DATA-DRIVEN

MARKETING
How to use data correctly and drive growth

50 YEARS AGO 2 YEARS AGO TODAY

 Data-Driven Marketing How to use data correctly and drive growth

Table of Contents

1. Why Data-Driven Marketing

2. The Basics of Data-Driven Marketing
and the Customer Journey
3. How to Drive Growth
4. How to Optimize the Customer Journey
5. Results: Connecting the Dots Between
Strategic Goals, Tactics and Attribution
6. The Road to Data-Driven Marketing
7. Conclusion

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 Data-Driven Marketing How to use data correctly and drive growth

Why Data-Driven Marketing

Marketing has experienced a fundamental shift recently. Techniques Today’s marketing has shifted from being a discipline close to
and thinking that worked for 50 years have grown stale, with the lone communications, to a discipline incorporating more scientific, technical
surviving tenet: the customer is always right. Business success is now and strategic responsibilities. Marketing professionals are tasked with
directly related to how closely we listen to the customer. quantifying, executing, measuring and expanding a growth strategy
based on customer-centric approaches and data-driven decisions. A
CMO or VP of marketing is no longer looking for a shotgun model—
The American Marketing Association defines “marketing” as: spending money to broadcast a message, converting a fraction of the
impressions, then re-investing profits into further broadcasting. The
new model involves technological innovation combined with targeted
spending and executed to maximize precision and drive growth.
the activity, set of institutions, and processes for creating,
communicating, delivering and exchanging offerings that have For organizations to succeed in a competitive landscape,
value for customers, clients, partners and society at large * they need to employ data-driven marketing. Only with
data can they achieve organizational transformation in
technologically advanced, closely integrated, zero-dollar-
waste systems where the only true North is growth and
However, this traditional definition no longer works. You can blast customer success.
your product’s “value” message across the Internet all day long, but
customers just don’t buy that way anymore.

Here’s an alternative definition to consider.

Marketing is a strategic discipline that uses closely

integrated technology to connect with existing and potential
customers, to drive conversation about a product or a service,
better understand their needs, learn their behavior and
present meaningful answers to their requirements.

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 Data-Driven Marketing How to use data correctly and drive growth

Customer Accountability
Businesses are at the beginning of this journey right now, with The reason for this is twofold:
customer demand pushing them in the right direction. Customers and
the competitive landscape demands truly optimized and personal Even large datasets fail to make meaningful connections to
experiences; however, processes and even business philosophies desired outcomes in a well-connected 360-degree view, taking
now need to catch up. Most areas of strategic importance are still not into account multiple variables affecting volume, probability,
being connected together adequately to enable decision making and average cost and revenue.
resource allocation to be based on data-driven insights.
The sheer volume of accumulated data simply doesn’t fit the
Research indicates 91 percent of senior corporate old “spreadsheet” model anymore. Insights are based on much
marketers believe successful brands use customer data larger datasets and discover more complex patterns requiring
to drive marketing decisions, yet 39 percent say their visualization, validation and process integration.
own company’s data is collected too infrequently.
Each organization can benefit from transparency in goal-centric
51 percent claim lack of data sharing within their own metrics, and those metrics need to have a very meaningful
organizations is a barrier to effectively measuring ROI.* standardized tie-in with the marketing and sales process.

39 percent say they cannot turn their data into an The solution is simple but not easy: data analysis based on business
actionable insight. goals needs to be embedded in each and every organizational
process, so insights can automatically drive action, leading to improved
We all have data in some shape and form, and certainly in great metrics. The redefined purpose of data-driven marketing is to allow
volume. But the increasing size and variety of sources make it difficult organizations to focus and refine each step of their customer’s journey
to analyze and derive simple conclusions. Marketers still believe data through meaningful conversations, carefully measured interactions and
is not successfully and fully utilized in automation, marketing process timely, strategic and serendipitous intervention.
and decision making. As a result, decisions are still based largely on
opinions. Even mature marketing organizations struggle to understand
their customer’s journey and what steps influence it in what ways.

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 Data-Driven Marketing How to use data correctly and drive growth

Challenges for Data-Driven Marketers The quest for attribution: Every activity needs to connect closely
to revenue generation. Further, there needs to be a specific model
Have you ever heard the phrase, “Our CFO is very data-driven”? Of to explain any volatility or trend, so it can be influenced in an optimal
course not. For someone in finance, this is an absolute given. Numbers direction.
and data are the sole basis of all financial operations. The organization
would not survive a month if every financial report, projection and The quest for marketing budgets: The question of revenue
key performance indicator (KPI) were not executed with the highest attribution can be political. Budgets are often redistributed as a
degree of precision, based on accurate and risk-averse models. This company gains a better understanding of channel interplay, leaving
expectation is now extending to the marketing organization. CMOs struggling to justify hiring, budgets and spending, without
providing a clear sense of impact.

The quest for a customer journey: Understanding the customer

journey is a true guiding point, but it’s also complex. Every customer
takes a separate path, so journey data is diverse. Sophisticated models
can not only detect structure, trends and patterns in the customer
journey but translate them into actionable terms.

The quest for centralized customer data: The era of siloed,

unintegrated systems is over. Businesses now need a complete picture
of all customer interactions: both on and offline, as well as those
managed across diverse systems such as WCM, CRM, ERP and more.

