What is data-driven marketing? (How it works and examples)

By Indeed Editorial Team

Published 11 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Before launching any marketing campaign, it's beneficial to possess a thorough understanding of the company's target audience, their demands and where to find them. Insights from prior research form the basis of data-driven or data-based marketing. Learning how this concept works can help you create successful marketing campaigns to reach a company's ideal customers. In this article, we discuss what data-driven marketing is, how it works, the challenges common to this type of marketing and a list of steps to create a successful data-based marketing campaign.

What is data-driven marketing?

Data-driven marketing is a marketing strategy that relies solely on collecting and using insights from customers' data for marketing purposes. You can also refer to this as data-based marketing. Marketers use analytical tools to collect data and generate necessary insights that may be useful in understanding a target audience. With these insights, businesses can make informed decisions and direct their marketing efforts to the right channels. To achieve a more effective marketing process, marketers can evaluate the effectiveness of previous campaigns to make informed decisions regarding future advertising. If well-coordinated, data-based marketing can increase a company's return on investment.

Related: 8 different types of advertising (digital and traditional)

Data-based marketing vs traditional marketing

Traditional marketing uses assumptions and a lot of trial-and-error marketing processes to determine what works best for a company. This action can be time-consuming and more expensive to run. In contrast, data-based marketing allows companies to focus on strategies that work effectively for individuals in specific groups at specific times. Using data to make marketing decisions helps companies save time and resources.

Related: What is experiment marketing, and when do companies use it?

How does data-driven marketing work?

Marketers collect data to target the ideal customers of a company. Information relating to customers' demographic characteristics or online behaviour could be beneficial here. After deciding on the essential data to collect, marketers gather these data sets from different sources, such as website reviews, email and call centre data. They analyse data and use insights from this analysis to determine the type of individuals likely to develop an interest in its products or services, including the best methods to convey information about the company to the target audience.

Related: What is integrated marketing? (And how to use it effectively)

How to integrate a successful data-driven marketing campaign

Consider the steps below to integrate successful data-based marketing:

1. Define your goals

You can start by setting goals about what you intend to achieve with a marketing campaign. These goals can include increasing traffic, boosting sales or improving customer satisfaction. The goals you set can guide the entire campaign and help you measure your marketing efforts' success. Ensure that your goals are specific and measurable.

2. Determine the target audience

It's beneficial to determine the company's target audience to ensure that any marketing campaign is successful since a business can't meet the demands of everyone. Recognise the individuals likely to purchase a product or subscribe to a service. The knowledge of who you're selling to helps to create relevant campaigns. You may consider the following factors to identify your target audience:

  • Demographics: This includes information such as gender, age, education level, marital status, location and income level. Identify the market segment that may find the company's products useful.

  • Behavioural patterns: Study how customers may likely respond to a marketing campaign using past information. Consider studying their social media activities, including the online content and advertising they find relevant, to plan marketing campaigns.

  • Motivation: Research extensively about what motivates customers to buy a product or use a particular service. You can use such insight to plan marketing campaigns to achieve positive results.

Related: How to find your target audience (with types and benefits)

3. Choose the right marketing channels

Use insights from customers' online behaviour analysis to determine the right marketing channels. For example, if the target customers use email more than social media platforms, it's beneficial to reach such customers through email. Other channels can include blog posts or search engine advertising.

4. Create relevant content

It may not be enough to choose the right marketing channels. Developing the right products or content according to customers' preferences is equally important to increase retention. Also, consider your goals and the marketing channels when planning content for marketing.

5. Track to examine the performance of marketing campaigns

Continuous data collection is necessary for a successful data-based marketing strategy. Record how often the target audience takes a desired action and regularly examine the effectiveness of marketing campaigns to identify ways to improve. As your campaign progresses, you can use previous performance metrics to track your success and determine what is and isn't working.

Examples of data-driven marketing

Some examples of data-based marketing include:

Personalised email campaigns

If a survey reveals that the target audience is exclusively interested in finding men's clothing accessories, adverts for women's clothing accessories are less likely to be successful. Personalised email marketing makes reaching a specific audience more effective. It also allows marketing teams to automate the personalisation process.

Related: What is email marketing? (Tips on how to launch a campaign)

Retargeting

When visitors leave a company's website after their initial visit, marketers can use retargeting to reintroduce certain products to these customers repeatedly through the Internet. This strategy serves as a subtle reminder to customers about a previously overlooked product or service. Marketers often use this method to turn website or social media visitors into actual customers.

Data-driven advertising

Marketers use data-driven advertising to reach their target audience, no matter where they are. The demands of individuals are unique, so marketers gather information about these demands and may target their efforts more precisely by choosing the proper channels. Personalised ads use data insights and automation technology to boost click-through and conversion rates.

Marketing based on trends

The marketing team of a fashion-based business with customers that use social platforms frequently use these platforms to share high-quality visual content to promote the business. They can use analytical tools to decide the trends that suit their target audience the most. Other trends may include creating polls on topics related to the company's products and updating the company's website with SEO articles or blog posts.

Related: What is customer profiling and how do you create one?

Benefits of data-driven marketing

Here are some benefits of using data-based marketing:

Personalised marketing

Personalised marketing gives customers a sense of value. Businesses use data-based marketing to reach the right individuals at the right time with the right message. Creating valuable customer relationships necessitates the use of personalised messages. Instead of providing a generic experience to potential customers, a data-driven approach helps marketers deliver content or products to the individuals who require them.

Improves the customer experience

Customer experience is a significant determinant of future revenue. A customer who experiences excellent service while buying from a company tends to stay loyal to such a company. A data-driven approach provides insight into factors controlling a customer's buying decision, such as age, occupation, lifestyle, socioeconomic status and the gender of the customer. Data-based marketing helps marketers use this information to improve customer satisfaction.

Related: How can customer experience mapping affect campaigns?

Increases sales

A data-based approach transforms some marketing strategies into straightforward sales methods. It reveals the chances of recognising buyers' demands more rapidly and guides them more efficiently through the sales process. Using data also provides marketers with insights on how to keep engaging customers even after making a purchase. This post-sale interaction can turn regular customers into loyal customers who make additional purchases in the future.

Informs product development

Data-based marketing can lower the risk of product failure in the market. It helps identify specific demands, challenges and desires of a company's target audience before launching the product. There may be more product success if companies customise the value and features of their products to match what customers want.

Related: How to create product plans (with steps and best practices)

Common challenges in data-driven marketing

The following are typical challenges data-based marketers face:

Collecting and interpreting data

The success of data-based marketing relies on filtering the right data to make informed decisions. Businesses generate a lot of data every day, making it challenging to sort. It can be time-consuming to regularly collect and update the data manually, so the use of marketing dashboards can help marketers overcome this problem. Dashboards help marketers collect data from various sources, summarise key metrics and monitor market trends.

Related: Key data collection methods and when you should use them

Simplifying data silos

Data silos occur when data from different sources accumulate in one location. This action could lead to inconsistency or duplication of data. Similarly, data from various sources, which are spread across multiple locations, may make it more complex for marketers to access the most accurate and up-to-date information. Setting up uniform data standards and using marketing analytics software can help the marketing team overcome this difficulty.

Normalising data

Normalisation involves organising data into a database efficiently. When there are numerous data sources and formats, it becomes challenging to generate actionable insights. Marketers can overcome this challenge by eliminating redundant data to make the database smaller.

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