In the information age, businesses should strive to reach out to their target audience strategically. No matter their niche or industry, they win the market with clear-cut goals and focused implementation. But you can’t start with half-baked assumptions about what your customers want or which of the multiple channels available should go into your marketing mix. You need something measurable, actionable and provable, and that something is data-driven marketing.
What is data driven marketing? Think of it as marrying creativity with big data. Companies that are data-driven collect and analyze large data sets, such as sales data, to discover trends and patterns. Business owners use the new information to make decisions about operations. As for marketers, they leverage data to understand and even predict customer behavior.
The beauty of data driven digital marketing is that you have a substantial way of knowing your customers deeply. There are tools that measure every activity online and gather digital marketing data, allowing you to make informed decisions. The opposite is true for traditional marketing, which relies much on guesswork: shoot a message through clever copy or a catchy commercial and then wait to see where it lands. The latter is also so steeped in siloed practices that sharing data across departments rarely happens – if it happens at all.
When done right, data marketing can be liberating and resource-saving. It can prevent channel overlaps and pin down customer expectations. It can also pad your bottom line, which is music to the ears of bosses and executives. A 2015 McKinsey & Company study said those who adopt it can expect 15 to 20 percent marketing return on investment (MROI).
If your marketing efforts are failing to produce results in said areas, becoming data driven might be the next big step for you. In this article, we go beyond the question of what is data driven marketing and share with you how to create a strategy for it. We discuss:
• What is a key performance indicator (KPI) in marketing?
• What is the link between data and KPIs?
• How to create a data driven digital marketing strategy
• What data-driven marketing tools can you use?
• What other factors should you remember when rolling out data marketing?
What Is a KPI in Marketing?
Key performance indicators, or KPIs, measure a company’s success in supporting pre-set objectives or targets. They are used to evaluate the short- and long-term performance of an entire organization or its departments. Some examples are the cost of goods sold and recurring revenue (financial) and store foot traffic and employee retention (non-fictional/anecdotal).
So, what is a KPI in marketing going to look like? Based on the definition and categories above, you can have a financial or non-financial marketing KPI in the form of the following:
• Customer Acquisition Cost (CAC)
• Lifetime Value of a Customer (LTV)
• Return on Investment (ROI)
• Return on Ad Spend (ROAS)
• Leads (Marketing Qualified Lead or MQL & Sales Qualified Lead or SQL)
• Conversion Rate
• Website Traffic
• Email Marketing Performance
• Social Media Reach and Engagement
• Net Promoter Score (NPS)
But before you can track your progress and measure your success, you should identify your goals. Goals are the things you want to achieve and they’re what key performance indicators marketing version or otherwise, are set against. They are specific, measurable, achievable, relevant and timely, or what is commonly referred to as SMART goals. We’ll talk more about this step in the section about strategy creation and execution.
For now, here are a few goal samples and metrics to guide your marketing KPI setting:
• Customer loyalty: Focus on nurturing your existing customers.
– Customer attrition rate or the total customers lost (a) ÷ the total customers at the end of the the month or year (b) [E.g., 5,000 (a) ÷ 50,000 (b) = 10% attrition rate]
– Customer retention rate or the percentage of customers retained at the end of the month or year
• Customer experience and satisfaction: Meet customer demands faster and easier with more personalization.
– Bounce rate or total site visits that accessed a single page (a) ÷ total site visits at a given time (b) [E.g., 50 (a) ÷ 200 (b) = 25% bounce rate (the lower, the better)]
– Click-through rate (CTR) or the clicks / impressions for an advertisement or free product listing
• Brand impressions: Increase your consumer exposure on various channels.
– Search rankings
– Social media mentions
– Impressions or the number of times an ad or content was displayed on certain platforms or engaged with by potential customers
• Website visits: Attract more people to your website.
– Traffic, sessions, referral sources and other metrics found on the Google Analytics Marketing Platform
• Customer acquisition: Bring in new business to expand your customer base.
– CAC or the total marketing and sales expenses (a) ÷ total customers acquired over a specific period (b) [$50,000 (a) ÷ 400 (b) = $125 CAC]
Note that KPIs are easy to tell from objectives because the former can be calculated, the resulting figures for which determine wins or losses for the latter.
The Link Between Data and KPIs
The digital age has afforded many sectors the means to collect large volumes of data. Specifically, brands and businesses use digital marketing data to understand their customers. You can determine how your users are engaging with the content on your site or which variant of email marketing copy is working for a particular segment of your audience. Better yet, you can validate if the consumer persona you’re targeting is the same as what the data says.
As big data becomes available and accessible, companies of all sizes can now develop a better marketing KPI. The key performance indicators marketing professionals use not only record results but also predict outcomes and effect change.
You can, for instance, increase repeat customers by looking at your total webinar attendees or the number of products purchased per customer. And instead of conducting surveys just like the old times, you can track online behavior in real-time or conduct social listening to collect the information you need.
But with this opportunity comes the obligation to obtain data ethically. Be aware of best practices and regulations, such as the United States Data Privacy Laws.
Creating and Implementing a Data Driven Digital Marketing Strategy
For all the technicalities surrounding each KPI a marketing team establishes to achieve their goals, the data-driven approach is people-first marketing (which is now a basic truth known to every data driven digital agency worth its salt). Learning more about your customers empowers you to seek ways to serve them better.
No worthwhile effort is without challenges. Devising and deploying your data driven marketing strategy requires the investment of time, money and energy. But preparation is half the battle, right? So going through the process increases your chances of success.