The quest for true ROI and ROI optimization: The Big Data
Marketing and business executives have become strategically and very space has provided us with broad technological confusion as well as
closely connected to growth. Their only true strategic objective is to a few specific answers to the most basic questions such as, “how do I
maintain growth, and this objective relies on sophisticated technology optimize ROI on an ongoing basis?”
and data-savvy teams to understand customer needs and growth
drivers. Combine this expectation with the modern-day plague of The quest for omni-channel: The growing number of channels
impatience, and marketers often have less than a year to complete will remain a primary driver for shifting to a data-centric philosophy
very challenging journeys. entirely. Being omni-channel in itself means having the full 360-degree
view of the customer data, integrated systems and unified processes.
Essentially, omni-channel is a solution that mandates a data-driven
marketing philosophy.

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 Data-Driven Marketing How to use data correctly and drive growth

How to Use This eBook

The quest for real-time marketing: Individually customized real- The book is divided in the following sections:
time customer communication remains a prized goal. To succeed,
businesses must mature, not only with technology, but with content Basics of Data-Driven Marketing and
and process, as well. the Customer Journey:
How are goals, insights and process connected to the
There is an endless supply of solutions claiming to solve the data- customer journey? How is data extracted from customer
driven marketing challenge, but marketers and business executives engagements and contact information?
require a solid understanding of the technological principles
each embodies to prioritize and make the best decision for their How to Drive Growth:
organization. What are traditional and data-driven perspectives on the main
marketing objective: to drive growth in key business indicators?
The aim of this book is to introduce you to the theoretical components,
technological principles and overarching process needed for a data- How to Optimize the Customer Journey:
driven system to come together. Through examples and illustrations, How do we organize the process for optimizing engagement
we explore the practical application of technology—taking you and understanding customers so we can find the fastest, data-
from buzz words such as “Big Data” and “Customer Journey” into an driven way to increase growth metrics?
overview of actual business problems and how they can be solved.
Results: Connecting the Dots between Strategic Goals,
Tactics and Attribution
How do we prove results in a data-driven fashion?

The Road to Data-Driven Marketing:

How do we get from buzz words into the actual questions Big
Data can answer, and what are the best ways to ask them?

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 Data-Driven Marketing How to use data correctly and drive growth

Basics of Data-Driven Marketing and the Customer Journey

There is good news for marketers. Data-driven marketing can be
broken down into easily digestible components. In fact, the basics can
be translated into specific and understandable terms and connected
together in more sophisticated frameworks to formulate business CONTACTS ENGAGEMENTS
process. It’s critical to evolve our thinking beyond some existing
abstraction models, such as the marketing funnel. This chapter will
introduce a construct describing the components businesses need
to carefully identify and consider along the journey to becoming fully GOALS
data-driven.

process
To start, the first important concepts are goals, contacts, engagements,
data and insight.

Here is a simplified illustration showing how they interact in a data-

driven process. Start by building engaging user experiences, and drive
users to a well-defined set of business outcomes. After tracking the DATA
math
INSIGHTS
data, you can derive insights based on both positive and negative
patterns and business results. Those insights result in actions, or
repeatable actions in the form of process.

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 Data-Driven Marketing How to use data correctly and drive growth

The main components of this process are as follows: behavioral traits, which can be fully contextualized to drive
decisions about new interactions and/or devise new ways to
1) Goals or Desired Outcomes: These are clearly defined and understand customers and their interests.
cover two perspectives:
4) Insights: Data is only as good as the insights you derive from
a. Definition of success: “How many customers have it. In a very simple case, going from data to insights is a matter
converted and what made them convert?” is an of crunching the numbers. With the relatively new boom in
important question to ask. But the next question Big Data technology, we are going through a technological
should be, “convert to what?” In reality, organizations disruption. But behind the buzz words of this disruption is a
have multiple goals tracked by different departments, simple problem to solve for marketing: how to provide a clear
potentially including clicks, test drives, trials, purchases interface to derive meaningful conclusions to key marketing
and customer lifetime value. It is a data-driven questions. Getting from data to insights is a matter of having
marketer’s mandate to move definitions and success the right data, defining the right problem and having the right
tracking from short-term metrics (a click) to long-term technology behind the scenes.
metrics (customer lifetime value).
5) Process: Insights are only useful if they are clearly and
b. Metric to influence and improve: Having a clearly distinctly connected to process or automation. The point of
defined goal and action plan is a good way to structure data-driven marketing is to let data reveal hidden gems that
and centralize key performance indicators, track drive business action. This is why analytics systems must be
progress and prove attribution. an inseparable component of execution or process systems.
Together, these systems can determine actions, control the
2) Engagements/Interactions: These represent different steps in path to actions and track their effect thereafter. The role of
the customer journey, spanning multiple channels. They can be data-driven marketing is to seek those insights and act upon
online and offline interactions, both in the digital and physical them, either through automation or through process, and then
worlds. Everyone has a series of engagements defining his or clearly prove and measure attribution.
her experience. An experience has multiple layers, including
what content the customer sees, how the content is designed If we look at things in a circular process such as this one, we get a
and what the interactions are. This path will be unique for system of constant data-driven improvement in which you prioritize
every customer, and for some, it will be a very long sequence with the help of data, then execute, measure, automate and reprioritize.
of disperse engagements.

