In the last 30 years, the IT industry has proliferated. The COVID-19 pandemic has also accelerated its growth. Today, these technologies allow us to distribute information worldwide and collect instant data regarding customers. Compared to 30 years ago, when communication and interaction with customers were only via stores, telephone, and loyalty programs (excluding one-way advertising channels), everything has changed a lot. Moreover, marketing has been the department that had to put the greatest effort to adopt this change.

Those who could not keep pace with today's media dynamics and communication technologies in their marketing strategies and practices fell behind in the competition or had to face high costs to stay in the competition. 64% of marketing executives agree that data-driven strategies are now crucial to success in today's hyper-competitive global economy. Well, what is this game-changing method, also known as data-driven marketing? Let's take a look at it together.

What is data-driven marketing?

Data-driven marketing refers to collecting consumer data such as demographic information, purchasing habits, hobbies, and interests, making predictions and tests using the insights obtained from these data, shaping marketing strategies accordingly, and continuously optimizing marketing activities to meet consumer demand.

Marketing departments first try to acquire new customers, retain available customers, and maintain brand loyalty. Based on these goals, it aims to reach the target audience at the right time with the right content and campaign management via the proper communication channels. Data-driven marketing is a better usage of the flow of customer-related data to integrate and optimize marketing efforts in the age of big data, with more selective consumers and more fierce competition.

Thirty years ago, marketing activities were based on as much data as possible. However, although that period is recent history, the technologies of that time and today's are highly different. The companies had limited capacity to obtain data about their target audiences during that period. The technologies of the relevant era were insufficient to get information about the targeted customers' consumption preferences, decision-making processes, and how they engaged with the brand at various touchpoints.

Thus, mass marketing methods, also known as \"spray and pray\", were followed more in the past. The campaigns shaped by the marketing department based on general trends and previously successful projects were implemented most thoroughly and popularly. Then, it was time to pray to reach the target audience(s) and wait and observe the customers' reactions.

Shifting from mass communication to personalized communication

Today, everything has completely changed. 30 years ago, marketing departments had only partial demographic data about their customers or data about their payment preferences such as credit cards or cash. However, today's companies can instantly observe where their customers are, with whom they are, what book they read, what they chat about, which celebrity they follow, what they eat and drink. These companies can even predict what might evoke the emotions of their customers. This allows companies to customize their marketing, advertising, or communication campaigns almost for each customer

Primary benefits of data-driven marketing

Despite many benefits of data-driven marketing, we can summarize them gradually in 4 stages:

  • Increasing customer engagement
  • Thus, reaching or generating more potential customers (usually with lower budgets)
  • Boosting sales
  • Maintaining after-sales customer satisfaction and loyalty.

From the 2010s, the peak of Facebook, to the 2020s, with TikTok's popularity due to the increasing use of mobile technologies, many new channels emerged and provided the ability to reach customers via the internet and mobile-based platform. The rise of online marketplaces and search engines let us put purchasing processes under the microscope. Moreover, getting customers' data and observations that we could only access via stores or loyalty programs through numerous points is now possible.

Collecting the data in this manner allowed us to get to know our customers better and establish closer relations. It also strengthened the interaction and relations between the customer and the brand. Today, campaigns and advertisements can be customized in such a way to be called "personalized". Moreover, different versions and messages can also be pre-tested to optimize campaigns and promotions. Everything we have mentioned allowed us to reach more customers and establish deeper relations with them.

The ability to get to know customers better and test campaigns beforehand extended a classic marketing funnel from A to Z. That's because reaching customers from many points effectively and impressively at every stage, including raising awareness about the product, evoking curiosity, purchase intention, and the moment of purchase, became a reality. Considering traditional marketing budgets aimed at mass targets without prior tests, data-driven marketing strategies increased the potential to direct possible customers to one lower level of the marketing funnel. Thus, this situation increased the overall sales potential.

However, data-driven marketing also provided many benefits in terms of after-sales channels, customer satisfaction, and customer retention (namely, the later stages of the CRM channel). When asked the most used area, 43% of marketing executives who use data-driven strategies state that they use it to reach new customers, 42% to retain existing customers, and 47% to boost customer loyalty.

What stages does data-driven marketing have?

1.Data collection

In data-driven marketing, we first need to collect data. Before collecting data, we must determine which of the "data and indicators" we can obtain are significant for our company and marketing goals, thereby saving time and effort.

After determining the data and key performance indicators (Key Performance Indicators | KPI) we will collect and follow for our marketing goals, we also need to determine the tools and resources to be used while collecting this data because data collection channels and tools, besides data types, vary significantly. Although we can test and modify these channels later, we need to find the best channels from the beginning, again, to save time and costs.

Ultimately, upon data collection and before making actionable decisions, we need to ensure the reliability of our data. According to a new KPMG International report, many senior executives are cautious about the data their organizations use. We can discuss data reliability (not security!) comprehensively. However, it fundamentally includes testing the data's validity and accuracy, ensuring its authenticity, classifying and storing it regularly, and error-checking. The simplest issues involve cases where the same data is recursively included in sample sets or forms and surveys filled out by bots (not real people).

2.Data deduction for actionable decisions and actions

After ensuring data reliability, the next step is interpreting the data collected and making actionable decisions accordingly. Herr, being objective is critical because just as making someone say anything you want with torture, you can also reach deductions from the data based on your desires and beliefs from a subjective perspective. During data deduction, determining the assumptions to be made and the hypotheses to be tested accurately is important. Once the evaluation of collected data is finished, you can regularly test the data and optimize marketing campaigns accordingly.

3.Data reporting and validation of marketing campaigns

Customers' purchasing journeys are now much longer and complex and include multiple devices and touchpoints. Convincing senior management and receiving its approval regarding the budget for all marketing efforts are required at some point to map out this journey accurately from the beginning and block the customer from drifting off course. Marketing professionals consider this situation causing much pressure on them. According to a recent survey conducted by Allocadia, among the pioneer marketing performance management companies, 84% of marketing professionals have difficulties and are under pressure to prove ROI to justify their marketing spend or budget increases for campaigns and initiatives.

In the report published in August 2021, many marketing professionals state that they struggle to measure this ROI effectively. Unfortunately, 61% of marketing leaders say they do not use ROI when making strategic decisions because they do not trust their data.

Using data trumps!

According to marketing guru Philip Kotler, "Marketing is a business function that identifies unfulfilled needs and desires, defines and measures their size and profit potential, pinpoints which segments the company is capable of serving best, designs and promotes the appropriate products and services to serve these segments, and requires everyone within the organization to consider and serve the customer". Today, big data and tools that develop daily for big data analytics offer significant benefits to marketing professionals in each function of the marketing department.

Enhancing customer experiences at each step of marketing & sales and managing brand perception accurately is increasingly becoming important for companies to stay in the competition. Getting the upper hand in the race depends on the capability of marketers to use the data trumps provided to them. However, this requires having technical competencies that are not always accessible within an organization. If you want to leverage the power of data at each marketing stage, you can find the best digital marketing agency and develop the required competencies. Besides, working with an agency focused on "growth marketing" will allow you to build your digital marketing strategy and perform creative activities.