What is data-driven marketing? Explaining the importance of using data in business and how to put it into practice

Data-driven marketing has become an essential element in modern business. It means moving from a qualitative approach that relies on human intuition and experience in traditional marketing strategies to a more scientific approach that uses objective data. Using data to develop a marketing strategy is a valuable tool for achieving effective and efficient marketing.

In this article, we will explain data-driven marketing, its importance, the key points to success, and how to put it into practice.

What is Data-Driven Marketing?

Data Driven means "driven by data." In other words, it refers to a marketing or management method that uses data as the basis for decision-making.

Data-driven "marketing" refers to conducting marketing activities based on data and formulating optimal marketing strategies according to the results of data analysis. Specifically, data such as customer attributes and behavior, the costs and effectiveness of advertising measures, and product and service usage are collected and analyzed, and a marketing strategy is created and measures are implemented based on the results.

The Importance of Data-Driven Marketing

Implementing data-driven marketing brings various benefits to companies. Here are four of them.

1. Understand your customers better

Analyzing data about customer behavior and preferences helps you understand their exact needs and wants, which helps you develop customized marketing strategies to increase customer loyalty.

2. Make success more repeatable

Through objective data analysis, it is possible to understand which marketing measures are successful and which are unsuccessful. Rather than relying solely on human intuition and experience, companies can achieve more certain results by providing evidence based on data.

3. Improved ROI (return on investment)

Data analysis allows you to understand which marketing activities are most effective, which allows you to reduce unnecessary expenses and improve ROI by optimally allocating budgets to more efficient marketing measures.

4. Realizing the PDCA cycle

By implementing a marketing strategy based on data analysis and analyzing the results, you can identify areas for improvement and come up with solutions. This allows companies to go through the PDCA cycle and continue to make improvements.

Key points for successful data-driven marketing

Before we explain the specific methods of implementation, we will explain the key points to success. Companies that do not have these in place will find it difficult to realize data-driven marketing.

Point 1: Identify your business goals

When implementing data-driven marketing, it is essential to determine business goals, such as sales goals, profit goals, market share goals, etc. Based on these goals, a data-driven marketing strategy can be developed and implemented.

Point 2: Understanding within the company and collaboration between departments

To start data-driven marketing, it is often necessary to first collect data that is scattered throughout the company. To do this, it is very important to have an understanding within the company and for each department to work together.

For some companies, this includes changing the perception and attitude of marketing activities within the organization. Through a top-down approach and employee training, companies can deepen their understanding of data-driven marketing and promote a change in organizational culture.

Point 3: Investment plan for people and technology

You will also need to invest in creating an environment that allows you to implement data-driven marketing that suits your company. This includes investments in tools and services for collecting, storing and analyzing data, as well as personnel costs and outsourcing costs.

It is important to plan what kind of return you can expect from optimizing your marketing activities on these investments and allocate your budget effectively to data-driven marketing efforts.

Point 4: Introduction of specialized teams

This overlaps a little with the "investment in people" point above, but to realize data-driven marketing, it is essential to organize a team with specialized knowledge. A team that can make data-driven marketing possible includes data analysis experts, marketing experts, and technology experts.

By gathering such talent to build a team or outsourcing to an external partner, you can expect the introduction of data-driven marketing to go more smoothly.

How to implement data-driven marketing

Here are four steps to help you put data-driven marketing into practice.

STEP 1: Collecting and storing data

To implement data-driven marketing, you must first collect sufficient data. This can come from a variety of sources, including data from websites and social media, customer surveys, marketing campaign data (e.g., advertising costs, volume, and clicks in the case of online campaigns), and even competitor data.

Once collected, data must be stored appropriately. Depending on the type of data you want to store (e.g. personal information), there may be security issues or legal regulations. It is important to carefully consider how you will store the data and ensure that it complies with legal regulations.