3) Contacts: Contacts are a combination of all anonymous or

non-anonymous customers or prospects interacting with you
in a certain way. They carry a number of demographic and

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 Data-Driven Marketing How to use data correctly and drive growth

The diagram on this page proposes an entirely new circular process for - How do you drive growth?
marketing professionals to follow. - How do you optimize the customer journey?
- Who is my customer?
The marketing process shown on the left-hand side of the illustration - How do you optimize process?
below is the “funnel” model. The data-driven model shown on the
right is very different, and poses different answers to some of the most In the next sections we explore how traditional marketing has tackled
important business questions: those questions, and how data-driven marketing reframes the thinking
around them.

OPTIMIZE PERSONALLY
CUSTOMER COMMUNICATE
BROADCAST JOURNEY VALUE

NEW
SPEND CUSTOMER
MONEY LEARN

CONVERT

HAPPY
CUSTOMER
Traditional Marketing Data-Driven Marketing

The standard definition of marketing revolves around communicating Armed with data-driven process, marketers can take a completely different,
value. For a long time this has translated into a circlular model of spending, more personal approach toward customers. Learning from existing customer
broadcasting, converting and spending the profits again. This model is data, they can apply what they’ve learned to target customers and improve
getting more expensive and more inefficient by the day. personalization. The more customers you have, the more you can perfect your
approach; the more you perfect your approach, the more customers you get.

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 Data-Driven Marketing How to use data correctly and drive growth

How to Drive Growth

CUSTOMER
POTENTIAL LIFETIME
CUSTOMERS VALUE

HAPPY
CUSTOMERS’
JOURNEYS

Traditional Marketing Data-Driven Marketing

We have been using the funnel for decades, but it fails to help us prioritize Having a map of the customer journey allows you to predict very early on
the best customers and recognize them early on. This is no longer in the whoyourpotentialcustomersareandserverelevantexperiencesforthem
scope of sales – you need scale and you need to be able to scale your in real time. This allows you to prioritize both customer segments and
marketing methods. marketing activities.

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 Data-Driven Marketing How to use data correctly and drive growth

Determining the role of data in the big picture requires a quick look at More to the point—your target market segment is not infinite.
the the following formula: A volume-based approach is essential, but there are traditional
and data-driven ways to increase volume. The data-driven
NUMBER OF ARCHIVED GOALS = methods work on the basis of “more of the right buyers,” and
(NUMBER OF CONTACTS WHO ENGAGED) * (AVERAGE CONVERSION RATE) you can clearly see the difference between “more of the right
buyers” and “more people and let’s hope some of them turn
out to be the right buyers.” This is yet another difference
If the goal is a sale, then the total revenue matters more than the between data-driven and traditional approaches to volume.
number of sales. For example, if you sell 1 million packs of gum for $1
each, this is different than getting 20 superstores to buy a shipment Better conversion rates: You can achieve much higher
of 2 million gum packs each. So if we add the revenue factor for each conversion rates through customer journey optimization for
of these, then the formula simply states total volume, the velocity and critical steps. Customers frequently follow such steps beginning
how much revenue you get on average from an achieved goal as the with popular landing pages or home pages. Optimizing these
factors you need to grow. areas provides some return and may prove experimentation
and A/B testing to be an effective way to influence the
customer journey. Starting with the most frequented
Traditional Perspective: The Marketing Funnel experiences generally makes sense, and traditionally, this is
where digital marketing professionals have focused. But what
Improving business outcome using the traditional funnel approach has happens when that potential has been reached and you’re still
three aspects: below your goal?

More volume: Adding more people to the top of the funnel, Higher average profitability/revenue per goal: This metric
increases revenue or any other goal, since a fixed percentage of is very tricky to influence and doesn’t have a clear answer
them will convert. For the most part, this is statistically plausible in the traditional marketing sense. A traditional marketing
if you assume you are getting more of the same type of users methodology promotes the opposite—discounts and
with the same type of conversion rate. However, this presumes promotions. In reality, the amount of revenue you get per
your assumptions are correct, and it’s very difficult and customer certainly depends on business strategy, but in general,
extremely expensive to achieve. Typically, to increase quality influencing this metric usually entails a change of customer type,
you decrease quantity, and different techniques decrease in quality of product, product strategy, perceived value or other
effectiveness. As the law of s#$ty clickthrough rates variables widely considered in the field of product and strategic
clearly states: marketing. Here, the data-driven answer is a bit simpler: more
of the right buyers. But only after providing them with the right
Over time, every marketing strategy results in s#$ty click experience would they be more likely to increase their spend.
through rates.

