In the pursuit of digital transformation, more and more marketing teams are looking to take advantage of what could be their organization’s greatest asset: enterprise data. Spending on data analytics was over $29 billion in 2021, because of a 26% increase from the previous year.
But what is marketing analytics exactly, and what does it have to offer your organization? In this article, we’ll go over everything you need to know. The most important benefits, the best marketing analytics tools and metrics, and the challenges that marketing analytics has to overcome.
What is Marketing Analytics?
Marketing analytics is the use of quantitative methods to analyze marketing data, helping you make smarter data-driven decisions. Thus, the goal of marketing analytics is to:
- Calculate the impact and return on investment (ROI) of various marketing activities.
- Identify new opportunities, channels, and markets before your competitors do.
- Understand the behavior and desires of your customers and prospective customers.
- Monitor trends over time, and predict future results based on historical data.
Operating based on gut feelings is often not a bad way to go. However, it can only get you so far, and it won’t help you find patterns in large data sets. What’s more, key decision-makers such as managers and executives will be reluctant to sign off on a new idea unless you have solid proof of its plausibility.
That’s where marketing analytics comes in. It advances the field of marketing from an art to a science. Marketing analytics removes the guesswork from the equation in favor of evidence-based arguments. As this is so, there are a variety of metrics that can be tracked and analyzed in marketing analytics. These include website traffic, conversion rates, click-through rates, cost per acquisition (CPA), customer lifetime value (CLV), and more.
As a result of tracking these metrics, marketers gain insights into the performance of their marketing campaigns . Marketing analytics can also help marketers to identify opportunities for growth and optimization.
How is Marketing Analytics Accomplished?
How then is this all accomplished? There are many different ways to approach marketing analytics. Most businesses use a combination of qualitative and quantitative data to get a complete picture of their marketing efforts.
To clarify, qualitative data includes things like customer surveys, focus groups, and social media data. This type of data can be very useful in understanding customer sentiment and what motivates them to make a purchase.
Additionally, quantitative data includes things like website traffic data, sales data, and click-through rates. Data like this helps businesses understand which marketing channels are performing well but also which ones need improvement.
Who is Needed to Perform Marketing Analytics?
Consequently, there are a few key players involved in performing marketing analytics:
- Marketing data analyst: responsible for collecting, cleaning and organizing marketing data. They use statistical techniques to analyze data and uncover insights that can be used to improve marketing campaigns.
- Marketing strategist: responsible for developing marketing plans and strategies. They use insights from marketing data to create plans that will optimize campaigns and achieve desired business objectives.
- Marketing manager: responsible for overseeing all aspects of marketing campaigns, including budgeting, execution and measurement. They use data from marketing analytics to make decisions about where to allocate resources and how to optimize campaigns.
4 Benefits of Marketing Analytics
Understanding now what marketing analytics is, how does it benefit you? According to McKinsey & Company, marketing analytics can have enormous impact on organizations of all sizes and industries. A study of 400 companies found that integrated marketing analytics can free 15 to 20 percent of marketing spending. That is a significant impact! So then, what are the details about how marketing analytics benefits you?
1. You get a better understanding your customers
If you want to understand what truly makes your customers tick, marketing analytics can help you get inside their heads (or as close as possible without needing an MRI). Marketing analytics offers a 360-degree view of your customers by collecting as much data as possible, from their first contact with your business to their most recent purchase. Different ways of segmenting your audience, such as behavioral and demographic segmentation, can help you deliver the right messages to the right people.
Organizations that know more about their customers are more likely to keep their customers happy—and do better for themselves as well. According to McKinsey: “Companies that make extensive use of customer analytics are more likely to report outperforming their competitors on key performance metrics, whether profit, sales, sales growth, or return on investment.”
The benefits of customer analytics include:
- Delivering effective, personalized messages that are more likely to convert.
- Increasing customer loyalty, engagement, and positive word of mouth.
- Reducing churn rates and raising customer retention.
2. You start outperforming your competitors
Of course, converting and retaining more customers also means that you’re in a better position to beat your business rivals. Marketing analytics can help you identify emerging trends and ideas before they hit the mainstream, getting the jump on your competitors.
Just as marketing analytics can be applied to your own marketing campaigns, you can also apply it to your competitors. For example, competitor analysis can help reveal your rivals’ strengths and weaknesses, find interesting strategies and campaign ideas, and identify opportunities for poaching customers.
If you don’t keep up with a robust analytics program, then the fate of your business could be at stake. The well-known decline of Kodak, for example, happened after the company made poor strategic decisions and failed to prepare for the rise of digital photography, which competitors like Canon and Nikon embraced.
3. You are able to measure your performance
You might be completely satisfied with the marketing campaign for your latest product, but the real test is how your target audience responds to it. That’s where marketing analytics comes in, collecting people’s reactions and responses due to your marketing efforts through quantitative and qualitative information.
Marketing analytics measures the business impact of your marketing campaigns, so that you know precisely how well each campaign is performing. Selecting the right metrics and KPIs for marketing analytics will be highly rewarding when it comes time to crunch the numbers. Later, we’ll discuss some of the best metrics and KPIs for marketing analytics programs.
4. You can make informed decisions about resource allocation
Even the biggest marketing department has a finite amount of resources at its disposal: employees, budget, technology, etc. But how can you distribute these resources in an optimal way (or as close to optimal as humanly possible)?
