What is Data Driven Marketing?

I was recently asked to put together a workshop session on “Data driven marketing” for a class of digital marketing students. Part of what I asked to talk about to explain what data driven marketing is and how to go about it. In pulling the material together for the workshop I came to the conclusion that there are four key components for successful data driven marketing, some of which are obvious and some perhaps less so.

The four components are:

  • Philosophy
  • Processes
  • Data
  • Technology

Philosophy

This is the most important component I believe. To be successful at data driven marketing, an organisation needs to have the right culture and philosophy. At its hear t, data driven marketing is about continuous optimisation and iterative improvement. It’s the deployment of a “test, learn and adjust” philosophy. However, you can have the best data and technology in the world (see later) but if there is not the desire to act and to change, then the data and technology are only providing interest as opposed to insight. Organisations must have the “desire to act”.

At a Web Analytics Wednesday I attended in Berlin last week a lot of the talk in the networking session was not about metrics and systems but about how do you embed analytics within organisations? The biggest challenge often facing analysts is getting support for the development of their programmes because culturally the organisation doesn’t have a philosophy of measurement and accountability.

Processes

If “philosophy” is about the desire to act, then “processes” is about the ability to act. More specifically it’s about the ability to execute and then to react. These processes involve the management of the technologies and also the management of the decision making. Processes will include building “measurement” into the marketing development process for example, so that there is no question that new campaign won’t be tracked properly or that new content on the website won’t be tagged. It also involves ensuring that a feedback mechanism is in place that enables trends to be identified and changes to be made in the appropriate timescales.

One example I had in the past demonstrated to me where a potential desire to act was inhibited by an inability to execute. We did a piece of segmentation analysis for a retailer to feed into their email marketing programme. In the analysis we identified a number of distinct groups of customer with different purchasing behaviour that could be marketed to in a more customised way. We also identified some key timing mechanisms that could potentially double the customer’s propensity to buy again. Despite this insights the segments were never deployed operationally because the retailer didn’t have the resources and processes in place to develop and deliver more targeted email marketing programmes.

Data

Data is of course a vital ingredient in the mix, but it is the organisational culture and processes that provide the recipe for success. Good quality data is important and attention must be paid to getting the numbers right. People are reluctant to make decisions if they don’t have any faith in the data.

Also data driven marketing needs integrated data rather than data sitting in silos. Often within organisations different types of data sit in databases and different functions may have ownership of different data. For data driven marketing activities to be effective, the different data sources need to relate to each other. To understand and optimise marketing across channels, the data from different channels (PPC search, display ads, email etc) needs to be in the same place, whether that be in a web analytics systems, a campaign management system or both. In addition data needs to be managed across the life cycle of the customer, for example by ensuing that data on how customers are acquired can be analysed with the customers’ long term value or profitability.

Technology

Finally the technology is the enabling component. It is the technology that allows you to execute and react either over the duration of a planning cycle or even in real time. I don’t think that technology can make up for deficiencies in the philosophy and processes, though if you have the right apporach and procedures, you can make progress even if your technology is not the most effective. Good technology enables you to cycle through the processes faster to the point where real time optimisation is possible. Like the data, the technologies should be integrated and allow the loop to be closed between insight and action.

So, the core ingredient of data driven marketing is good quality, integrated data. The technologies are the tools but it is the combination of the organisational philosophy and strong processes that will provide the recipe for success.

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