How to build a data driven marketing strategy
To improve your marketing results, you need to be aligned with your audience. They now expect it. The effectiveness of blanket email marketing messages pushed to your ‘lists’ fade over time.
A data driven approach to marketing will get you more engaged with your customers, allow you to send targeted relevant marketing that will increase your results overnight.
Data Driven Marketing will help you to be agile in your approach, but you need to set a data foundations in place to get things started, so you need a plan to help you understand your data – and therefore your customers – to get things started.
Getting started with a data driven marketing plan
Firstly, the good news, if you are selling things to customers, you already have all the data you need to get started. After all – No Customers = No Sales.
Data Driven Marketing is a customer focused approach. We are looking to build marketing around the behaviour of the customer, AND the value of the customer to the business.
Getting this right results in a win-win.
The customer receives relevant, engaging marketing material based around their behaviour with your business
Your strategy is driven by the value of the customer – so you are strategically targeting your marketing activity to the benefit of the business.
This is not a one size fits all approach.
The main drivers for a data driven marketing plan are understanding two key metrics for each individual customer.
Customer lifetime value
That is the total spend of each customer with your business.
Time since the last purchase
How long since the last purchase from that customer.
Recency, Frequency, Spend Reporting
Recency, Frequency, Spend reporting can help you to understand the overall position of customer value within your business (and your customer data). Here is a typical recency, frequency, spend report from Websand.
The main change in your marketing metrics is that with a data driven marketing approach – these measurements are the foundation of your performance, and are therefore key to improving your marketing.
Email marketing is a core channel of a data driven marketing approach, and of course, opens and clicks are still important – they are however secondary measurements compared to customer value.
Building your data driven marketing strategy
Breaking down your audience based on time since last purchase and customer value helps to develop focused strategies. This is especially important in high frequency businesses and especially e-commerce, where sales are online and marketing is batch focused on lists rather than ‘customer value’.
The model below makes it easy to understand the value of each strategy and the audience you are looking to address.
For those with above average customer lifetime value, AND have purchased recently – then this group of customers could be regarded as VIP’s (these represent the current ideal customer), and you can build a marketing strategy based around rewarding their value to your business.
For those with above average customer lifetime value, AND have NOT purchased recently – this group of customers should be targeted for re-engagement. They have demonstrated value in the past, so you need to understand why they have stopped buying and get them back to VIP status.
For those with below average customer lifetime value, AND have purchased recently – then this group of customers could be regarded as VIP’s (these represent the current ideal customer).
For those with below average customer lifetime value, AND have NOT purchased recently – this group of customers are unengaged. You could target them for re-engagement – but do this based on the the. They have demonstrated value in the past, so you need to understand why they have stopped buying and get them back to VIP status.
Once you have identified your ‘four’ value based customer audiences, your marketing can be build around targeting each group with the objective of moving a customer from one customer segment such as ‘lapsed customer’ to another segment such as VIP
Some other considerations to note when setting your data driven marketing strategy
Setting the ‘Recent’ purchase level will depend on what you offer as a business. Looking at the behaviour of your most regular customers will help you to set the benchmark.
Understanding the profile of your VIP customers can help you to be more effective when targeting the acquisition of ‘New customers’.
This model is fluid. The value generated by your customers, and the time since their last spend, can change all the time. So once your marketing strategy is in place, you will need to be agile in your approach to make the amendments you need to maximise the potential from your audience.
Websand is built for data driven marketing, and will put your data driven marketing plan in play. If you need some help creating a data driven marketing strategy for your business, we can help with that too. Sign up and take control of your data.
Also published on Medium.