This article will show you how marketers are trending towards data analysis, which can provide useful insights regarding your target market’s behavior and preferences, enabling you to redesign your marketing strategy.
Data analysis has played an important part in marketing since the 1980s when the first million-dollar advertising campaign started. This is when bigger companies like McDonald’s or Coca-Cola started to gain power and dominance over the smaller companies who did not pay much attention to using data in their marketing strategies.
As more new technologies, like computers, were introduced to businesses, marketers and advertisers began to use their amazing potential for data analysis and promotional techniques that would optimize their marketing.
What is Data Analysis?
The better you know your customers, the more you can tailor your marketing to them. Data analysis is the data-driven process of discovering new information. First, you collect data, whether through surveys, focus groups, or analyzing customer transactions. Next, you analyze the data, looking for patterns and relationships.
Finally, you decide what action to take. Data analysis can be used for discovering trends, predicting probabilities, and measuring outcomes. Marketing companies use data analysis to help customers choose what to buy when to buy it, and where to buy it.
Today, data analysis is less expensive than ever. (In 2007, Home Depot launched a program that allows regular customers to download information about their purchases in a format they can analyze with a spreadsheet.)
With data analysis, companies can capture and tailor marketing not only to their individual customers but also to their potential customers as a business growth strategy.
What types of Data can be used to Develop Marketing Strategies?
Data analysis is a buzzword these days, but it serves an important function in marketing as well. Marketers use data to identify key success metrics, test new marketing tactics, measure the effectiveness of advertising, and measure the ROI of marketing campaigns.
If a business sells a product in a particular store, the business can track the number of sales that take place and decide which store would be best for its next marketing campaign. Data analysis is used to optimize a marketing campaign.
A marketing campaign is not only generating as many sales as expected, a business might decide to change the marketing message or the timing of the campaign. Data analysis can also help a marketer find new places to market a product.
Suppose your business sells a product in a particular store, the business can analyze the sales to determine which stores are doing the best and which ones could use another product. The data will help the business decide which stores to stock more and which stores to remove from inventory. Data analysis can be used to test the effectiveness of a marketing campaign.
How do I use Data Analysis Effectively?
How much should I spend on marketing? What kind of marketing campaign should I do? What kinds of advertising works? Which customers are most likely to become long-term customers? These questions have obvious answers. But in practice, many companies make poor decisions because they simply don’t understand their own data.
Your company has a product called Gadget X, which customers buy for $100. These customers spend an average of $100 a year with your company. But Gadget X only accounts for 5% of your company’s sales.
So, how much money should you spend marketing Gadget X? If you asked most people, they would probably say, “Neither too little nor too much.” They would probably say something like, “Market Gadget X, because everyone else is, and because Gadget X is a good product.”
Unfortunately, that’s not the right answer. For one thing, Gadget X only accounts for 5% of your company’s sales. Who cares about 5%? You should probably spend 95% of your marketing budget on products, market to customers who are most likely to become long-term clients, or customers whose lifetime value contributes to 95% of your revenues.
Marketing is all about getting to the right customers at the right time. Analytics gives advertisers a clearer sense of what campaigns are more effective for different demographics and provides new opportunities to engage with potential customers.
Data, more than ever before, is the foundation of marketing. It’s so important that some people say it’s the future of marketing. Data analysis has completely changed how we create strategies and why they succeed or fail. Now marketers can track everything on a single dashboard.
They can see where traffic is coming from and what channels are performing best. They can also test various strategies to see which ones are most effective for different audiences.