If you have ever watched the popular TV show “Mad Men,” then you may be thinking that marketing decisions are a stroke of inspiration from a creative genius like Don Draper. Those successful at marketing campaigns are those that are more creative, while those of us that lack creativity should stay out of it. Fortunately, you can’t always believe everything you see on TV. While marketing as a field does require a good measure of creativity, successful marketing is always based on data. So let’s discuss the refined and intelligent approach to marketing: Data-Driven Marketing.
What is Data-Driven Marketing?
To define Data-Driven Marketing, let’s start with an example. Company XYZ produces a diet product that helps people achieve their weight-loss goals. The product has been successful in their initial launch with local markets, so Company XYZ looks to launch a regional or national based campaign. A few different approaches can be taken:
- Shotgun Approach – Launch a campaign focused on the product that targets anyone that has ever been tied to diet products. These consumers may have purchased diet products in the past, or they may have expressed interest in diet products. This approach will reach millions of potential customers from wildly different demographics. This is referred to as the shotgun approach because you are blasting out a wide range of messages hoping to hit something.
- Assumption-Based Targeting Approach – As this is a diet product, one might assume that the target audience consists of single females ages 18-24 with moderate-high income and interest in fashion. A campaign can be customized to target this specific demographic to reduce the immense cost of launching a shotgun campaign. This approach is based on the assumptions of the marketing/sales team of who the customer is, or might be. While this approach could be successful, are you really safe to assume?
- Data-Driven Marketing Approach – This approach begins by analyzing existing customers. Then by appending and modeling demographic, socioeconomic, and psychographic data to current customers; the modeled data is used to create a customer profile representing who the customer really is. After thorough analysis, a campaign is created to target consumers that match the customer profile. The resulting audience will be much smaller, but highly targeted and based on real data.
While the shotgun approach may lead to reaching a greater number of people and potentially more sales, it will not help the company to increase ROI and profit. In fact, you are more likely to lose money with this approach. Even if your sales are higher, due to the high cost involved the shotgun approach is ineffective and expensive. To reach the larger audience, marketing spends have to increase. Marketing messaging also has to be generalized making it less personal for each consumer that sees it. Conversion rates decrease. ROI suffers.
Assupntion-based approaches will personalize the marketing message to the assumed target, but the assumption-based approach is a risk. While you could be successful, if your assumptions are off then your campaign will fail. With the assumption-based approach you essentially guess who you should target, then hope you are right. This is not intelligent marketing. With a Data-Driven Marketing approach, Company XYZ gains the following insights from their analysis of existing customers:
- Marital Status: Single
- Age: 27-34
- Gender: 87% Male; 13% Female
- Income: $50,000 – 75,000
- Interests: Sports, Fitness, etc.
This is just a fraction of the information available when creating a customer profile. With this information, Company XYZ now understands who their customer really is. While their product may work for everyone, marketing to everyone is expensive. Marketing to individuals outside their true target audience would mean that marketing dollars would be spent on consumers that are less likely to buy. However, by using the customer profile Company XYZ is able to launch a Data-Driven Marketing campaign targeting single men ages 27 to 34 with an income of $50,000-75,000 and interests in sports and fitness. The result of this targeted approach will be a much higher ROI for their marketing spend. With this approach, the data drives the decisions on who to target and helps craft a custom message for that demographic. This is what Data-Driven Marketing means.
Data-Driven Marketing with ANS
At American Name Services, we use state-of-the-art technology to partner with our clients to analyze, model, and draw valuable insights from their customer data. The customer profile we provide helps our clients to make Data-Driven Marketing decisions that lead to increased conversion rates and higher ROI. By partnering with American Name Services, you can say goodbye to the day of pulling the trigger on your marketing shotgun. Instead, you’ll be using valuable insights based on data to drive your marketing decisions and refine your messaging. Data-Driven Marketing is more intelligent marketing. Contact us today for more information.
This article was written by David Fiso, Digital Marketeer and Growth Hacker at American Name Services.