Over the years, I’ve consulted with well-recognized global brands and mom-and-pop startups. One of the questions I always ask is, “Who is your core customer?” Every time, the business has an answer. Almost every time, that answer is wrong. How do we discover this? I compile vast amounts of information and examine it to identify the core customers and the kinds of campaigns that will resonate with them. This is known as data-driven marketing.
So why is data-driven marketing so important to your small business? It’s simple. Remember how I said the majority of businesses I’ve worked with incorrectly identify their core customer? That’s because they’re usually telling me about their ideal customer—that “perfect” individual or company who they think is best served by the product or service they’re selling. They are failing to consider who is actually buying from them and businesses like them.
In other words, they’re advertising to the wrong people, and they’re leaving money on the table. They’re also failing to create the best brand awareness in their market. By letting data drive their marketing plan, you can identify who is actually most likely to purchase your product, as well as how to talk directly to those potential customers.
Collecting Data for Marketing Planning
Sourcing the kinds of data you’ll need can be challenging. In part, this is because your small business probably doesn’t produce the quantity of data you need to make an informed decision. Another challenge is the availability of data—both a dearth of data in some areas and an overwhelming crush of information in others.
There are many sources you can tap for the information you’ll need. Generally, these sources break into two broad categories—internal data and external data. Internal data is generated by the business through the conduct of that business, like sales receipts. External data comes from third-party sources, such as search engine optimization (SEO) software or government databases.
Internal Data Sources
- Client relationship management (CRM) suites: Many businesses operate some kind of CRM software to track each customer’s progress through the buyer’s journey and to keep track of repeat business and the purchase of new products or services. Almost universally, a CRM is a great source of data for marketing strategies.
- Point-of-sale (POS) systems: POS systems track individual transactions with individual customers. These are typically used in retail stores and restaurants. Most POS systems include some form of inventory management or control, order tracking, and financial reporting.
- Sales and specials: Retail stores and restaurants frequently offer various types of coupons or special discounts. These programs help the business measure the success of particular advertising campaigns, as well as gauge who is buying their products.
- Customer surveys: Shop long enough and you’ll be asked to take a customer survey. Usually, these surveys are brief—taking just a couple of minutes to complete—and they collect a wealth of information about customers, such as age, economic status, and the kinds of products customers are interested in.
- Loyalty programs: Loyalty programs reward customers for repeat purchases. Sales are tracked via a scannable card, phone number, or email address. Loyalty programs encourage customers to come back again and again, usually with the promise of special consideration for enrolling in the program. Loyalty programs allow businesses to tie individual purchase trends to particular customers, providing a wealth of business intelligence.
- Email marketing platforms: Services like Mailchimp and Constant Contact in-depth intelligence about customer behaviors revolving specifically around email marketing. You can even measure which messages resound with customers through A/B testing of email marketing.
- Website visitor metrics: Websites can be configured to collect data on visitors, such as where the visitor is located, how they found your website, and the pages they visited. You can even track how the visitor interacts with your website through click tracking and heatmaps.
In this Microsoft Clarity heatmap, red indicates high reader engagement, while green indicates lower reader engagement.
A Microsoft heat map showing where visitors have clicked a web page.
Internal data is the front line of data-driven marketing strategies. Once you start digging into these sources, you’ll be amazed at how much you can learn about your small business.
External Data Sources
Internal data is important, but it’s not the only information you should consider. There are external considerations, such as general market insights, industry-specific datasets, and trends in internet business. Sourcing this data can be confusing and challenging, and often it requires specialized tools to process the data into actionable business intelligence. Here are some of the many sources for external data:
- SEO and keyword research tools: Driving traffic to your website requires using specific tools and services to determine how customers are locating businesses like yours. These tools provide not only guidance for building your site, but they also give you powerful data to help guide your content marketing strategy.
- Market research tools: Vast pools of market data exist for virtually every industry imaginable. This data includes sales trends, customer profiles, and more. Using marketing research tools, you can access and cull this data into actionable insights.
- Online advertising platforms: Google, Microsoft, and other online advertising platforms provide a wealth of data to help guide successful marketing efforts. Understanding how each platform’s tools work unlocks the power of literally trillions of data points for your small business.
- Government agencies: Government organizations like the Small Business Administration (SBA), Census Bureau, and Bureau of Labor Statistics provide volumes of reports and statistics to help guide your business efforts. Local university business schools are also aggregators of data. In both cases, you can probably find in-depth analyses of the data you’re looking for.
- Economic development groups: Economic development organizations exist in most major metropolitan areas and many smaller communities to support business growth. Groups like the Chamber of Commerce will work with small businesses to identify markets, streamline startups, and even prompt grand openings.
- Competitive analytics tools: Similar in scope to search engine optimization (SEO) and keyword research services, tools like Sprout Social and Similarweb aggregate data from diverse sources and provide insights on content development and performance, new publications, and market trends.