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 Data-Driven Marketing How to use data correctly and drive growth

So, which one of these should you focus on? Impact on any and all Data-Driven Perspective: The Customer Journey
of these parameters would account for the same growth. They are
directly proportionate: a 30-percent increase in volume has the same A different model, the so called “customer journey,” approaches growth
effect as a 30-percent increase in conversion rate or a 30-percent with a different philosophy. It is not a simple flow measurement—
increase in average profitability. Since conversion rates typically are measuring people in and out of the buying cycle and seeking to
smaller numbers, they seem likely to be the easiest to change. If your increase them. Instead, it captures every single step of every single
conversion rate is 1 percent on 1 million leads, for example, growing it customer. It does that to find patterns. With patterns, you can resurface
to 1.3 percent seems more doable then getting 300,000 new qualified priorities at will, such as who are your most important customers,
leads. Below we’ll see different data- and customer-centric ways to which prospects have the biggest customer potential, which customer
achieve increasing profitability and desirable outcomes. engagements are working and which can be improved. The customer
journey fixes some of the biggest flaws in the funnel, namely, its
But here’s the trick: not all customers and experiences are the same. inability to prioritize customers and actions.
Funneling more and faster is not an answer to sustainable growth.
The business world has learned this the hard way. Funneling more Why has the industry migrated toward this model? This is where
and faster as a model is a linear system; it has a beginning state and the customer-centric trend comes into play. The right customer,
an end state. No linear system can ever work in a finite space. Imagine when he or she is happy, engaged and promoting, brings a level of
that your market segment is growing by 10 percent this year, then 8 circular attribution and exponential growth that becomes sustainable.
percent next year, then 7.3 percent next year and you target 12 percent Additionally, knowing exactly what made a customer convert helps
year-over-year growth. The only way to achieve that growth is to cause you convert more customers in kind. This is then coupled with the
negative growth in some of your competitors, otherwise you will run increasing expectations of customers to be more connected and
out of marketplace buyers at some point. This is why the funnel model receive personal and compelling experiences prior to conversion. The
is reaching its limit, leaving businesses to pursue more customer- confluence of factors means that meeting and exceeding customer
centric models. expectations requires solving multiple problems, while creating
a model of sustainable, sometimes exponential growth amid a
continuous learning system that improves customer acquisitions and
produces happy customers.

This is the win-win scenario for which data-driven and strategic

marketing strives.

A smarter way to phrase the question is, “What is the optimal growth
in key metrics that influences my goals and is achievable over a period
of time?” As with many things, it depends. The world of marketing and

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 Data-Driven Marketing How to use data correctly and drive growth

digital experience relates very closely to your capacity to influence a Simply put, in a data-driven marketing world, we first answer the
certain outcome in a certain amount of time. If someone can give you question, “What do we want to achieve: sales, donations, sales
insights about 50 campaigns that present the biggest opportunity for conversation?” With data we can start answering questions such as:
your conversion optimization, can you execute on all 50 in a week, a
month, a year? “Which customers deliver this result most often?”

This is why it’s important to consider a strategic and tactical “What’s the profile?”
perspective. Draw models and process based on a long-term strategy,
but consider optimizations and tactics as they relate to the next step “What are the trends and patterns in the customer journey that
with the most potential to produce a maximum measurable impact. lead to a positive result?”
But what exactly is this model for growth from which we can derive
tactics? Again, this is where customers come into play. How?

Start from your existing and ideal customers. Learn why you Consider the 80/20 rule of productivity. Twenty percent of the things
have become successful in acquiring and converting them and you do bring 80 percent of the results. A more likely rule for your
where you have failed the rest. business is the following: two percent of your visitors bring in 80
percent of the revenue. This is an essential component to consider
This becomes an insight to acquire more of your best when starting to examine the customer journey. What are the
customers—where do they come from and what are they dynamics that attract your best and happiest customers, at both a
interested in? This is an insight you can apply within a demand macro and micro level? Influence the customer experience for those
generation or advertising strategy. folks first, so when a similar customer comes in, you can usher them
toward a faster path to conversion. Repeat and refine the process
Based on those insights, you can also optimize some of the for each successive group until the level of granularity is so acute it
key routes they go through and become more successful in approximates a personal conversation.
acquiring new customers. This in turn resurfaces new insights
on new routes to optimize. The next chapter takes a granular look at data-driven optimization
techniques on top of a similar 80/20 rule.

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 Data-Driven Marketing How to use data correctly and drive growth

How to Optimize the Customer Journey

Going back to the basics, we looked at a few terms that define our Engagements: Engagements are the largest and most meaningful
process for building and analyzing the customer journey. Now to set of data points we have. Each user has a number of engagements
optimize our approach, we need to look at how to improve them further: across different channels. Our optimization purpose is to build, present
and drive such engagements to increase the probability of customer
Better engagements Better customers conversions.
Better goals Better data
Better insights Better process

LEARN FROM
CUSTOMER
SUCCESS

BUY

FIND
KEY STEPS
APPLY TO
ACQUISITION
FIND BEST NEXT
EXPERIENCE

PICK AN
EXPERIENCE OPTIMIZE

Traditional Marketing Data-Driven Marketing

Whenyouneedtoinfluenceametric,youusuallystartaguessinggameof Indata-drivenmarketingyoulearnfromcustomersuccessandapplyitto
whattodo:whatpromotiontorun,whattooptimize,whichcustomersto customeracquisitionandconversion.Dataaroundthecustomerjourney
target.Thisusuallymeanseverybodyworkingsixtimesashard,butalotof helps you find key segments, steps and experiences that will influence
this effort doesn’t help your actual growth in an optimal fashion. exactly the tactic you are targeting, transforming your team into a zero-
waste system.

