Paid and organic marketing efforts employed by businesses and brands have similar overarching goals, which include increasing brand awareness, generating leads, and improving the business's bottom line. However, marketing experts often break down these broad goals into easily trackable metrics that can be used to define business success and performance. This is where marketing analytics comes in handy.
Marketing analytics essentially involves tracking and analyzing the outcome of marketing efforts. Insights from marketing analytics help businesses improve their marketing efforts, increase ROI, and improve customer experience. A PWC report found that data-driven companies improve their decision-making three-time compared to less-data-driven businesses.
Whether you are an entrepreneur or part of a marketing team, learning the basics of marketing analytics is vital for business success.
Why is Marketing Analytics Important?
Marketing analytics is important for the following reasons:
1. Improve User Experience
Marketing analytics lets businesses and brands get a first-hand feel of customers' interactions with their products and services. Through surveys and customer behavior, such as leaving your website immediately after loading a webpage, businesses can use clues gathered from marketing analytics to make adjustments that address customer needs and improve conversion.
2. Plan Future Marketing StrategiesMarketing analytics presents an opportunity for businesses to create data-driven marketing strategies. This often proves impossible without knowledge of customer behavior and understanding the return on investment on various previous marketing efforts. Through close marketing data analysis, businesses can identify effective and non-effective marketing efforts.
Understanding customers' experience with your products and services also helps businesses evaluate the impact of their marketing efforts. You can use this information and insights to plan future marketing campaigns and adjust your goals.
3 Calculate Return on Investment on Marketing EffortsMarketing analytics is also important in calculating the monetary gain attributed to specific marketing campaigns. The return on investment (ROI):
ROI = Net Profit / Cost of Campaign x 100
Your marketing efforts are considered profitable if the ROI is of positive value. Without such data, businesses and brands can't understand the source of their leads. Calculating the financial impacts of marketing efforts also becomes impossible. Such calculations help in determining marketing efforts that drive more sales.
Where is the Source of Marketing Analytics Data?
You should collect, organize, and aggregate marketing data to track progress, gain customer insights, and evaluate goals. Customer data can be classified into:
1. First-party data - collected directly from users. It is the most valuable and reliable data that reflects how your customers think, behave, and feel.
2. Second-party data - customer data shared by other organizations about their customers. It is beneficial to businesses that share the same audience or partnerships.
3. Third-party data - data that is sold or rented by third-party organizations. Such data is gathered and kept in cloud storage or other platforms.
Businesses should rely on first-party data because of its reliability and accuracy. First-party data can be collected through:
- Surveys - surveying prospects and current customers can give invaluable insights into your products and services.
- A/B tests involve testing hypotheses by comparing customer interaction with different versions of your products, website, and services. For instance, you can hypothesize that customers will most likely click a blue sign-up button than a red one. You can create an A/B test that subjects half of the website visitors to blue vs. red sign-up buttons and analyze the results.
- Interactions with organic content - tracking organic content, such as blog posts, social media posts, videos, emails, and podcasts, can also yield insights about customer purchasing motivation, stage in the marketing funnel, and preferred content type.
- Paid ads - engagements with paid ads also help in determining customer behavior.
The Bottom Line
Marketing analytics allows businesses to quantify their marketing efforts more than before. Key performance indicators, like the click-through rate, bounce rate, conversion rate, and new vs. returning visitors, are important indicators of marketing success.
