The Basics of Data-Driven Marketing

The Basics of Data-Driven Marketing

Behind every successful direct marketing campaign is a four-letter word: data.

Customer data is information that’s gathered about those who buy what you sell. This data is the foundation, the building blocks, for effective direct marketing efforts.

Where does customer data come from?

Your company’s social media sites and digital marketing efforts are a rich source of customer data. Website analytics, for example, show what has made people click on your website, buy a product or call your company in the past. CRM (customer relationship management) and POS (point of sale) systems are also packed with customer information. Customer surveys—online or in-person — provide valuable insight too.

For most companies, the problem isn’t too little data but little understanding of its value to growing their business. Many don’t use data to drive direct marketing efforts, but a recent report by McKinsey and Co. shows that they should.

McKinsey found that when companies use customer data to guide sales and marketing efforts, they outperform competitors by 85 percent in sales growth and 25 percent in gross margin.

Data provides a profile of your customer

Still, many companies don’t use their customer data, opting instead to market to a broad audience and hope for the best.

Misdirected marketing is often the result, like the discount coupon for HVAC service sent to the occupant of a rental apartment, or the postcard promoting a luxury car, mailed to a single mother scraping by on minimum wage.

By using customer data, companies can create profiles of ideal customers and then (1) design a marketing strategy and (2) find others with similar profiles who aren’t customers and market to them. Buying mailing lists of people whose profiles and buying habits mirror those of current customers is a good way to do that.

What should you gather data-wise?

By collecting and using these three types of data in tandem, you’ll get a fuller picture of your target audiences.

Demographic data

Demographic data includes age, education level, income, living situation, marital status, family members, religious affiliation. Demographic data allows marketers to consider the differences age, culture, income and other demographic factors make in purchasing decisions and tailor messages accordingly. For example, if a product is aimed at Gen Xers, there’s little need to send emails or direct mail flyers to retirees.

Psychographic data

Psychographics is the study of people’s attitudes, interests, values and beliefs. For example, if a nonprofit supports environmental causes, it could target new donors by buying lists of nature magazine subscribers, environmental organization members or purchasers of green lawn care products. Knowing what people value and believe is also important in designing and writing marketing messages.

Behavioral data

Behavioral data is the history of how people shop and buy, tracked through credit cards, reward cards and online browsing and purchasing. A lot of companies do it well, which is why that pair of shoes you checked out online keeps popping up on your laptop weeks later. This information allows companies to use a customer’s purchase and shopping behavior to market to them in a very personalized manner. One recent study showed that revenue increased 15 percent when companies’ marketing matched shoppers’ behavior to products.

For more information on how to use your customer data to execute an effective direct marketing campaign, give us a call.

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