A friend of mine once said, “Instagram and Google can read my mind!”.
While this was said in a satirical tone, he did make a very good point. At some stage in our life, we’ve wondered on how the internet knows all about our favourite brands. How on earth do marketers always send us emails about a new discounted suit when we’ve got a mate’s wedding around the corner!?
All the answers to our questions lie in our browser history where our internet activities are stored somewhere in the digital realm, and that’s just the tip of the ‘big data’ iceberg.
In order for us to understand big data’s significance, it is first necessary to know what it actually is.
Oracle defines big data as “larger, more complex data sets, especially from new data sources that are so voluminous that traditional data processing software just can’t manage them.”
But why should big data be a big thing to us?
According to Bernard Marr & Co, big data’s principle is simple, the more you know the current situation i.e. the more data you currently have, the more reliable your new insights and more accurate your predictions of the future will be.
Forbes shows that customer analytics is found to be the largest proportion of big data usage (48%), followed by operational analysis (21%), fraud and compliance (12%), and product & service innovation (10%).
The high proportion of customer analytics is indicative on how important big data is to the marketing world in particular.
So, let’s explore some ways big data helps marketers today and how it can further enhance the quality of decision making in the future.
Targeting the Right Customers
Customers like to receive straight-forward ads that are relevant and based on what they need, not random calls from total strangers. While cold-calling was a thing of the past, today it is seen as a nuisance meant to waste time.
Big data helps save consumers’ time on researching discounted products, looking for the best services, and browsing endless promotions. It also provides marketers with clear, detailed and structured information. Thus, preventing clueless bombarding.
Rather than running aimlessly, marketers can now target their products to the right customers. By tracking their online activities, data compilation shows their interests and needs based on their preferences in a real time situation. Therefore, big data helps marketers to concentrate their resources onto their target market.
Understanding Customer Behaviour
Customer relationship management (CRM) is another area that big data contributes significantly. While getting a customer to the purchase stage in their lifecycle is hard, retaining them as a loyal customer can be even harder. Having the purchase history of a customer is good but may not be enough to sell future products.
Currently, this is being addressed by analysing reports generated from electronic direct mail (EDM) campaigns. But, sometimes EDMs do not provide accurate enough information.
Big data reports offer the opportunity of higher accuracy and a comprehensive picture of customers. It allows for customer retention to be more effective because as more data is stored, the pattern of customers’ behaviour is also predictively revealed. Therefore, this data can be used as the most reliable insight for companies to manage, interact with and offer to customers effectively and efficiently.
Making Informed Decisions
Past performances and current market analysis are used traditionally for making decisions. However, now with the availability of big data, making informed decisions can be taken to the next level.
Analysis is often limited by the information we have. But if marketers had access to all the information stored and processed, decisions based on a big data analyses would surely be more accurate and reliable.
If the assumption of Trump won the election by using big data in political campaign is proven true, how much more can marketers use it in their marketing campaign to create a winning strategy?
Determining a marketing budget can be a tricky thing.
More often than not, companies tend to set strict limits to how much they are willing to spend. This decision is usually supported with the unsatisfactory outcomes of previous marketing campaigns.
This fear is justified; however, it is necessary to also consider that decreased funding to marketing in any given company risks it stagnating.
While past unsuccessful campaigns need to be considered, it should not fully determine budget for future campaigns as campaign failure could be attributed to a variety of reasons.
So, how can businesses spend their budget smartly?
Research shows marketing budget allocation is now shifting towards digital channels rather than traditional advertising.
Gartner Research in a 2018-2019 survey reported that 29% of marketing budget is now allocated to technology – two-third of advertising budgets are used on digital channels, which is 22% more than in 2017. Brafton also revealed that digital advertising in the U.S is now 30 billion larger market than TV advertising.
Companies sense these winds of change and are gearing themselves for the competition – one major reason to consider your marketing budget.
Not convinced? Here are a few other reasons why and when you should increase your marketing budget.
