Its a no brainer that with the popping up of newer technologies each day for improving marketing efficiency, marketers too need to stay ahead of the pace and constantly update their marketing abilities, skills and strategies. There's no surety if a new marketing strategy may last even for more than a week. Here, marketing analytics comes to the rescue. Companies in every sector have been spending huge chunks of their money on Marketing Analytics because its role in businesses has expanded exponentially since the last two decades.
This white paper is dedicated to providing a detailed analysis on why and how marketing analytics are implemented by companies to make better marketing decisions.
Understanding Marketing Analytics
In the era of traditional marketing, marketing was considered to be huge cost centers in business. The marketers in companies had to spend huge chunks of money for marketing since it required people on the field to spread awareness and promote activities, and they too were untraceable. Then came the era of digitization where marketing could even be done at the comfort of home. This system was really efficient but after it became really popular and got adopted by nearly every industry, something more was needed to gain the edge. There, marketing analytics came to the rescue. These analytical tools helped in tracking and deciding whether the actual marketing strategies and efforts are showing results and if further investment into them is reasonable or not.
The Present Marketing Analytics Space
Marketing analytics is the technique by which marketing aspects and channels are measured, analyzed and managed in order to maximize their efficiency. This ultimately leads to an increased ROI on investment. It also helps marketers in realizing which marketing channels are wasting company's money.
Other than just increase in sales and revenue, marketing analytics also provides insights on customer choices and trends. Even with such profound benefits, many companies, even today, fail to optimize marketing analytics in their company up-to full capacity. According to a report in Harvard Business Review, "more than 80% of respondents were dissatisfied with their ability to measure marketing ROI."
You must not rely solely on guesswork to judge whether the customer will like your product or service. This is not how companies thrive. You need actual data and insights to understand the feasibility of every operation by way of facts and charts. By way of using different analytics tools like Google Analytics, you can track the action of every visitor in your website or social media handle to understand what you can do to stimulate those customers to buy your service.
Marketing Analytics Key Trends
"The Marketing Analytics Market was valued at USD 2.13 billion in 2020 and is expected to reach USD 4.68 billion by 2026, at a CAGR of 14% over the forecast period (2021 - 2026). The benefits of analytics have become highly obvious for companies as the competition for the retention of customers has become a necessity for the businesses. Companies these days use multiple channels to keep the customers informed and connected with them. Analytics solution allows them to keep track of the impact of the actions taken. This has resulted in the Integration of these solutions with the existing ERP solution, which is beneficial in using the generated and available data."
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Types of Marketing Analytics
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Need for Marketing Analytics
Marketing analytics is a really well known concept these days but it is important to know exactly on what terms marketing analytics adds value in a business. Some of these are:
- Strategic use of data as an asset: The customer data generated in a company is of some value. Now keeping the data secure is important, but utilizing this data to create useful insights is also important to have the edge.
- Comprehensive Picture: In a company, it is imperative to keep the shareholders' needs in consideration and provide them with complete transparency into the business operations. Marketing analytics helps to do just that by providing a comprehensive view into the workings and effectiveness of all the marketing channels. This also helps in deep diving into granular marketing trends.
- Understand market behavior and trends: One key feature of marketing analytics is to analyze market and individual customer behavior and respond quickly. Marketing analytics helps in development of statistical and predictive models based on a combination of variables by using various data mining methods.
- Improve social media strategies: This can be done by providing a personalized customer experience and 24*7 focus groups for engagement. Social media analytics can be used to identify the actual influencers by use of data and get a candid external perspective for improving customer value.
- Lead Generation: The ultimate purpose of every marketing strategy, including marketing analytics, is to increase the conversion rate. Marketing analytics does that by providing insights that help in determining the effectiveness of existing marketing efforts and campaigns and targeting only those customers that can increase the overall profit.
- Data visualization: Data visualization, when combined with marketing analytics, can help even non-marketing members of a team to understand concepts and hence, enables coordinated decision making which generally turns out to be more effective than otherwise.
Challenges in Marketing Analytics
Enterprises should know not only the benefits, but also the challenges that are faced when using marketing analytics. The three major challenges are:
Lack of understanding of how data is used
Marketers may have access to a ton of data at just a few clicks, for example, emails, clicks on explainer videos and banner ads, queries, and more, but all of it is merely of any use if he cannot really grasp the actual worth of each data and how it will add to the existing marketing strategy. Many-a-times, marketers become totally clueless on what to do with the data at their hand. This leads to little to no change in the marketing strategy and clients ultimately end up spending their money for no good.