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 Data-Driven Marketing How to use data correctly and drive growth

Optimizing Engagements: demographics, interests and behavior. It’s difficult enough to track
A Data-Driven Perspective— these in one system, but because of cross-channel challenges, you
Reverse Engineering Customer Success might have difficulties consolidating dispersed data in disparate
systems and reconciling it to know it’s coming from the same customer.
Optimal engagement patterns for each customer are unique. No
two are necessarily the same—but they can be. That’s where the Mapping the customer journey is very difficult to visualize on a
data comes into play. Recognizing and leveraging behavior patterns macro level, not to mention draw enough insight to impact business
presents a huge business opportunity. results. The analytic work is exhaustive because the path is unique
for each customer, and the number of possible paths is immense.
Start with successful conversions. What do you see? Are there However, when we break down these engagement and customer
customer journey patterns in common? What was the shortest and the segments into who has beneficial behavioral engagements, we can
most common path? What path is typical for my target buyer? This see certain combinations produce more than others. For example,
type of analysis provides meaningful segmentation on your customers customers browse activity gear because they are outdoor enthusiasts,
based on behavioral data, as well as a segmentation of engagements they ask about car safety because they are new parents, and so on.
based on their impact and attribution—both by themselves, and in By combining these behaviors with demographic data, you’ll find
combination with other noteworthy engagements. some paths in the journey are more closely associated with certain
demographic characteristics or profiles.
A customer journey by definition is a chain of engagements, so
gaining insight about a combination of engagements that produce Try to answer this for your business: what combination of interactions
better conversions is invaluable. In a website, the main way you guide work best to achieve your goals, and for which customers does this
the journey is simply through linking– navigation, calls to action, have the greatest effect?
banners and so on. In a sales conversation, you interlink mentions of
certain benefits, collateral, customer successes and so on, essentially
controlling the flow. Insights about individual step attribution toward
the larger goal gives you vital information about what resources to
emphasize or replicate. Insights on engagement order illustrate the
flow you need to optimize and how to best arrange your journey.

Consider this: in a customer journey, you have to examine each

page or email viewed, sales call made, event or billboard seen, or
document downloaded, and millions of other engagements. Each
user has participated in some combination of touch points in a certain
order and timeframe, bringing his or her personal context based on

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 Data-Driven Marketing How to use data correctly and drive growth

One way to answer this question is to have an opinion based on some Standard marketing data derived from surveys or even benchmarks
superficial data and observation. We sent out a survey that included cannot answer this question because:
a question about job position; 40 percent of our buyers turned out to
be marketing directors. Although this is good insight, but how do you It requires a full 360-degree view of the journey for each
classify someone as a marketing director if he or she is just browsing successful customer.
anonymously on a cell phone, for example? More importantly, do
you know what type of engagements are important for this director The number of possible combinations grows extremely
and what to present? If not, here are some important segmentation quickly—exponentially, in fact. If you have 32 parameters—say
questions: 16 regions and 16 web pages—that you care about, then you
have over four billion combinations of them, but in reality only a
Is this segmentation focus decision opinion- or data-based? few dozen will prove to be meaningful.

What other segments in your purview could be bigger This is the secret behind how Google serves ads and how Netflix
growth drivers? Which specific industries, sub industries or recommends movies: certain algorithms draw insight as to which
demographic groups, for example? exact combinations of behaviors are the big money makers and which
components in those combinations have the biggest attribution.
Are certain customer journeys enough to qualify customers Then, they dictate which the best next experience is for them. This
in a meaningful segment? is not technologically impossible; it’s simply not yet commoditized for
companies that do not have a data science department.
How quickly and accurately can you predict conversion rates
based on a specific segment?

These optimization questions are impossible for humans to process.

To come up with a meaningful list of customer segments that are
low-hanging fruit or experiences with the opportunity to drastically
improve your goals, you need to look at endless behavioral and
demographic criteria, most of which will turn out to be close to
irrelevant. However, some will prove to be very important—this is
your insight.

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 Data-Driven Marketing How to use data correctly and drive growth

The Customer
In business, your main priority is to have a keen sense of your current Lead scoring: A more advanced model is lead scoring, which
customers. This helps determine who your ideal customers are and is the ability to accumulate behavioral and engagement data
what your growth plan should be to retain and acquire more. In the to achieve some type of predictability over whether someone
comparison between the data-driven and traditional models, you’ll see will become a customer and offer some level of automation.
that data-driven marketing principles don’t take a drastically different The benefit of scoring is that it is easy to understand and
approach toward customers. Instead, they create better in-depth works with automation process (lead reaches score X, they get
understanding and better connections with data to drive insights, as passed to sales). The drawback is that the prioritization created
opposed to some more superficial decision-making techniques. by lead scoring is still created based on opinion-driven criteria.

A Traditional Look: Manual segmentation is used to frame certain campaign and

Segmentation, Surveys and Statistical Data promotion planning, create personalized offers and experiences with
the brand, locate advertising media and create marketing messages
Traditionally, customers play a role in marketing planning, but decision that are intended for a particular segment.
making is typically based on a high-level understanding of the
customer. Some of the traditional principles have been: Surveys and a handful of other data points have been the traditional
marketer’s way of proving or disproving assumptions made in the
Manual segmentation based on demographic data: manual segmentation.
In traditional marketing, behavioral segmentation has
been difficult until recent years. The main factors driving Scoring is currently used by some of the more advanced organizations
segmentation are demographic: job title, industry and to achieve some level of automation in the segmentation and sales
geography for B2B sales, age, gender, family status and enablement process.
interests for B2C. Based on those, marketers have created
models to picture and profile customers.