Marketing analytics can provide the answer: previous performance should match the current investment. In other words, people and campaigns that have done well in the past should be prioritized when allocating resources for future marketing activities. Companies like Amazon, The Mariott Hotels, Netflix, Mcdonald’s, and Uber Eats are just a few huge companies that are investing in marketing analytics.
What Types of Tools are used in Marketing Analytics?
With the many benefits of marketing analytics come great power and responsibility. To create an effective program, you’ll need a robust suite of tools at your disposal. In this section, we’ll go over 3 types of tools that you should consider adding to your arsenal.
1. Website analytics tools
Website analytics tools are almost as effective as watching over your customers’ shoulders (without being quite as creepy). Event-based analytics tracks people’s clicks and actions as they navigate through your website, helping you understand each customer’s journey from start to finish. For example, when presented with an overlay that advertises a sale on your website, what percentage of customers click through to look at the sale items?
There are a wide variety of website analytics tools, depending on which behaviors and actions you want to measure. Website analytics tools can measure how long customers spend on each page, tell you which search terms they entered to get there, and even generate a “heatmap” of the cursor activity on a specific page, showing which areas customers tend to focus on. Examples of web analytics tools are Google Analytics, Adobe Analytics, Mixpanel, Matomo, StatCounter, and many more.
2. A/B testing tools
A/B testing is an invaluable practice for marketing analytics. During A/B testing, customers are segmented into two or more groups, each of which is presented with a different user experience (unbeknownst to them). By measuring the behavior of each group, you can determine which alternative is most effective for your purposes.
The applications of A/B testing are endless: the text of your headings and calls to action, the website’s design and layout, the logo of your business, and even the color of a particular button. A/B testing is a powerful technique, but you need to use it the right way. For example, the more elements you squeeze into a single test, the harder it will be to understand the motivation for any particular success or failure.
3. Digital marketing analytics tools
The Internet is a big place, especially for marketers. Digital marketing campaigns may comprise a variety of channels: social networks like Facebook, Twitter, YouTube, and Pinterest; search engine optimization (SEO) for Google and other search engines; platforms for display ads and search engine ads; and much more.
Capably dealing with so many channels will require you to master a number of tools for digital marketing analytics. For maximum productivity, the best teams will have to integrate these tools—both with each other, and with other technologies like CRM (customer relationship management) software.
What Can you Measure with Marketing Analytics?
You can have all the data in the world, but it means very little unless you choose the right ways to slice and dice it. Metrics and KPIs (key performance indicators) are the building blocks of marketing analytics. These are measurable values that offer a quantitative assessment of how well you fulfill a specific business objective.
Below, are three metrics and KPIs that you should seriously consider for your own marketing analytics workflow.
1. Clickthrough rate (CTR)
Clickthrough rate (CTR) is one of the easiest metrics to understand: it measures the percentage of people who click on a link, ad, and email. This metric roughly corresponds to the percentage of your audience interested in learning more about your products and services.
Engagement is a category of metrics that measures how much users are interested in, or engaged by, your content. This type of metric is most commonly applied on social networks where people can easily interact with your business. Engagement metrics include:
- The number of users who approve of your content (e.g. likes, favorites, retweets, etc.).
- The percentage of your followers who engage with your content.
- The percentage of viewers who share your content (also known as the virality rate).
3. Website traffic
Website traffic metrics give you more insight into how users behave while visiting your website. The most important website traffic metrics are:
- Traffic sources: Useful for knowing what search terms people enter to find your website and for knowing whether an influential figure has shared your content.
- Bounce rate: The percentage of users who leave your website immediately after viewing a single page.
- Average time on page/on site: Users who tend to linger on your website and on a particular page are more likely to be interested in your content.
- New vs. returning visitors: A large proportion of new visitors is a good sign when you’ve started a new marketing campaign. On the other hand, having a large number of returning visitors likely means that you have a steady base of loyal customers.
Challenges of Marketing Analytics
The marketing analytics landscape is complex and ever-changing, therefore making it a challenge for organizations to keep up with the latest trends and best practices. In addition, there is a lack of skilled analysts who can effectively utilize marketing data to drive business decisions. As a result, many organizations are struggling to fully harness the power of marketing analytics. Here are the main challenges companies are facing:
Lack of skilled analysts
One of the biggest challenges faced by organizations is the lack of skilled analysts who can effectively utilize marketing data to drive business decisions. In many cases, the people who are tasked with managing marketing analytics are not properly trained in the use of analytical tools and techniques.
Complexity of the landscape
The marketing analytics landscape is complex and ever-changing, making it a challenge for organizations to keep up with the latest trends and best practices. There is a vast array of analytical tools and platforms available, each with its own strengths and weaknesses.
Lack of integration
Another challenge faced by organizations is the lack of integration between marketing data and other business data. In many cases, marketing data is isoltated from other types of data, such as customer data, financial data, and operational data.
Poor data quality
One of the biggest hurdles for marketing data is poor data quality. Inaccurate or incomplete data can lead to inaccurate insights and decision-making. There are a number of factors that can contribute to poor data quality, such as incorrect data entry, errors in tracking systems, and duplicate records.
Why Should You Invest in Marketing Analytics?
Marketing analytics is an essential practice for marketing teams and organizations that want to make better use of their enterprise data. By asking the question “What is marketing analytics?”, you’re already ahead of the curve.
If you need help implementing a marketing analytics program for your own business, get in touch with IronFocus today. Let our team of experts help you optimize your marketing funnel and make smarter, data-driven decisions.