- Trade and industry groups: Many industries have trade groups a business can join. These organizations exist solely to help members grow their businesses and increase the overall health of their industry. To that end, most collect data and produce reports about the state of the industry in which they operate.
There are many other sources for the kinds of data you can use to create actionable business intelligence. Consider the kinds of data you have access to and the tools you need to access that data. Data-driven marketing can be major work, but it’s also an invaluable practice for driving business.
Business intelligence is the collection and processing of data through software and tools to produce actionable insights that inform business decisions. It plays a role in numerous aspects of operations, including marketing, staffing, product development, and logistics.
4 Benefits of Data-driven Marketing Campaigns
Using “big data” to inform marketing decisions can be a game changer for small businesses. The benefits can affect everything from profit margins to how your customers feel about your business. For many entrepreneurs, collecting and analyzing marketing data is a key step in starting a new business.
Here are a few reasons to consider implementing a data-driven marketing campaign.
Using data to drive marketing planning means you’re not wasting money tossing spaghetti at a wall to see what sticks. Instead, you’re making informed decisions driven by evidence, which produces better results.
In a recent HubSpot survey, 32% of respondents indicated data-driven marketing improves return on investment (ROI) of marketing and advertising efforts. According to a survey conducted by lead generation firm Invesp, data-driven marketing improves ROI by five to eight times. This represents a huge potential return on your investment.
Semrush is a data aggregator and SEO research platform, and it’s a key source of data for building a marketing program. Semrush highlights four key areas in which data can improve customer experience:
- Targeted ads: Marketing messages tailored to demographics of past customers
- Paid search: Using insights from paid search to inform SEO efforts
- Personalized content: User data utilized to personalize content to each potential customer
- Abandoned cart emails: Reaching out to customers who’ve left items in their shopping carts without placing an order
Abandoned cart emails are one of the most effective kinds of data-driven marketing you can do. Moosend research shows 45% of users open abandoned cart emails and at least 21% click through to their abandoned cart. Sending emails to customers who abandoned items in their carts can boost sales and grow your customer base.
While these are just a few areas in which data can improve your marketing efforts, they also represent some of the most common (and easiest) types of data you can collect and analyze. You can even subscribe to tools that can help with that analysis, such as Microsoft Tableau, Zoho DataPrep, or Oracle Analytics. In choosing the right tool, it’s important to remember these tools can be expensive. So plan accordingly.
When creating an SEO content marketing strategy, it’s almost impossible to avoid using data about how your competition is achieving results. This is called competitive analysis, and it provides insights into the strategies other businesses are using to reach customers.
Using specialized tools like Ahrefs and Semrush, you can investigate how competitors gain visitors via search engines like Google and Bing. These tools will tell you which keywords competitors are utilizing to gain those clicks, as well as provide actionable insights you can put to work on your website.
A search engine results pages (SERP) analysis of “data driven marketing” from Semrush
Examining competitor data from external sources can provide you with insights into new markets for your products or services. The data you use to find these new avenues can come from tools like Semrush, trade organizations and surveys, as well as government and educational organizations.
Essentially, as you are examining this data, you’ll begin to see demographic patterns. As you are looking at these patterns, you can use this information to create customer personas. Customer personas allow you to craft specific messages speaking to particular concerns of specific segments of your target audience. A HubSpot survey reveals 96% of marketers say personalizing marketing messages increases repeat buyers.
Creating a customer persona is quick and simple.
Tools for Creating Data-driven Marketing Strategies
The tools you utilize to source and examine data largely depends on the kind of data you’re looking for. You might look at the demographics of visitors to your own site. Or you could be conducting competitor research on Semrush or through a government agency’s data. Here are a few of the most common tools you’ll use when exploring the data that can drive your marketing strategy:
Semrush is one of the most popular SEO research platforms that includes billions of data points about websites on the internet. Using Semrush, you can see how customers are finding your competitors, figure out the most advantageous keywords to use on your website, and even get guidance on how much a pay-per-click (PPC) campaign might cost.
When you install Google Analytics on your website, you gain access to a suite of tools that can provide significant details about how your visitors are behaving on your website. Details you can get include bounce rates (the number of users who visit only one page on your website), the time users spend on your site, and the number of pages the average visitor accesses.
Another tool for performing a deep dive into visitor behavior is Microsoft Clarity. As I indicated earlier, Clarity shows you where visitors are engaging on your website, as well as how deeply they’re going into your content. These are just a few of the many measurements Clarity provides that you can use to improve your content marketing strategy, as well as customer experience and engagement.
Managing an email marketing campaign is part of almost all small business advertising efforts. Using tools like Mailchimp or Constant Contact, you can send emails directly to existing and potential customers, conduct A/B tests, and create audience segments. These platforms also collect vast amounts of data—data you can tap to create more effective marketing materials, not just in your email campaigns but beyond.