Survey-based marketing: In surveys, we use specific

methodology to get a snapshot of the audience at one point in
time. Based on that snapshot, businesses make decisions about
what channels, products and services to develop, what type
of marketing materials to create, what is the health of key KPIs
such as a Net Promoter Score or Customer Satisfaction Rating.

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 Data-Driven Marketing How to use data correctly and drive growth

For example, take the oldest question in marketing: “How did you hear
about us?” This comes from a time in which systems were unable to Customers: A Data-Driven Perspective—
track the exact customer journey that a certain large client has taken, Micro Segmentation, Behavioral Profiling
and further pinpoint its starting point. There are a few problems that and Validated Learning
exist in such a method:
To understand the data-driven principles behind customer
Most of your customers will not answer this type of survey; the development and the role that strategic marketing plays in it, you have
type that does answer it usually has similar traits (wants to win to know “lean” and “agile” principles and implement them correctly.
the free thing you are offering), which introduces bias into the The main goal of data-driven marketing, in this case, is focused on the
numbers. Even the ones that do answer might not remember following KPIs:
to give a very data-centric response.
Minimize cost to acquire a customer
The question assumes incorrectly that how the customer
heard about you is the main characteristic, and by prioritizing Maximize customer lifetime value
the most common answer, you’ll yield unlimited growth.
Why those metrics? Because of this simple business rule:
Simple surveys are entirely too narrow in scope to review
the thousands or even millions of questions you need
each customer to answer precisely to prioritize campaigns, Cost to Acquire Customer < Customer Lifetime Value
messaging, flow, digital experience and cross-channel outreach
and to maximize customer acquisition. A survey is not able
to cover the information breadth you need, giving you only This formula, although popular for startups, is critical for any business
a partial view, although the data points measured may be to track and control. In very simple terms, Customer Lifetime Value on
accurate. average should be larger than the Cost to Acquire a new Customer—
in the range of 3x, 4x or 5x larger—if one is to maintain a successful,
While potentially helping to identify a value segment, this growing business.
approach fails to account for the next action step: automating
future activities to guide business-critical customers through This approach uses profitability-based decision making, and it’s
their experience. Essentially, it disregards the next step of what much more sophisticated than using traditional metrics, which simply
happens after they hear about you. measure small windows of interaction, such as clicks, page views or
customer satisfaction ratings.
The answers to these questions are within the scope of data-driven
marketing.

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 Data-Driven Marketing How to use data correctly and drive growth

Strategies of the data-driven approach include:

Studying customers with high Customer Lifetime Value

Targeting cost for acquisition for similar customers

Validating and refining metrics—constantly

Data-Driven Marketing Process

AUTOMATE
IDENTIFY ACTION TO INCORPORATE
SEGMENTS IDENFITY EXECUTE CONVERT LEARNING
THAT CONVERT SEGMENTS YOU ACTION TO SIMILAR TO DEVELOP
MARKETING CUSTOMERS BELOW/ABOVE CAN INFLUENCE INFLUENCE CUSTOMERS KEY TARGET
ACTIVITIES CONVERT AVERAGE TO CONVERT CONVERSION TRACK SUCCESS PROFILES

The main idea here is to start by listening and incorporating past data. This will help you find patterns revealing a successful customer journey,
while exposing a few critical things:

Which customers are likely to take that journey

Which customers are already on that journey

What can further influence their path, delivering the “Best Next Experience”

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 Data-Driven Marketing How to use data correctly and drive growth

Traditional vs. Data-Driven Segmentation

There are several differences when segmenting customers according
to traditional versus data-driven marketing approaches:

Traditional Marketing Data-Driven Marketing

Segmentation criteria are selected by humans based on opinion and Segmentation criteria are intelligently derived from data.
superficial data.

Number segmentation criteria are limited, usually to 3-10 factors, Segmentation criteria are data-derived and can be any behavior,
including job position, geography, industry and so on. trait or interaction, as long as it indicates a segment with specific
behavior similarities and is predictive of results.

Classifying and prioritizing customers and marketing actions cannot Classifying and prioritizing customers happens in real time, based
happen in real time. Distribution of priorities is derived from scarce on a full analysis of the voluminous customer data.
data and statistical methods, such as surveys.

Essentially, a data-driven approach removes anything opinion- The original Netflix series “Orange is the New Black” and “House
based or based on scarce and incomplete data. Instead, it starts with of Cards” are examples of strategic decisions to draw viewership
the question “Who is my customer,” and lets data reveal patterns and subscriptions. What you may not know is that those decisions
to guide decision making. From high-level data such as customer were data-driven ones based on observations about relationships
title—33 percent Marketers, 54 percent Developers and 13 percent between a viewer’s preference for seemingly unrelated categories.
unclassified—to low-level, granular data that delves into thousands of But it wasn’t an executive who suggested looking at whether there is
microsegments based on unique characteristics or behaviors, the data- a relationship between people who like Kevin Spacey movies, people
driven approach is extremely powerful. who like British political dramas and people who like dark, cerebral
shows. It was an algorithm that identified that combination, providing
Example: Netflix movies are classified in 80,000 different categories. actionable data for Netflix to act upon. The results are evident: profits
These categories help it gain a unique understanding of your movie and revenues have more than doubled, and Netflix passed the 50
preferences, which influences not only the recommendation engine, million subscriber milestone.
but the entire decision-making process of what movie catalog would
drive up subscriptions.

