What Is Data-Driven Marketing?

What is data-driven marketing?

Data-driven marketing is an approach that prioritizes data gathered on customer behaviors. This data allows marketers to predict future actions and position strategies to reach targeted groups of customers.

Insight into consumer behavior and how people interact with brands and products allows companies to personalize strategies that meet customers’ expectations. Data-driven marketing is an essential marketing component, with 83 percent of marketers identifying the ability to translate data into actionable insight at the optimal time as very important [2].

Examples of data-driven marketing

Marketers use data to guide decisions. In the past, leaders made decisions based on intuition or what the organization did in the past. Data helps guide decision-making free of bias or false assumptions.

Let’s look deeper at the three main types of data you might use to gather accurate information about the past, present, and future.

• Descriptive Analytics: If you collect data from earlier campaigns, you can use descriptive analytics to gain insight into how those campaigns can help plan strategies for the future. Reports on website traffic or social media engagement provide descriptive analytics as they paint the picture of how users interact with a website or social page. For example, Netflix uses descriptive analytics to pinpoint trending content, allowing users to see what’s popular. 

• Predictive Analytics: This allows businesses to draw insight into predicting customers’ behavior. A company can use predictive analytics to adjust future campaigns to anticipate new trends or to determine the best times to show ads to customers, using their previous engagement with your brand to find clues as to when they would be most likely to buy.

• Prescriptive Analytics: This data draws conclusions from any touchpoint between the brand and the customer, allowing the organization to target campaigns toward desired customer groups. TikTok is a prime example of prescriptive analytics. The “For You” page identifies posts based on the interest the user previously showed in similar posts.

Data-driven marketing strategies

Considering these forms of data, marketers use the numbers well with several marketing strategies that embrace data insights.

Omnichannel marketing

Omnichannel marketing is all about reaching consumers across multiple channels and platforms. How a group of customers interacts with a brand, whether on social media or by outreach channels such as phone, email, or online chat, can inform a brand about their behavior. An omnichannel marketing campaign seeks consistency in the customer experience no matter what type of device or platform customers use to view the messaging. That means if a customer sees one product advertised on social media and visits the brand’s website, they will see the same product recommended to them.

Benefits of using omnichannel marketing

A marketer may use omnichannel marketing if similar customer segments engage with the brand on different channels. An omnichannel marketing strategy, for example, can combine insights gathered from data regarding website traffic, social media engagement, and email marketing to complete a picture of customer behavior across all channels.

Customer segmentation

Organizing groups of customers into segments makes it easier for brands to identify groups of customers with something in common. By paying attention to demographic information, brands can then target marketing more closely to profitable segments of customers and tailor their marketing to the demographics likely to make purchases.

Benefits of using customer segmentation

Not all customers are the same. Brands focus on segmenting customers to tailor messaging to specific groups of customers, select the best channels for each customer segment, and establish closer, more personal customer relationships by delivering particular messages to targeted customers who will likely receive those messages well.

Personalization

Customers’ online shopping behavior underlines the importance of personalization. According to a McKinsey study, people expect brands to personalize their marketing efforts and interactions, with 71 percent of people saying they expect personalization in marketing [3]. Personalization includes targeting ads according to people’s past purchase history or offering targeted discounts for relevant products that align with their interests.

Benefits of using personalization

Marketers use personalization to make customers feel that a brand’s products are just for them. Personalization increases loyalty and allows brands to stay relevant in a customer’s mind.

What is data-driven marketing used for?

Data-driven marketing uses accurate information about aspects of marketing, such as customer behavior, to guide decision-making and improve efficiency in marketing efforts. A data-driven approach to decision-making seeks to remove implicit bias or intuition from decisions.

Harvard Business Review highlights the benefits of data-driven marketing using a real-world example. A data-driven approach to marketing to new insights into customers’ needs, behaviors, and expectations for Telefonica Chile. The Chilean telecommunications company began using a new marketing analytics platform called AURA. The company identified marketing goals early during implementation as it sought to expand sales of its essential products. Challenges arose in ensuring those involved could collect correct, up-to-date data. However, after four years, Telefonica Chile could track customer behavior in real time. The company strived to adjust to the digital age, and it needed a clear, data-backed picture of the present.

