An introduction to the role of data on everyday marketing challenges
Data Driven Marketing is the process of using company-generated or market data to inform and validate actionable marketing decisions. It aims to reduce uncertainties by generating insights from Big Data and helping Marketing Managers adapt their strategies to ever changing trends, unique demands from their brands audiences and requirements from their product customers.
It means that every step towards decision making is systematically based on hard and unbiased data, as opposed solely on instinct or past experience. Despite the fast technological development of recent years, which has made it possible for machines to leverage Big Data and train complex Machine Learning models, Data Driven Decision does not necessarily translate into an automatic decision. It is, first and foremost, a thought framework, an approach to important decision making which may or may not translate into a new set of tech tools.
Its only requirement is good, unbiased and detailed data (hence the expression garbage in garbage out). Tech can lend a helping hand producing deeper analytics or automating actions, but if a company is already collecting any data from its operation then it can start implementing a Data Drive Decision approach.
Why Data Driven Marketing is it so important for today's Marketing Managers
"You can't manage, what you can't measure" Peter Drucker famously said. On a similar note he urges executives to recurrently measure the effective use of their time. By putting into practice a simple daily measure routine, executives often find out that reality is far off their initial expectations. This is an excellent example of how data can actually affect everyday decisions and how it can improve productivity even at a small scale.
The gap between reality and expectation should be a warning that it is ill-advised to follow intuition alone. According to Daniel Kahneman, 2002 Nobel Prize on Economics, Intuition is nothing more and nothing less than an exercise on adapting past experiences to a situation that our brain believes to be similar.
It is important to point out that Data Driven Marketing can be applied to any aspect of the marketing mix. Due to the growing role of digital channels and e-commerce available literature sometimes tends to focus too much on on-line data which can lead to some confusion. Data can play a key role on price strategies (how price sensitive are your customers?), location (where should you open new shops or relocate current ones?), product (which features are crucial, which should i drop or develop?) and any other aspect of the business model.
Uncertainty plays a significant role on every executive decision. The higher the stakes, the harder the decision and bigger becomes doubt. Increased confidence when facing tough decisions should be an enough incentive for every executive to consider a Data Driven approach. On the topic of marketing decisions a few key benefits should be highlighted:
- Avoiding decision bias:
Individual and collective intuition can be a dangerous advisor during the decision process. When facing the unknown, our brain uses walking sticks as comparing to situations he believes are similar or related. This process biased mechanics lead to repetition and often to bad decisions.
- Targeting the right audience with a relevant message:
The amount of information available today for companies makes it possible to identify microsegments and implement long tail marketing strategies.
- Better product development:
Every Marketing department aims at knowing and understanding the customer so well that the product or service fits him and sells itself. Learning about the business target audience behaviour, expectation, pain points helps guide the development of products and services that cater to specific needs.
- More efficient campaign investment:
Under the pressure of Return on Investment targets, Marketing Managers struggle to understand the impact generated by their departments expenses. Data plays an important role in measuring and inferring campaign impacts on different customers purchase journeys.
- Proactive approach instead of reactive:
With enough data and good analytics, companies can evolve 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 become a Data Driven Marketing organization
Highly data driven organizations are three times more likely to report significant improvement in decision making according to a 2016 survey. Yet, 62% of executives still rely more on experience and advice to make decisions (although the survey has shown this conclusion to be quite different among countries).
Analytics executives must overcome challenges in three areas: accumulation, analysis and action. Put another way the analytics leader need to be able to easily integrate more data sources, harness advances in technology for faster and more sophisticated analysis, and extract insights that lead to improved business performance.
However, few marketeers have the expertise to work with data effectively. Most have no quantitative or statistic background which could help them guide through the numbers collected and identify patterns. Data and data analysis are only as valuable as the insights that you can draw from it.
Unfortunately, is not uncommon nowadays to feel overcome by the flow of information and it may not be easy to know what to do with it. Therefore, there is a legitimate concern about investing on a new platform or technology just to discover later on that the company is not able to use it effectively to its full potential.
Given the constant pressure that Marketing Managers feel to deliver returns on their activities, is only normal to rely on old proven and tested, even if less than optimal, formulas.
Just because a decision is based on data doesn't mean it will always be correct. While the data might show a particular pattern or suggest a certain outcome, if the data collection process or interpretation is flawed, then it leads to inaccurate decisions. If it's not the right information, it won't support big decisions.
Putting the focus on data can be daunting at a time when consumers have real-time expectation and needs. It is a path which often leads to significant changes and require significant internal reflexion. To defy and question collective intuition and lore is not easy, but the growing number of game changers that adopted a Data Driven strategy should be a testament that it is worth it.
When companies understand the who, what, where, when and why customers are engaging with their marketing efforts they are able to make better decisions.
At Math Marketing we help companies from around the world to implement Data Driven Marketing processes, both online and offline. We proud ourselves on answering though questions by employing data insights. Some of the largest brands share with us with their data challenges, and trust our data generated insights on everyday operational and strategic decisions.
If you want to learn about our projects and methodology reach us over the e-mail or contact any of our team managers directly on Linkedin. We are always available to share our insights with you and listen to your experience