Every year, the number of businesses competing for customers in the marketplace increases. With this added competition, only those who do the best job marketing their businesses will be able to sustain and grow their existing customer base.
But exactly how do you ensure your marketing efforts outdo that of your competitors?
Previously, this would come down to budget. Those with the most money to spend would generally outperform those with smaller budgets. However, now, the nearly-endless amounts of data available to businesses has levelled the playing field.
The age-old saying, “work smarter, not harder” has never been more relevant in the marketing space.
Instead of making decisions based on intuition or gut feeling, marketers are beginning to realize that there’s a better way to operate. They’ve discovered that data and facts can be analyzed and manipulated to achieve the best possible marketing ROI.
Marketing has shifted from an abstract combination of guesswork, luck, and spending to a rock-solid, data-based science.
With that said, in this post, we’ll explain exactly what data-driven marketing is and how it can take your marketing efforts to the next level!
What is Data-Driven Marketing?
Simply put, data-driven marketing is the practice of using customer information to optimize marketing efforts. This information could include things like demographics (age, sex, ethnicity, etc…), spending habits, interests, and more.
Using this data, marketers can create highly targeted and personalized campaigns that have the potential to be many times more effective than traditional one-size-fits-all marketing strategies.
Think of it like this:
You’re in a crowded mall (perhaps WEM) and you hear someone yell “Hey!” behind you. You hear them, but there are dozens of other people around you so you don’t think they are talking to you.
However, if they were to say “Hey, (your name!),” you would almost immediately turn around.
Now they have your full attention.
This is the benefit of data-driven marketing. Because it’s much more personalized and targeted, it has a better chance of speaking directly to your customers, making them much more likely to respond to your message.
Why is Data-Driven Marketing Important?
There are a number of reasons why it is critical for businesses of all sizes to incorporate data-driven marketing into their marketing strategy:
- Helps create a more personalized message.
- Increases response rates.
- Provides concrete feedback as to what’s working and what isn’t.
- Saves businesses the trial-and-error period often common of traditional marketing campaigns.
- Improves customer experience.
- Can utilize multiple channels to reach customers (direct mail, online, etc…).
- Can be highly automated.
Without using at least some form of data in your marketing efforts, an immense amount of luck is needed to see any real results.
Data-Driven Marketing Vs. Traditional Marketing
By now, you probably have a pretty good idea of what data-driven marketing is and how it can help your business. But how does it compare to traditional marketing methods?
For starters, data-driven marketing is much more exact. The technology now available to gather data provides you with the opportunity to target the ideal customers who are most likely to do business with you.
Compare this to traditional marketing, where you’re forced to rely heavily on trial and error, and you can begin to see why data-driven marketing is the best choice.
Because you’re able to directly target your ideal customers, you can save money on your marketing campaigns by achieving higher conversion rates.
With data-driven marketing, you’re shooting for quality leads rather than a high quantity of leads. For example, if you know your target customer well, you can spend half the amount of money as a traditional campaign and still get much better results.
Finally, data-driven marketing helps reduce the amount of time spent in the data-collection process. With traditional marketing, businesses relied on things like surveys and polls to learn about their customers. Not only was this time-consuming, but it also sometimes provided unreliable data.
Now, however, many more reliable ways exist to learn about your target audience. For example, you can understand their interests, income level, and more simply from their postal code!
Also, data-driven marketing reduces the amount of time spent on brainstorming new marketing strategies. It helps to clearly show you exactly what has/hasn’t worked for you in the past, so you will have a better understanding of what will work in the future.
Once you have successfully defined your target audience, it becomes extremely easy to execute automated campaigns that generate results in no time at all!
Which Industries Benefit from Data-Driven Marketing?
It’s safe to say that every business would benefit from getting to know their customers a little better. However, here are a few industries that can really take advantage of data-driven marketing:
The hospitality industry is a prime example of a space where data-driven marketing can be applied.
For example, a resort owner could analyze data to determine where most of their guests are coming from. Based on that information, they could create a better, more personalized experience for each guest.
Given the fact that 86% of consumers are willing to pay for a better customer experience, doing this has the potential to significantly increase revenue.
Banks and financial companies can use data to track the behaviour of website visitors on their sites. This is helpful because it allows them to see which pages have the highest bounce rates.
If a certain page has a high bounce rate, this could signal that the content is too confusing for the average visitor or that the content needs to be more engaging.
This type of analysis is especially helpful in industries like banking because customers often get hung up on the technical jargon and corporate language, causing them to exit web pages early.
With the right kind of data, nonprofit organizations can see which demographic is most likely to respond to their donation campaigns. They’ll also be able to see which marketing channels are most effective, helping them to double-down on the medium that provides the best results.
For example, did you know that direct mail brings in 78% of donations for nonprofit organizations?
It’s data-based insights like these that can multiply the effectiveness of your marketing campaigns.
Data-Driven Marketing Statistics
Here are some more statistics that help show the importance of data-driven marketing as we advance further into the age of information:
- Campaigns that leverage data-driven personalization report 5-8x ROI for their campaign spend.
- 88% of marketers use data obtained by third parties to enhance their understanding of each customer.
- Two out of three marketer state data-based decisions to be more effective than gut instincts.
- By adjusting ad copy to target price-sensitive customers, conversions have been found to increase as much as 200%.
- 74% of consumers are frustrated by irrelevant content.
- 56% of consumers would reward personalized marketing with a purchase.