Abundance of data
A very common belief is that more is better. But in marketing, sometimes it's quite opposite. Sometimes, the more data we have, the more difficult it gets for us to analyze data.
Let me explain, let's say a marketer collected data from one source, maybe emails. Now, he analyzed and derived some insights. Now, to confirm the insight, he used another source called website traffic. The insight from this data is not in sync with the previous insight. Then another source is used and that insight is totally different from the previous two insights, and so on. This can make a marketer's job very difficult. This case is not very common but the risk is still out there.
No way to predict exact upcoming trends
Regardless of what technique you use or how highly advanced analytics technique you use, there will always be some loophole in your predictions of trends and models. Why? Because the consumer behavior and preferences, marketing conditions, demand and supply, economic relations, prices, and many other external factors are ever-changing and each of these things can't be predicted. In marketing analytics case' predicting what exactly a consumer's preference after a month will be is not a fool-proof work.
Marketing Analytics in Different Industries
With marketing analytics on the boom, companies in different industries have already started to adopt it over the last few years. Companies in nearly every type of industry, except monopolistic companies like BHEL, INDANE, and IRCTC, need to use marketing to some extent. Since all aspects of marketing are not very cheap, these companies need marketing analytics to see how their marketing strategies are doing, whether they need to bring changes in it or maybe just remove it because its not worth the cost. Below mentioned are 4 different industries where marketing analytics it used:
Banks posses huge amounts of customer data in an organized manner such that it can smoothly track efficiency using marketing analytics. Banks do marketing analytics for the following:
- Customer segmentation
- Customer targeting
- Understanding Customer behavior
- Forging relationships with new customers and strengthening existing ones
Hotels too use marketing and advanced analytics to understand how much the customers were satisfied, what their perception was of the service and how to bring them back again. Marketing analytics is further used in Hospitality industry for the following:
- Analysis of customer data allows the company to understand consumer perception and hence, understand their preferences and actual purpose for visiting the website.
- Customers are categorized in market segments, i.e. customer segmentation. This helps targeting selected audience for boosting sales.
- Analytics of customer data helps to select what particular offer will induce which customer.
Retail and Wholesale Trade
Retail industry uses marketing analytics to analyze customer buying behavior. The moment customers enter an e-commerce website, real-time analytics starts tracking and analyzing how the customer is navigating through the website, which products he is seeing, which price segment is he buying from, etc. This, in turn, helps to provide them a better experience the next time they visit the website. Companies forecast their preference and they according mange their inventory too.
Entertainment, Communications and the Media
To understand this, lets take an example. Spotify, a globally used on-demand music application, uses marketing analytics big time. They use Hadoop, to collect and analyze data. It helps to give personalized music recommendations to every individual customer. It also predicts customer preferences and whenever a new song launches and its genre matches the customer's preference, Spotify adds it to the user's feed.
Tools of Marketing Analytics
Marketing analytics tools are techniques and methods that are used in the process of marketing analytics. They include:
Web Analytics Tools
Web analytics tools are used by most companies these days. These are used for tracking behavioral , demographics and technological characteristics of a website or application visitor as well as his actions, events and navigation. It considers bounce rate, page views, site speed, traffic source, time spent on page and so on.
Visual Behavior and Testing Tools
These solutions help in tracking the user's interaction with particular web pages through heat maps, conversion funnels, session recordings, etc. While web analytics tools prove to be really handy, there are certain setbacks which one should know. Web analytics tools do track customers' clicks and visits but it cannot track how the visitor is actually behaving on the website. For this, visual behavior and testing tools come to the rescue. While these tools are just part of the web analytics arsenal. they provide data for easier consumption and initiation.
SEO Analytics Tools
SEO analytics platforms provide marketers with insights that help them improve their SEO results. The aim of these tools include tracking of queries, i.e. keyword phrases that your websites rank for, keyword insights, competitor analysis, backlinks and so on.
Social Media Analytics Tools
Social media is a very useful tool these days. Its importance in the overall marketing strategy has drastically increased in the past few years. Tracking aspects of social media like comments, likes, shares, time spent on pages, search history, clicks on links, etc. gives an idea about what customers and users think about the website and how it can be improved.