HubSpot provides dozens of “freemium” tools for small businesses to aggregate and process data as well as improve business operations and increase efficiency. Many tools are free to use with some limitations of features, and you can upgrade to paid plans at any time. Here are just a few of the tools that can assist your data gathering efforts:
- HubSpot CRM: A free-to-use customer relationship management (CRM) software to manage and analyze sales journeys of potential customers
- HubSpot CMS: A website builder that integrates with HubSpot’s CRM, marketing, and operations tools to collect and measure online customer engagement
- Marketing Hub: A marketing automation and planning tool to guide your marketing efforts
There are dozens, even hundreds of other tools you can use, from simple spreadsheet programs like Microsoft Excel or Google Sheets to complex, full-service suites such as Salesforce’s Marketing Cloud. If there is data, chances are there’s a program to analyze it.
How to Build a Data-driven Marketing Strategy for Your Small Business
If your small business is operating in a niche industry with few competitors, your data-driven marketing program may be small—perhaps as simple as a spreadsheet tracking customer ZIP codes. For larger industries, you’ll probably be examining much more complex data, comparing web traffic to demographic patterns across multiple channels, from social media to offline advertising like newspapers and television.
Whatever the size of your industry and business, the steps for creating a new data-driven marketing campaign are relatively straightforward. It’s become very common for businesses to treat data-driven marketing as a key part of how to market a business.
Before you start any marketing campaign, you have to set goals and expectations. Otherwise, how will you know if your marketing efforts are working? Goals should be specific (e.g., increase per-ticket revenue 22%). They should be measurable (e.g., average number of customers per week). They should also be flexible enough that you can modify them as necessary once you’ve analyzed your data.
Take each goal you just set and determine the kinds of data you’ll need to collect in order to measure the effectiveness of your campaign. For example, if your goal is to increase per-ticket revenue, you’ll need to keep track of each sale and a running average of any increases or decreases your sales are seeing. Many point-of-sale (POS) systems can automate data collection of this kind.
Once you’ve collected an actionable amount of data and analyzed it, you can begin to craft your strategy. If, for example, you’re looking at ways to attract new customers, you might examine the demographics of visitors to your website. For example, if you see a significant number of visitors coming from a particular geographic area, you’ll be able to target marketing on social media and pay-per-click (PPC) campaigns to that area.
Armed with your marketing strategy, it’s time to launch your campaign. Place the kinds of ads you’re planning with an eye to targeting the customers you’ve identified. As your campaign unfolds, continue to track performance. Pay close attention to over-performing or under-performing areas of your campaign.
As the data comes in, chances are you’ll notice some messages seem to improve results while others fall flat. Using the data you’re collecting, you can refine your campaign to boost positive messages and revise or eliminate portions of your campaign that aren’t producing results.
These steps may seem somewhat rudimentary, but they provide you with an overview of the data-driven marketing process, regardless of the tool or tools you’re using to collect data. By applying these steps to each segment of your marketing plans, you will quickly see the positive benefits data can have on your small business.
Unique Challenges of Data-driven Marketing for Small Business
In spite of the potential transformative power data-driven marketing has to offer, it’s not without its challenges. In fact, it can be downright daunting to build a campaign that produces accurate assessments and results. Three particular challenges face owners seeking to work data into their marketing plans:
While data is important, it’s not without its costs. Without adequate planning and forethought, you can easily overspend on the tools necessary to source and analyze data. Some platforms charge $500 a month or more for their data analysis tools. Paying special attention to the potential return on investment (ROI) of a tool or data source is just as important as the data it produces.
Not all data sources are created equally. Not only can you face challenges extracting data from your website, customer relationship manager (CRM), or email marketing platform, you can just as easily pull bad data from these and other platforms. For example, you might accidentally pull data that includes figures related to another, adjacent industry. Or you could find a data source that isn’t authoritative. Bad data can lead to mistakes in your advertising efforts. Choose your data sources carefully, and lean on resources like the Small Business Administration (SBA) or Chamber of Commerce.
Just because you can get your hands on the data and subscribe to a tool to analyze it doesn’t mean you’re home free. You still have to learn how to work the tools and to understand the results the tools produce. Data-driven marketing has a steep learning curve you’ll have to overcome to maximize results. Many data tool providers offer tutorials and how-to guides to help navigate the process.
Frequently Asked Questions (FAQs)
A data-driven marketing strategy is a marketing and advertising plan where decisions are made based on quantifiable measurements drawn from sources that produce data. These sources include websites, email marketing platforms, government databases, and trade publications.
Using data to drive a marketing strategy has numerous benefits. Data can increase return on investment (ROI) of marketing dollars. It can improve customer experience and satisfaction. Data can also help business owners attract new customers to their products and services.
Marketing and advertising costs are increasing, and advertising media are becoming increasingly fragmented. Innovations in the way businesses reach customers make data increasingly important because they provide businesses with insights into where their potential customers are spending their time, attention, and money.
Bottom Line
Challenges aside, putting data to work in your small business marketing and advertising can transform how you approach customers. Data-driven marketing strategies can shape your message, change the ways you reach customers, and even attract new customers to your small business. Building a data-driven strategy takes tools, planning, and learning, but the results are well worth the effort.
