Marketing analytics is the use of customer, competitor, and industry data to make smarter decisions for your marketing team. This brings with it a variety of benefits. According to the management consulting firm McKinsey & Company, “an integrated analytics approach can free up some 15 to 20 percent of marketing spending.”
Our other article “What is Marketing Analytics?” gave an overview of the field of marketing analytics as it’s applied in organizations today. However, we offered just a cursory look at how marketing analytics actually works. Also, look here if you are interested in the best marketing analytics tools.
In this post, we’ll dive deeper into some of the best marketing analytics techniques. By the end, you’ll have a much better understanding of how to construct your marketing analytics workflow.
1. Marketing mix modeling
Marketing mix modeling (also known as media mix modeling or MMM) is a marketing analytics technique that uses big data and statistical analysis to assess the performance of your marketing campaigns across different channels.
MMM uses a statistical technique known as multiple linear regression, which seeks to find a relationship between a dependent variable and two more or independent variables. In MMM, the dependent variable is the volume of sales (or some other performance metric), and the independent variables represent different elements of a marketing campaign.
In particular, MMM is concerned with four different types of factors, known as the “four Ps”:
- Product: The selling points and benefits of the product or service itself.
- Price: The price point at which the product is offered, as well as any discounts or promotions.
- Promotion: The method(s) by which the product was promoted, including special offers, email newsletters, and social media campaigns.
- Place: The channel(s) in which the product is marketed and sold (e.g. online, in stores, by mail).
2. Demand forecasting
Demand forecasting is a marketing analytics technique that attempts to predict future demand for a product or service, based on historical sales data or market analysis. The most common form of demand forecasting is time series analysis, which examines past sales in order to identify cycles and trends that are likely to reoccur in the future.
While it’s important for all parts of the business, demand forecasting is particularly important for your marketing team. By making more accurate forecasts, you can better plan your future marketing campaigns. For example, determining the best time to launch a new product, or holding sales during times of sluggish demand.
3. Competitor analytics
Regardless of your own marketing strategies, it’s always a smart idea to keep an eye on your competition. The goal of competitor analytics is to obtain more accurate information about your business rivals’ internal operations.
Competitor analytics is a marketing analytics technique that can help you answer questions such as:
- What is the unique value proposition of our products and services that differentiates them from those of our competitors?
- What are the strengths and weaknesses of our competitors’ products? Can we take advantage of these weaknesses to attract customers away from them?
- Are there any markets, customer segments, or product categories that are currently underserved by our competitors? Can we distinguish ourselves by entering these new markets?
- How successful was our competitor’s previous marketing campaign? Can we replicate any elements in our own campaigns?
4. Unmet needs analytics
Unmet needs analytics is a marketing analytics technique that’s complementary to competitor analytics. Rather than trying to find the fatal weaknesses of your competitors, unmet needs analytics seeks to find weaknesses in your own products and marketing strategies.
There are a variety of ways to perform unmet needs analytics, including:
- Data from customer support and technical support. These records can help you identify customers’ most common complaints, requests, and issues, which you can potentially use to build a better product.
- Interviews with the sales team. Your sales representatives have a great deal of insight about the behaviors and motivations of your target audience. This may include the reasons why some prospective customers are reluctant or unwilling to purchase your products, or what attracts them to your competitors.
- Focus groups and customer interviews. Sitting down face-to-face with your customers gives you information straight from the horse’s mouth: what problems they face, how they choose a solution, and what features they’d like to see. Skilled interviewers can even tease out subconscious thoughts that your customers weren’t aware of.
5. Pricing analytics
Pricing analytics is a marketing analytics technique that measures the effectiveness of your pricing strategy and seeks to calculate the optimal prices for your products and services.
The successful application of pricing analytics can dramatically improve your company’s profitability and market share. According to Deloitte, pricing analytics can increase profit margins by 2 to 7 percent in just 12 months, with an ROI above 200 percent.
Setting the optimal prices for your products depends on a variety of interlocking factors: the price sensitivity of your customers and prospective customers, your competitors’ pricing strategies, and broader economic conditions, just to name a few.
6. Market size analytics
If your pricing analytics results aren’t turning into profitability, there may not be a sufficient market for your products and services. To prevent this issue in the first place, there’s market size analytics: a marketing analytics technique that examines the plausibility of a given business model.
Market size analytics looks at factors such as:
- The number of customers who would be interested in your business.
- The potential demand for your business proposition, as measured in the number of units sold, the total value of all sales, or the sales frequency.
- The status of competitors and potential competitors in the market.
- The growth potential for your business model.
By applying market size analytics, you can successfully identify the most promising areas for future expansion—or save yourself an expensive investment that won’t pan out in reality.
7. Trend analytics
Trend analytics is a marketing analytics technique that aims to determine whether a given market trend is rising, flat, or declining in popularity. For example, putting all your marketing efforts into starting a new fidget spinner product line is probably inadvisable at this stage—the trend has likely already peaked several years ago.
Knowing the direction of your market trends is important to avoid stagnation and foolhardy investments. On the other hand, identifying a stagnant trend can be a good thing. If you have a new innovation that you believe will disrupt and shake up the market.
Trend analytics relies on historical market and sales data as well as competitor analysis. You can also run small experiments and proofs of concept to determine whether your idea is viable in the current market.
8. Brand analytics
Your brand may be your company’s most precious asset. Which is why you need to make sure that it’s as strong and recognizable as possible. Brand analytics is a marketing analytics technique that compares your brand with those of your immediate competitors. In terms of factors such as profitability, recognition, values, perceived quality, and customer loyalty.
The best way to perform brand analytics is by speaking with the people who are the ultimate arbiters of your brand. Your customers and potential customers. You can conduct sit-down interviews, or look at what people are saying on discussion forums, review sites, and social media.
Final Thoughts on Marketing Analytics
The marketing analytics techniques in this article have all helped companies become more profitable and productive while running better marketing campaigns. If you need help implementing any of the marketing analytics techniques discussed above, get in touch with IronFocus today. Our skilled, experienced team of marketing experts can help you get more from your marketing campaigns through smarter data-driven decision-making.