Content Analytics Tools
Content analytics is also on par with social media analytics in terms of importance. It has become nearly compulsory for companies to keep track of what content is being developed in the market and by competitors. This helps in prediction of what the competitors might do. Content analytics tools also help in discovering the right influencers that might be needed to amplify your own content.
Email Analytics Tools
Emails are a good source of information. If a customer is sending a mail to the company regarding a query, you know that the customer is actually serious about it. This data needs to tracked and analyzed. Email analytics tools help in the breakdown of email data by collecting and analyzing campaigns and emails using marketing automation suites.
How Is Marketing Analytics Used?
The following segment will help in understanding how marketing analytics and its different components are used in companies:
All customers are different, with different sets of preferences, needs, choices, tastes and so on. It is neither fair nor logical to put them all under the same roof. This means that there is no surety that a marketing strategy that works efficiently with one customer will also work smoothly with another.
Customer segmentation comes to the rescue here. It is the process of grouping customers on the basis particular characteristics or criteria. This is done by using statistical data and analysis. This allows to better target customers by targeting each type of group with customers of similar interests. There is also a concept of micro-segmentation, wherein customers are further categorized into narrower segments. It is generally used when dealing with big clients.
Real-time analytics is the process wherein high-tech algorithms work in real-time ,i.e. while the process and operations are going on, and gives insights.
Real-time analytics opens doors to new opportunities including:
- detailed customer report
- discovering efficient platforms,
- good for unique CRM
- real-time-testing of customer data
Predictive analytics is the process of utilization of modern techniques like statistical analysis, algorithms and machine learning to predict future. These models are you to grab opportunities that may arise in the future. Predictive analytics is used for the following:
- for customers' behavior
- to qualify and prioritize leads
- to bring the right product to the market
- for targeting
Recommendation engines are used to match the customers with the product with features they prefer. Recommendation engines generally utilize the following models and algorithms:
- K-nearest neighbor
- Regression analysis
- Decision tree
- Neural networks
- Support vector machines
Market basket analysis
Market basket analysis is the process in which data mining techniques are used to learn the buying patterns of customers and identify relationships between different purchases. This technique also helps in prediction of future customer preferences.
Optimization of marketing campaigns
Optimization refers to the process of reducing either the cost, time, efforts, wastage or all of these in a process or operation. In this case, optimization of marketing campaigns refers to the reducing the time and money spent on data collection and utilization and reduce wastage. This algorithm treats each customer as a separate individual. This leads to an overall increase in efficiency and performance.
Future of Marketing Analytics
The present marketing analytics space is seeing a massive boom. But what about its future? One thing is for certain, that marketing analytics is only going up from here. But what else do we need to know about its future?
Rise of CRM
Product quality and reasonable prices are definitely something that attracts customers but according to Forbes, 73% customers also believe that a good customer experience is a major factor in their purchasing decision. But opposed to that, only 49% of consumers in the US say that they have a good experience when purchasing stuff or dealing with companies.
US is one of the most developed countries and this is its condition, think about developing countries like India. With a massive population of 1.3 billion, there is scope for bringing a massive increase in sales by using Customer Relationship Management. But the real question is, how do you give your consumers a personalized experience?
Collection of customer data, both by online and offline (physical stores and shops) modes is of key importance. This can help you to give a personalized experience by giving the offers and deals that the customer actually wants.
Personalized content creation will be empowered by AI
Inevitably, majority of tasks done by human beings will be replaced by AI and robotics after a couple of years. This can lead to a huge number of job cuts. Marketers may face the same problem in the future too.
With powerful technologies like AI replicating human creativity with their own in creating more effective marketing campaigns, marketers may face a hard time keeping their job. AI powered campaigns are believed to be more personalized for customers, beneficial and cost efficient to companies. By 2022, it is believed that 30% of the content created online will be done by artificial intelligence.
But the thing is, human intelligence can never be replaced completely. There will be some requirement of human insights in marketing too but for that, they might need to constantly keep on updating their skill sets and knowledge.
The coming future holds key to upgrading the marketing analytics technique to such an extent, where predicted models will match the exact trends. But only those who adopt these changes, both the marketers and client companies, earlier than their competition will thrive.