1. Assemble a team
To harness the power of big data, you should build a team that brings together various departments, such as marketing, sales, information technology (IT) and customer support. The members should be committed to working with the data analyst and willing to acquire new skills.
Having a centralized analytics team that handles projects across the organization and aligns regularly has several benefits, including:
• Focused efforts to satisfy customer expectations
• Lower operational costs
• Improved communication and knowledge-sharing
• Collaborative decision-making
All things considered, you should not disregard decentralizing your analytics team if you prefer giving more power and independence to your data analysts.
2. Set goals
We addressed identifying your objectives earlier in the article. Aiming for a limited number of goals lets you determine which data is critical to your needs, narrowing down your key performance indicators marketing to what matters to your business. It allows for greater focus and efficiency.
Here are a few tips to establish goals for your KPI marketing effectively:
• Look at the big picture. If you know about the sales funnel, you should make it a point to set objectives for each level, from those who have just become aware of your products or services to those who are ready to take action.
• Create a baseline. If you have existing digital marketing campaigns, determine how they’re doing and start from there.
• Align goals with resources. Forty percent of marketers surveyed have plans to raise their budget for data-driven marketing. But if you don’t have the financial capacity, talent pool or bandwidth to accommodate unrealistic goals, it helps to know your priorities.
3. Collect data and master data mining
Now, it’s time to gather data. After doing the second step, you most likely know which data you need to drive your KPI marketing. Ask for it if the data is handled by a specific department, such as the social media team for social media analytics.
Then, roll up your sleeves and start doing the dirty work. That is, it’s time to put your team’s data mining skills to work. But what is data mining? It’s the process of converting raw data into valuable information for marketers, sales managers and others to use in their strategy. In the words of Doug Alexander from the University of Texas at Austin, the newly discovered knowledge could be “significant facts, relationships, trends, patterns, exceptions and anomalies that might otherwise go unnoticed.”
What is data mining going to achieve? When it drives your marketing (which is why we sometimes call it data mining marketing), you can craft smarter campaigns, stay ahead of the competition and amplify your profitability.
What is data mining automation? It’s when you use digital marketing analytics tools to automate parts of or the entire process instead of manually doing it yourself.
4. Assess and apply insights
Evaluating the impact of data mining marketing on your business is essential. Your business has unique needs that require a tailored strategy. And you continue that personalization until the effects are felt by your customers.
Still, there are common steps shared across data driven digital marketing services and strategies:
• Test and learn. In the true spirit of data-driven cultures, validate your new discovery. Test before you fully commit and test after you implement.
• Refine. You can perform tests on many channels. Data driven content marketing or pay-per-click advertising requires you to mine data before, during and after launch, which in turn allows you to fine-tune your strategy, tactics or campaign.
• Remove barriers. Ultimately, the end- goal of data mining marketing is to eliminate obstacles in the path of customers to purchase and loyalty.
Data-Driven Marketing Tools
Your digital marketing data, objectives and KPIs are all set. But what is data driven marketing without tools and software?
Using the right tools can make your life easier. Some of the suggestions provided here apply across all channels, such as data driven content marketing and search engine optimization (SEO). But others function as digital marketing analytics tools.
• Website analytics: Google Analytics Marketing Platform, Alexa, Mixpanel
• Marketing automation: Marketo, Oracle Eloqua, Mailchimp
• Customer relation management (CRM): Salesforce, SAP, Sugar
• Advertising/Retargeting: Google Ads, Rocket Fuel, AdRoll
• Content: SEMRush, Buzzsumo, Canva
• Social media: Facebook for Business, Oktopost, Mention
• Analysis and reporting: Tableau, DataHero, Optimizely
While obviously not a tool, a reliable data driven digital marketing agency has access to critical digital marketing analytics tools. Partnering with one is more cost-effective and strategic, especially if you’re building from scratch. Choose a company with legitimate data driven digital marketing services to leverage its expertise and experience instead of experimenting on your marketing mix and strategy.
More Data Marketing Factors to Consider
Data-driven marketing is people-based. You shouldn’t be afraid to harness its power because putting it in context can propel your business toward next-level visibility and profitability.
When dealing with data, just remember it should be accessible and not complicated for non-data scientists to comprehend, be relevant, hold water and tell a story.
Level Up With Data-Driven Marketing
Trusting your gut feelings may work in other areas of life, but it is not the most strategic business option. In particular, a data-driven approach in marketing allows you to work with measurable, actionable and provable solutions.
These days, data-driven marketing is a minimum requirement if you want to connect deeply with your customers and outperform your competitors. Goals and KPIs must be grounded in data. The abundance of tools like the encompassing Google Analytics Marketing Platform should help alleviate the pain points you’re experiencing as a business owner or marketer.
Take the example of one of the leading factoring companies in America, Business Factors. In 2016, the financing options provider suffered a dismal booking performance, so it sought data driven digital marketing services from Thrive Internet Marketing Agency. It received a robust, data driven digital marketing strategy that included SEO and PPC campaigns, followed by email marketing, all with well-defined KPIs. From 2017 to 2019, Business Factors garnered:
• Conversion Rate (year-over-year): +546 percent
• Live Chat: +11,400 percent
• Organic Search: +51.13 percent
• Funded Deals: +14.75 percent
Thrive is a data driven digital marketing agency with over 15 years of industry experience. We have evolved to embrace data as our foremost source of information and inspiration. Trust our data driven content marketing, technical SEO, email marketing and other services to bolster your online presence and enhance your bottom line.
Contact us through this page or call us at 866-908-4748 to take that one step further toward getting the pulse of your customers and reaching your KPI marketing goals with a data driven digital marketing agency.