Growth is an important factor for marketing, especially for a small business. Knowing which marketing campaigns and channels increase growth is important to determine your business direction.
Spending dollars on marketing should naturally trigger growth in sales or customer acquisition. If there is no upward growth trajectory, maybe it is time to consider your marketing spending. Aspects like target audience, content, marketing channels etc. all need to be considered from a growth perspective.
McKinsey & Company recommends that a company should also consider ROI drivers rather than just market and competitive pressure (e.g. market share, competitive intensity) to better allocate their marketing budget.
Campaign monitor reveals that the biggest potentials for small businesses in building brand awareness and gaining new customers are social media marketing and email marketing as these reap the highest return of investment (ROI).
So, if you are looking to attract and keep customers long-term as a young business, it is best to consider allocating extra cash for the early stages of your business lifecycle because allocation for marketing budget is as important as spending.
But, what about more established businesses?
If your business has established its brand exposure and retained a loyal base of customers, it is probably best to consider an expansion strategy before the company risks stagnation.
After years of repetitive cycles and strategies, business expansion is almost a must an established business. This is not only necessary for current growth but also future. Forbes has advised on the being proactive with marketing plans and adopting new strategies. While there are risks to this strategy, the risk of stagnation and possible decline far outweigh the failure of expansion.
Popular American scent brand, Old Spice risked stagnation by only focusing on an ageing target audience. But smart marketing saw the brand expand itself by repositioning to also include a younger base by adopting a well-executed integrated marketing campaign that was relevant to their new target market.
Businesses might choose to expand in several other ways such as through product development, market development, competitive pricing, and many more; all of which require a great deal of marketing to customers.
Smart allocation of funds here can be determined through a thorough analysis of several factors like customer profile (through segmentation and targeting) and current competitive climate. Adequate preparation in budgeting here is key to the success of the route chosen for expansion.
Element three suggests another strategy for smart budgeting is to work backwards from the result you are trying to achieve. This may sound confusing since we cannot predict the results. However, if we have clear targets and goals to achieve, we are more likely to set a correct budget.
Many times, companies have huge goals to achieve but create budgets based on previous reports that may not be relevant to current strategies.
Working backwards enable companies to clearly see what is needed to achieve goals, be it growth or expansion, and set a realistic budget for the marketing and advertising activities.
Artificial intelligence is already very prevalent in the business realm, whether we know it or not. There are plenty of concerns about how it might affect the workforce, but have we considered how it could influence the behavior of our customers? The customer experience has so many variables between the first signs of interest to finally making a purchase, that it’s very important to know if AI can make any difference along the way.
AI can increase sales
Artificial intelligence can understand the habits, needs, and choices of the consumer in a way that revolutionizes the relationship between business and consumer. With this knowledge, AI can usher the consumer into a particular funnel that the customer will have a more positive response to. Not only will they have a better experience overall, but this experience may even push them to make a purchase. AI can also predict when a customer is most likely to purchase by targeting them at certain times of day to generate a jump in sales.
AI can increase loyalty
Those same insights that generate an increase in sales can also encourage customer loyalty. Businesses everywhere are trying to increase loyalty within their customer base, and AI can build that bridge between customers and businesses. By using these insights, predictive technology can make recommendations based on customer habits and behavior. If AI can make a recommendation that the customer is happy, why would they choose a different product in the future? Keep your customers coming back by offering an excellent solution to their problem. With AI on your side, you will be able to lock customers down left and right.
AI can provide convenience
Convenience makes up for a lot of customer decisions. Artificial intelligence is the next step of that progression. AI will allow customers to make purchases faster and communicate with digital assistants to find exactly what they are looking for, all from the comfort of their own home or office space. Online shopping has already provided an incredibly convenient way to shop without leaving the house, and AI is only going to take this further.
AI can increase trust
To create trust, customers need to know that not only are you keeping their financial details secure but that you can also deliver a great product every single time. Offering something that your audience will find valuable is a great way to establish a line of trust while maintaining a reputation for transparency, honesty, and security at the same time.