Data driven companies win: Facebook, Uber, Netflix, and AirBnB have succeeded in disrupting their respective industries and playing an important role within our everyday lives. To understand what data-driven companies are about, consider the fact that Uber doesn’t own a single cab car yet are one of the major players in the transportation industry. AirBnB is the go-to service for finding accommodations but it doesn’t own any hotels. And Netflix has essentially disrupted how we rent and watch movies today but doesn’t own a single DVD or Blu-Ray disc. Data driven companies are on the rise and competition is at an all-time high. So what is data driven marketing then? One thing is for sure: in order to win more business from your competitors, you need to start analyzing your data right now.
Data-driven companies win because of three main reasons: 1) they understand their customers better than their competitors do, 2) they make decisions based on real-time data, and 3) they move quickly by staying updated and constantly being in the loop of what is going on in their industry.
What is data driven marketing?
Data-driven marketing is the process used by marketers to better understand their customers. With the data obtained, you can create, track, and improve campaigns, among other things. This data-driven process allows you to learn quickly about what works and what doesn’t, giving you the chance to adapt your marketing strategy and, by doing so, augmenting your ROI. Data-driven marketing can be quantitative as well as qualitative.
In order to succeed using data, you will need to have a solid process in place. This may seem easier than it seems, considering the performance of companies attempting to use a data-driven approach. Research shows that 72% of respondents are focused on knowledge gathering instead of taking action on the knowledge gathered (source). The reason why many companies still fail at implementing this process is the lack of one or all of the following aspects: the right skills, the adequate toolset, and the right mindset.
Two steps to succeed at data driven marketing
1 – Define the metrics that matter to your campaign/objective and KPIs.
The key to success in marketing is focus. To find your focus point, you will need to ask yourself two questions: 1) what is it that your product or service does that provides value to your users or customers? 2) how can you measure that value? For Netflix, this focus point would be minutes watched per month, for Facebook the focus point is its daily active users. Both of these metrics are correlated with a user receiving value.
Once you’ve figured out your focus point and the metric that matters most to you, you have to think about how to improve the performance of this metric. Once you’ve created a plan, you have to set KPIs. Set an objective related to your metric, and think about how you can measure this objective during and after your campaign. Your objective could be: become the biggest player in the juice-delivery industry in NYC.
Your Key Performance Indicators could be:
- Increase average order value with 5%
- Increase monthly orders by 10.000
To learn more about creating objectives and identifying your KPI’s, visit this post: How to Create a Measurement Plan
2 – Identify your marketing opportunities
In order to identify the marketing opportunities available to you, you need to ask yourself the following questions:
- Where does most of your traffic come from?
- Where do your best customers come from?
- What’s your average conversion rate?
- What are the pages that convert the best?
- Where do customers drop-off in the sales funnel?
You should obviously adapt these questions to your industry. Additionally, if the first two questions result in different answers, you will need to allocate more resources to the best converting channels.
If you’re not hitting your average conversion rate goals, but you do have enough traffic that could possibly convert, you will have to work on bringing up your conversion rate. One way to do this is by learning about why certain pages on your website have high conversion rates, and why some low. You can do this by using Google Analytics. To learn how you can utilize Google Analytics to improve your conversion rate, head over to the section about Page Views.
While analyzing your data, if you find that you have a high bounce rate or a particularly low amount of people converting into paying customers, you may want to do qualitative research, or research that is conducted to understand underlying reasons or problems and to develop possible solutions and hypotheses. Before doing qualitative research, I would suggest hiring a professional to have a look at your website and your data to confirm its performance. Qualitative research is complicated, expensive, and time-consuming but can be totally worth it. Therefore, you will have to be 100% sure your website strategy and data are optimized before immediately heading over to qualitative research.
Take some time to process the tips and advice mentioned here and tailor and answer all the questions for your specific company, client, or industry. Next week I will elaborate a bit more about data-driven marketing by explaining which marketing campaigns to choose based on the two-step process explained right here. Do you already have a data-driven process in place?