There is no ignoring the monumental weight that data carries in the modern marketing landscape. It has contributed to the unprecedented success of marketing innovators like Google and Facebook, and enabled smaller businesses to utilize smaller budgets and analytical savvy to thrive in an increasingly competitive economy. Today, we’re answering a couple of questions we get asked often about the importance of data-driven marketing and discussing where we predict data-driven insights will take marketers in the future.
To truly understand the increased relevance of data in marketing, it’s important to understand the evolution of analytics since the 1950s. The advent of data usage in business, often referred to as “Analytics 1.0,” only marginally involved data in strategy. Businesses used small, structured data systems and constructed time-consuming models only in rare cases, basing many decisions on intuition rather than experience.
Around 2010, a new wave of business data enabled organizations to utilize massive amounts of data and variables in real time. Often associated with the buzzword “Big Data” (find out some key misconceptions about this phrase here), Analytics 2.0 enables marketers to use data to instantly assess performance, run tests, and change strategies. Its predictive tools measure the interaction of marketing efforts across channels, and identify how different variables affect performance. Data-driven marketing plays an important role in today’s business landscape by empowering marketers to answer questions that could previously only be guessed at and drive strategies with a relative amount of certainty about how they will perform. In fact, according to the Harvard Business Review, companies utilizing data-driven marketing tactics can often achieve improvements of 10 to 30 percent (sometimes more) while maintaining their existing budgets.
The goal of any marketing effort, digital or otherwise, is to target a product or service to a consumer’s needs. As marketers, we don’t simply tell our customers why they need what we’ve already created. We consider our customers in every stage of the marketing process by designing our product or service to fit their needs and then using targeted tools to communicate our solution. Therefore, the primary goal in data collection and analysis is to truly understand the needs of our customers. In the past, such research was conducted with surveys and educated guesses. Luckily, due to the mass amounts of consumer data at our fingertips, finding the answer is no longer as difficult: it lies in our digital footprints.
We all react differently to online marketing — in just 10 seconds on the internet, we might read, hover, click, and close a window before navigating to a new one or running a new search. Such activity, known as a “digital footprint,” when considered in aggregate, contains invaluable information about each potential customer — it’s the closest you can come to actually watching them interact with your marketing campaigns. Ask yourself, “Which pages do customers go to and from? What happens after they click our links? What content are they uploading or downloading and at what times?” Use this information to better target your marketing efforts to what your customers are looking for. In today’s data-driven market, your business is far more likely to succeed if you can harvest, blend, and analyze real-time customer data to identify patterns and predict customer needs before they’re even aware of them themselves.
Fittingly dubbed “Analytics 3.0,” the future of data-driven marketing involves integrating analytics into every level of the business, both internal and external. From an external perspective, Analytics 3.0 will involve a new resolve to embed data smartness into the products and services sold to customers, thereby providing an invaluable source of information and insight to every level of the organization. In order to integrate the new trend with organizational strategy, Tom Davenport, IIA’s Co-Founder and Research Director, recommends that companies align analytics with strategy, ensure leadership embraces analytics and leads by example, and create a management role exclusively responsible for overseeing the strategic deployment of analytics, and we couldn’t agree more.
Although it is a constantly evolving concept, data collection and analysis now holds unprecedented weight in the success of startups and established businesses alike. To learn more about the evolution of marketing from a rules and tools approach to a data-driven process, read our white paper, The New Marketing Value Chain.