns on their activities, it’s common to rely on old tried and tested formulas, even if they’re not considered optimal.
Just because a decision is based on data doesn’t mean it will always be correct. While data may show a pattern or suggest a specific outcome, if the data collection or interpretation process is flawed, it leads to poor decisions. If it’s not the right information, it won’t support great decisions.
Final Insights
Putting the focus on data can be daunting at a time when consumers have real-time expectations and needs. It’s a path that often leads to significant change and requires significant soul-searching. Challenging and questioning intuition and collective wisdom isn’t easy, but the growing number of game-changers who have adopted a data-driven strategy should be a testament to the fact that it’s worth it.
When companies understand who, what, where, when and why customers are engaging with marketing efforts, they can make better decisions.
At MATH Marketing , we help companies around the world implement Data Driven Marketing processes, both online and offline. We pride ourselves on answering questions through data insights. Some of the biggest brands share their data challenges with us and rely on our insights to drive daily operational and strategic decisions.