Customer Service Glossary
Table of Contents

    What Is Data-Driven Marketing?

    By definition, data-driven marketing is a business process that uses customer data and advertising technology to develop a detailed look at consumer behavior and learn more about a certain consumer base. Companies gather data through market research, direct communication, owned and social media platforms, website surveys, and third-party sources, such as customer relationship management tools and other digital marketing tools.

    Data-driven marketing typically guides an organization’s advertising and media buying efforts, promotional plans, and overall message. As the amount and quality of consumer data increases, businesses can leverage the information for creative problem solving, pinpointed customer segmentation, better lead generation, and enhanced accuracy and precision when it comes to messaging.

    Why Is Data-Driven Marketing Important for Businesses?

    Virtually every company in every industry uses shopper data to develop strategic marketing campaigns, create creative consumer content, pinpoint customer segments, and influence customer behavior, with the ultimate goal of increasing conversions. 

    In general, data-driven, personalized marketing can be extremely successful and offer several benefits. For example, following a thorough industry analysis, your business can leverage the data to enjoy competitive advantages, such as: 

    1. Better Audience Insights

    Knowing your audience is the only way you’ll ever be able to advertise to them effectively. Fortunately, acquired data is a powerful tool for developing a better understanding of their preferences, priorities, needs, and desires.

    Consulting the details you have on your customers helps improve your ROI, streamline your distribution channel strategy, and optimize digital advertising spends through enhanced targeting and efficient resource allocation.

    2. Effective Messaging

    It’s possible to promote the same product or amenity to different demographics. However, the results of your advertising campaigns rely on the clarity of your message. Fortunately, a study found that data-driven marketing can increase profits by as much as 8%.

    Consider the following scenario. You own an HVAC repair company in a suburban area. You deliver postcards advertising your company but get a low conversion rate. To improve your results, you turn to your customer relationship management software and evaluate customer data. In doing so, you realize that most of your clients live in a lower-middle-class area with relatively low household incomes compared to other cities in your region. 

    With this data in hand, you adjust your message to focus on fast, cheap repairs well suited to busy families, send your postcards again, and experience a substantial jump in service subscribers.

    You didn’t change your business model, update your web content, or increase your online advertising methods. Instead, you simply adjusted your message to suit your target audience, resulting in increased purchase funnel engagements.

    3. Enhanced Customer Care

    Finally, data-driven print and online advertising is vital because it allows companies to communicate with and care for their audiences. With large volumes of customer data and detailed customer profiles organized in your cloud-based CRM platform, your business can provide personalized care for each customer.

    For example, if your customer relationship management software indicates that a shopper has recently made a large purchase, you can contact them and make a customized recommendation for their next order.

    Alternatively, you can connect with shoppers who are still in the early stages of your conversion funnel to boost engagement and develop trust. Finally, you can upsell or cross-sell relevant products or convince shoppers to subscribe for hands-on care or better pricing.

    How to Develop a Data-Driven Marketing Strategy

    Developing data-driven marketing strategies can be broken down into three broad steps, as follows.  

    Clarifying Organizational Goals

    Before you can implement data-driven marketing strategies into your standard operating procedures, you must first determine your goals for data mining and analytics. Many organizations analyze data to launch targeted advertising campaigns. Others simply want to understand their customers in order to provide customized care. 

    Analyzing Data

    Based on the definition of data-driven marketing, you likely assumed you would need to organize and analyze data to promote your products successfully.

    Create cross-departmental teams to analyze information for best results. Some companies limit analysis to specific staff members, such as sales teams or marketing analytics professionals. Nevertheless, incorporating employees from other groups can boost insight and implementation.

    Developing User Personas

    After analyzing data, you can begin to develop detailed shopper personas. Shopper personas are “characters,” or customer archetypes, which share characteristics, goals, needs, and attributes, such as: 

    • Age
    • Income level
    • Occupational background
    • Marital status
    • Number of children
    • Education
    • Interests

    Typically, each user profile spans multiple pages and may include additional information on the character’s environment, along with a fictional biography and contextual details.  

    How Businesses Can Transition to Data-Driven Marketing

    While once relegated to targeted advertising and marketing efforts, data-driven marketing can enhance sales, customer retention rates, and customer service in various ways, namely through personalized support and an improved customer experience.

    By developing detailed user personas and analyzing the customer journey, agents can provide real-time assistance that solves problems and transforms prospects into loyal promoters. 

    That said, organizations must ensure that they embrace a detailed privacy policy to protect their customer’s data. Without a privacy policy, your business could open itself up to lawsuits due to data breaches or improper data use.

    Related Resources and Information