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 Data-Driven Marketing How to use data correctly and drive growth

Results: Connecting the Dots

Between Strategic Goals, Tactics and Attribution
A goal is a natural and intuitive term in the business world, but it As marketers, we have become obsessed with data, but have had just
has yet to make its way to the everyday marketing process. While a a few years of data with which to connect the dots and catch up to
business usually has clear and specific revenue and sales goals with a sales mechanisms that have had a 50-year head start. We haven’t yet
prioritized and quantitatively outlined set of goals on a conceptual level, reached the stage where quantitative goals for a marketing department
a marketing organization rarely deals with that type of structure. are the norm, not to mention goals for each individual or team.
REVENUE

MARKETING $$$
ACTIVITY

Traditional Marketing Data-Driven Marketing

Marketer A: We launched 5 major campaigns this year, reaching 20 Marketer B: By targeting key segments with maximum buying potential
million users in 30 different countries. Our website redesign provided throughcross-channelcampaignsanddynamicpersonalization,themarketing
a great experience increasing page views and time on site and our department contributed to 20% of the revenue increase and 35% of the
mobile traffic is up 300%. After launching a new product and massive customerlifetimevalueincrease,exceedingouroverallgoalof30%growth
advertising campaign, we received 210 mentions in the media and 1M thisyearby2%.Themarketinginitiativesdrove10xreturnoninvestmenton
impressions on Twitter. As a result our company revenue grew with 32%. budgetandprovidedatwofoldincreaseinthecustomerlifetimevalue/costper
acquisition ratio. Here are the clear points that attributed to this…

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 Data-Driven Marketing How to use data correctly and drive growth

There is nothing wrong with the story shared in scenario A. In fact, it Marketing Goal vs. Business Goal
seems very impressive, and one might conclude that this is a driven
organization because it cites a lot of data. However, it provides no The difference between marketing and business goals is the way
business answers to the following questions: they’re defined. In the first case, we can see a clear example of a goal
based on marketing data. In the second example, we track goals based
1) How did these tactics contribute to revenue growth, and on financial data such as revenue, fulfillment and services, as well as
exactly which ones? by reviewing forecasting models for customer lifetime value for each
acquired account. Business goals are not “instant gratification” goals,
2) What type of budget should I allocate for next year to produce satisfied by a click, view or impression. These goals are achieved in due
even higher growth? time, making it challenging to connect them to earlier stages of the
customer journey.
3) What customers should we prioritize?
In both cases, the business teams are responsible for contributing to
4) What initiatives should we prioritize? revenue. But when you look into a short-term goal, the revenue impact
is difficult to quantify. There’s a tenuous connection between random
A similar assessment from CMO A might lead to the logical conclusions growth in prospects entering the sales funnel, perhaps in response
of investing more money into campaigns and increasing the budgets. to campaign activity, and an associated increase in customers at the
However, as these investments grow over time, the return on them other end. That scenario can be just as easily coincidence as causality.
will decrease. As data-driven professionals, we need to move quickly
toward attribution models. This is a main aspiration of data-driven In data-driven marketing, maturity and success is directly correlated
marketing: to have full context and journey attribution percentages for to how far ahead your goals are – long term goals such as increasing
each activity—as well as the full cost—attached to each activity. Only Customer Lifetime Value usually yield much better long-term results.
this way can you calculate a true ROI and fine-tune your spending and
effort in ways that maximize relevancy.

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 Data-Driven Marketing How to use data correctly and drive growth

Interestingly enough, the more mature your process is, the fewer goals and/or increase the Customer Lifetime Value for each.
you end up tracking. In stage 1, you might have to review page views
and data for various assets, trying to make sense of data, while in stage To achieve that goal, you must examine how much each of your
4, you strive for one very special metric: the Customer Lifetime Value. actions and your spending contributed to generating Customer
Your main goals then become to increase the number of customers Lifetime Value.

Four Stages of Data-Driven Marketing

STAGE 4
+ CLV DATA

STAGE 3
+ FINANCE DATA

STAGE 2 Profitabillity-based
+ SALES DATA decision making
Add data from support and
STAGE 1 account management. Marketing
MARKETING DATA Revenue-based driven by Customer Lifetime
decision making Value (CLV).
Add data from finance, Result: Market mastery
fulfillment and services.
Conversion-based Marketing driven by strategic
decision making business objectives.
Add data from sales. Result: Measureable success
Response-based Marketing driven by sales
decision making pipeline performance.
Marketing driven by Result: Slow failure
marketing data alone.
Result: Fast failure

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 Data-Driven Marketing How to use data correctly and drive growth

Whether a prospect completes a form, registers for a webinar Therefore, our immediate goals are to try to connect customer journey
or downloads a whitepaper is not a goal by itself. It matters only data across every channel and start with as data-driven an approach
whether or not there is contribution to the end goal. The technical as possible. Over time, shift goals to cover more sales, financial and
challenge is that: even retention or lifetime value data. In this way, you can progress
through stages 1-4 at a pace that works for your organization.
1) Most companies don’t have all marketing, sales, financial and
account management data for a single customer together
in one system. This requires very sophisticated integration
platforms, good ways to purge and consolidate data, and
enormous volumes of storage.

