An Introduction to Marketing Analytics
Marketing analytics consists of processes and technologies that enable marketers to evaluate the success and value of their marketing initiatives, identify trends and patterns over time, and make data-driven decisions.
What’s the Goal?
In general, your marketing analytics will try to accomplish four goals:
- Measure the performance of marketing campaigns
- Find opportunities in marketing performance
- Understand your customers
- Understand your competition
Measure the performance of marketing campaigns
The most basic form of marketing analytics is to provide marketers with the tools to understand what business impact their marketing campaigns have. This task can range from something as straightforward as providing standard metrics (click-through rate, ROI, etc.) at the campaign level to analysis as complex as developing a Market Mix Model to come up with the optimal marketing strategy to maximize profit.
Find opportunities in marketing performance
While marketing performance analytics will let you know on the whole how a campaign performs, it isn’t until someone digs in to many cuts of data to uncover whether there are certain types of users that respond better to particular marketing treatment — perhaps some campaigns work better in certain markets or on mobile. Marketing analysts mine and model your data to uncover nuggets that can be acted on by marketers.
Understand your customers
Diving deep into customer demographics and behaviors can help you understand which are more likely to be successful. This information can then be used by marketers when selecting their target audiences. Through data mining and statistical modeling, marketing analysts can provide a rich understanding of your customers and what drives success.
Understand your competition
Market research is often within the domain of marketing analytics and it can help marketers understand the competition better and adjust their strategy accordingly.
How Do I Measure Success?
The B2C marketing funnel is a representation of the typical customer journey. It is comprised of four stages:
It is visualized as a funnel because it is expected that a lot of people are targeted at the top, but fewer and fewer go through all the stages in the customer journey with a given company.
In the awareness stage, also referred to as the “top of the funnel,” you’re trying to get an audience to know you exist. You find where that audience spends their online time and place advertising there — social media posts and ads, display ads across the internet, YouTube video ads, etc.
You’re going after name recognition because you want to introduce your product. The hope is that it inspires a need for your offering, so you have to cast a wide net. The targeting is less focused and your messages are inspirational or informative, not transactional. Thus conversion is expected to be low. You are catching people very early in their journey — they may not need your product for a long time or you could be showing your message to people who aren’t in your core demographic.
Indirectly, with awareness marketing (also called brand advertising), you’re trying to cultivate higher-converting traffic in the future. The hope is that people will remember your name when the need for your product arises or, at the very least, that they will be primed to receive lower-funnel messages, since by then they will recognize your brand. Unfortunately, it isn’t practical, or even always possible, to accurately measure these future indirect effects on a campaign-by-campaign cadence.
If a campaign is large enough and relatively isolated from other business changes, you can use Market Mix Modeling to get an estimate of its long-term effect. You could also partner with a third-party provider for brand awareness measurements. Both of these techniques are outside the scope of this post and are rarely undertaken by smaller companies. Companies that invest in brand advertising recognize the long-term value of a strong brand, knowing it can’t be easily quantified.
Primary goals of awareness campaigns:
- Grow your organic audience and keep them engaged, so when you have a highly transactional message (a big seasonal sale announcement, for example) it can be amplified through your network.
- Metrics: reach, frequency and engagement
- Grow future organic traffic and/or increase conversion rate of future lower-funnel campaigns.
- Metrics: Unfortunately, no simple methods exist to quantify this objective
When customers are actively considering making a purchase (or other conversion if you’re not an ecommerce site), your message is much more tailored and transactional. You find these customers as they’re searching online for your product (SEO, paid search) and as they’re researching your product on experts’ sites (referrals, affiliates, influencers). Your message no longer needs to inspire; you’re looking to convince and drive the conversion.
Primary goals of consideration/conversion campaigns:
- Make a sale (or other conversion).
- Metrics: revenue (or conversions), ROI
- Get a customer to sign up. While the first priority is to close the sale, getting contact information will allow you to keep trying to convert the user through a continued, personalized marketing relationship.
- Metrics: newsletter signups, app downloads
After a customer has made a purchase, you want to keep your brand top of mind for the next time they have a need for your product. At this point, you likely have their contact information to send email, push messages or share posts through social media. You will have a mix of customers who are not yet ready for their next purchase (high in the funnel) and some who are. Ideally, you can identify ready-to-buy users in the conversion stage (perhaps by whether they visited your site recently or viewed product pages) and send them different targeted messages.
Primary goals of retention campaigns:
- Keep your audience subscribed and engaged, so when they’re ready for their next purchase cycle, you’re top of mind; inspire the next conversion cycle.
- Metrics: reach and engagement
- Get repeat conversions, particularly of customers who are again in the consideration stage.
- Metrics: conversion rate, revenue
How Do I Ensure Success?
Here are some best practices for utilizing marketing analytics to understand and improve your marketing performance:
Ensure high-quality data
Your analytics rely on your data. For the average marketer, data may reside in over 17 different tools and applications. Being able to access all that data in a single place, combine data from multiple sources, and build appropriate models and reports across all types of marketing data is a very powerful proposition for today’s marketers. Unfortunately, most marketers still rely on point solutions provided by each tool in their marketing tech stack and lack the ability to analyze all their data in a single place.
The most convenient way to bring all business data into one place is to use an automated data integration tool like Fivetran to sync all of the data to a data warehouse. Homebrewed solutions to the same problem are intensely time-consuming and error-prone. Moreover, automated third-party tools offer the benefit of stress-testing against a wide range of obscure corner cases.
Once the data has been warehoused, a business intelligence tool like Chartio can be connected to it in order to provide visualizations, reports and dashboards.
Build meaningful dashboards for your use cases
Although it may be tempting to track as many metrics and KPIs as possible, it is better to start small with a few use cases and related dashboards. Then you can intentionally grow what you are tracking, making sure everything you end up publishing to the company is useful. In order to do so, define your goals and measure the outcomes and results for the use cases most important to you. For this purpose, it is important to understand what metrics should go on your dashboards.
Go agile with analytics
The agile method is grounded in a rapid test-and-learn cycle that should be used to help you determine what metrics you need. New information is an opportunity to learn, decide and act. Thus, every time we measure performance, it’s an opportunity to grow the business, and increasing the frequency of this cycle has an exponential effect on growth. Try out different combinations of data to see what helps you make the best decisions. Iterating on your dashboards helps you determine the right metrics and KPIs.
Choose appropriate analytics visualizations
Stakeholders and marketing teams should be able to understand their data to get insights from it. When building charts and dashboards, choosing the most appropriate data visualizations is vital to interpreting the data accurately, finding insights, and taking actions. You must choose an appropriate data analytics tool that enables you to customize your visualizations instead of using default charts for displaying data.
Develop models that measure and predict
Analyzing the past is not sufficient in marketing. You need to take it a step further and create predictions about new campaigns. For example, besides reporting campaign performance, you can build an analytical model that predicts which customer segments will be the most profitable and what sort of personalized promotion will best work for a customer or a segment. The combination of analytics and prediction can help marketers make better decisions to increase revenue and use their budget more effectively.
Marketing analytics measures marketing performance to improve the ROI of marketing efforts. Now that you have an overview of the goals, metrics and best practices for marketing analytics, you should have what you need to help your marketing team work more efficiently and make a bigger impact. Good luck!