Pros and cons of data-driven marketing

A data-driven approach has many advantages. However, it also poses some potential drawbacks. Learning about both has value and can help you decide when to use data-driven marketing. 

Pros

First, let’s examine the benefits of data-driven marketing and envision how it can improve your marketing efforts. 

It aids you in finding the truth.

Implementing a data-driven marketing strategy may be daunting at first, but the results allow a brand to establish the truth of how customers behave and think. A brand can prove or disprove previously held assumptions. Establishing the truth helps an organization devise thoughtful marketing strategies.

It allows brands to anticipate the future.

Predictive analytics can show you where your brand and your competitors are heading. You can identify trends based on data from what has already happened and use it to plan for the next cycle. 

It facilitates effective content creation. 

Data on the business and industry it operates in makes everyone more informed. You can use that information to develop content or analyze how people interact with your brand’s online presence. It can also guide decisions on the best time to post content and which platforms to use for particular messages.

Cons

Like anything, data-driven marketing has potential drawbacks. Let’s examine these potential drawbacks in greater detail.

You may have difficulty taking action.

Once you gather available data and numbers on customer experience, behavior, and satisfaction, it can be challenging to determine the next step: taking action based on data-generated insights. Companies that successfully pinpoint action based on data typically identify their goals early in strategy development and use data that directly informs their perspective on that specific goal.

It requires keeping data updated and relevant.

Things can change quickly, with customers’ focus shifting to innovative new products or attitudes changing. Maintaining relevant data that tells an accurate story of the present is a challenge for marketers.

It presents a storage challenge and the need for data silos.

Data stored in multiple systems, in multiple locations, and handled by multiple leadership roles or teams in an organization can be difficult to assemble for effective data-driven marketing. It is important to keep data centralized on one platform, in which other technology can be integrated to give a full picture of the marketing effort. Marketers use many different technologies to track activity. The data one team may be capable of accessing through platforms such as CRMs or other programs may be markedly different from the data another team can access.

One way marketers can seek to prevent blind spots caused by data silos in organizations is to take an “inside-out” approach by first identifying problems customers want to solve and then seeking to find solutions based on data.

Who uses data-driven marketing?

Data-driven marketing is a key component for companies’ ability to understand their customer base and how they interact with products. The number of business leaders overseeing data-driven marketing offers insight into its critical nature. The chief marketing officer (CMO) takes charge of the customer experience, with 36 percent of respondents involved in a Harvard Business School study reporting that their company positions the CMO to lead it. The chief executive officer (CEO) was the second-most popular answer, with 25 percent of companies putting in the purview of one of their senior leaders [2].

Data-driven marketing is a team effort overseen by a company’s marketing operations leaders. Some essential job roles in data-driven marketing include the following:

1. Advertising, promotions, and marketing managers

Median annual salary: $138,730 [4]

Marketing managers identify potential markets for products and direct marketing plans to fulfill sales, product development, and customer satisfaction goals.

2. Marketing specialists

Median annual salary: $68,230 [5]

Market research analysts or marketing specialists plan marketing or advertising campaigns, forecast potential sales performance of products or services, and analyze analytics such as web traffic or search engine performance.

3. Marketing managers

Median annual salary: $149,200 [6]

Marketing managers oversee marketing policies and activities. They determine the demand and pricing for products and services, forming strategies that maximize profitability and market share.

How to get started with data-driven marketing

Positions in marketing typically require a bachelor’s degree in a business field, including marketing or communications. Work experience in a related occupation, such as public relations or sales, may serve as a strong entry role to marketing. Some employers may prefer you to get a master’s degree. Additionally, cultivating analytical thinking, creativity, interpersonal skills, and decision-making are important skills related to data-driven marketing.

Learn more with Coursera.

Learn more about data-driven marketing in The Digital Marketing Revolution, offered by the University of Illinois, available on Coursera. This course examines how the digital revolution has altered how organizations create, promote, and distribute products. It also analyzes how digital marketing works analogically and helps you build a robust foundation in digital marketing concepts and tools.