2) The companies with sufficient data don’t have the ability to

process it to provide enough macro-level insights.

3) These goals do not provide the “instant gratification” that a

click provides. Even after you have the infrastructure to process
data, there is a waiting time for the cycle to close, resulting in
the accumulation of months or years worth of data.

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 Data-Driven Marketing How to use data correctly and drive growth

The Road to Data-Driven Marketing

Shifting to a data-driven marketing approach is much more than Long-term business goals: The journey toward true data-
buying the right piece of technology. It’s a process that requires a driven infrastructure starts with a mind shift away from
complete commitment from stakeholders across the company, and superficial metrics toward long-term goals. The focus should be
even with that, will likely take several months to implement. on identifying your long-term goals and leveraging whatever
positively influences those goals. This enables marketing teams
In this chapter, we’ll highlight some aspects of the technical conversion to define and diligently track KPIs and strategize to influence
to a Big Data approach that are good to avoid. This frees you to focus them. Further, it provides the tools needed to answer questions
on the organizational journey, which is, in truth, the most important around true ROI, cost of acquisition, forecasting, optimized
part. This map of the journey tackles all of the quests and challenges marketing planning and so on.
described in our Challenges section.
Accurate predictions (predictive analytics): Once your goals
Cross-channel data: This is a big infrastructure challenge are set, with the complete dataset available, you can make
because we need to combine data for each customer from much more accurate predictions. At this point, a lead score
each channel. It has both integration and data integrity becomes more meaningful, taking you from a relative number
implications because you must accommodate easy data source of points assigned to an actual conversion probability you
additions, large data storage and ways to anchor customer can predict with great accuracy. Shifting from opinion-
data from diverse channels to the same person. based heuristics to data-driven models is a key step toward
automating the sales and marketing machine of a data-driven
Customer intelligence through record and scoring systems: organization.
Once you can properly understand customer data, you can
start adopting general customer intelligence. This has different “Best next action” for each customer
implications for sales and marketing, because each requires (prescriptive analytics): Accurate predictions on a
unique data to have an impact on their part of the customer macro level (forecasting), as well as micro level (customer
journey. Systems need to accommodate both. conversion) are stepping stones to another level:
prescriptions. Once you can predict behavior, you can
Customer journey understanding: While customer insight prescribe next steps. This is similar to how Google can predict
often starts with opinions and gut instincts, data injects your likelihood to click on a certain ad with great accuracy. It
objectivity. Simple questions about which course to take are uses data to present ads proven to be successful with people
settled by applying buyer journey behavior to similar customer similar to you. By having the previously mentioned protocols
prospects. Seek success by using what has already proven to in place, technology can now be effectively leveraged to help
be successful. improve and prioritize the marketing process and increase
customer conversion rates organically.

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 Data-Driven Marketing How to use data correctly and drive growth

Proven attribution for marketing actions and true ROI: All steps in the marketing maturity process are, in one way or another,
Proving marketing attribution is traditionally challenging, as you within the scope of what’s commonly referred to as Big Data or
need to manipulate parameters and track success. Statistics Data Science. With the right tooling, you can cover all bases and
and the scientific method offer ways to prove cause and effect start improving the different steps. But the point of these steps is to
between different actions, and data-driven marketing has direct you toward a repeatable, circular process with a scientific basis,
a major task in pulling the story together. Broad marketing providing all necessary marketing metrics and leaving your team with a
activities provide little clarity into how they specifically clear priority list and set of iterations.
contribute to metric growth. With a clear understanding of
journeys, goals and conversions, you can devise ways to prove
attribution in very specific terms. Then you can mold an
organization that plans, executes and delivers based on true
ROI, thus maximizing every effort.

Full cycle of automation to maximize ROI

(real-time marketing): Imagine the following: you get an
insight and send an email to all people in that segment to
promote an offer. Results? Instant success for that customer
base. But what happens for the next 1,000 that will come in
the next year? For this, you need to automate, making sure
they get the same real-time offer or experience that will drive
them further.

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 Data-Driven Marketing How to use data correctly and drive growth

Conclusion
Data-driven marketing presents a number of challenges that are Data-driven marketing won’t be the gold standard for a few years,
both technological and behavioral in equal measure, each requiring a which puts you in a unique position. You can get ahead of the curve
mindset change. by changing the game for your organization, being an innovator and
reaping all the credit.
Pursuing the perfect data-driven end result will yield continuous
predictability, prioritization, attribution and automation. This can be If you want to learn more about data-driven marketing or consult
integrated with the creative process to provide maximum impact and a technology expert about jumpstarting this process for your
fast growth. organization, visit the Telerik Sitefinity™ Digital Experience Cloud and
request a demo.
With a mind shift into data-driven marketing, marketers can move
away from deprecated notions like the marketing funnel, counting
clicks, opinion-driven decisions and one-way communications. Instead,
they can turn infrastructure into a smart, self-improving intelligent Request a Demo
system to guide them to real customer conversations.

Until recently, this seemed like science fiction, as opposed to marketing

practice. But now, the road ahead is taking shape. It consists of
understanding components of the customer journey and how it can
be changed and expanded: ultimately providing more and more value.
With current technology, most of these steps take a matter of weeks to
initiate and benefit from.

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