If you would like to know more about the process of collecting and accumulating data related to marketing, please see the XICA Analysis Insight report "Best practices for data collection: What we learned from working with clients ."

STEP 2: Utilizing, visualizing, and analyzing data

Next, the collected data needs to be analyzed. This involves visualizing the data and identifying patterns and trends. Deriving and interpreting data analysis is a very difficult task even for AI, so it is recommended that this be done by experts with skills and experience in areas such as statistics and data science.

Data analytics and visualization can help you find the best solutions to your business challenges, helping you identify the problems and opportunities your business faces and develop strategies accordingly.

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STEP 3: Develop a marketing strategy

After identifying problems and opportunities through data analysis, you need to develop a marketing strategy. For example, this involves using data to identify your target audience, understand their needs and wants, and identify effective marketing tactics. You can then develop your marketing strategy, budgeting, and promotional planning.

STEP 4: Execution and verification

Finally, you need to implement the marketing strategy you have formulated and verify its effectiveness. When doing so, it is important to analyze the data regularly to find areas for improvement to your strategy. By verifying effectiveness, you can find areas for improvement in your marketing strategy, go through the PDCA cycle, and develop a more effective strategy.

If you want to learn more about how to measure your marketing effectiveness, check out this article:What is the optimal analysis method for visualizing marketing effects? Explanation of important points regarding analysis methods that companies should choose"Please confirm.

FAQ

What is Data-Driven Marketing?

Data-driven marketing is a method of marketing that uses data-based analysis to adopt a more scientific approach to strategy.

What skills do you need to implement data-driven marketing?

Data-driven marketing requires data analysis skills and knowledge of statistics. It is also important to have a business perspective and knowledge of marketing.

What steps do I need to take to implement data-driven marketing?

To implement data-driven marketing, you must first collect data and analyze it. Next, it is important to develop and implement a marketing strategy based on the results of the analysis. It is also necessary to analyze the data periodically and review the strategy.

What tools are used for data-driven marketing?

There are many tools and services that can be used to realize data-driven marketing. Below are some examples of data collection, storage, organization, conversion, analysis, and visualization.

• Data warehouse (DWH) for storing data
• A data management platform (DMP) that converts data so that it can be used with other tools
• Web Analysis Tools
• CRM tool for managing customers
• BI tools for visualizing data
• Tools to analyze marketing effectiveness and optimize budget allocation
  • Based on statistical analysis, advertising effectiveness can be visualized and budget allocation simulation functions can be usedLearn more about MAGELLAN, the MMM solution that supports the realization of data-driven marketing.
• MA tools that can automate some of your marketing tasks

What should you pay attention to when implementing data-driven marketing?

When implementing data-driven marketing, there are a few things to keep in mind:

• It is important to check the accuracy of your data. If you base your strategy on inaccurate data, it may lead to results that are different from what you intended.
• It is important to analyze data from a business perspective. Simply collecting data is not enough; it is important to link that data to business strategies.
• It is important to hire people with the necessary skills to analyze data or outsource to external experts. Data analysis requires expertise, so having the right team on board is key to success.

My Feelings, Then and Now

This concludes our explanation of data-driven marketing, its importance, and how to put it into practice.

By following the steps above, you can develop a data-driven marketing strategy and carry out more effective marketing activities. However, these steps are just examples and may differ depending on the company, industry, and business model.

The important thing is that by introducing data-driven marketing, it is possible to formulate more effective strategies and carry out marketing activities based on data and a scientific approach. To achieve this, it is necessary to have an understanding of the initiative and cooperation from each department within the company. In addition, in order to create an environment that makes it possible to realize data-driven marketing, it is also important to invest in personnel with specialized knowledge, external partners, and tools and services for utilizing data.

As data plays an increasingly important role in the future, data-driven marketing strategies are essential for the continued growth of businesses.

Please refer to the steps introduced here.Embrace data-driven marketing to achieve more effective marketingplease try.

Author information

XICA Co., Ltd. Marketing Team