Retail and advertising companies are no longer willing to use just their natural intuition to solve their marketing problems. The more effective way to target consumers with brand messages is to use data mining and analysis software to find optimal ways for connecting with potential buyers. This approach is becoming increasingly popular with marketers everywhere, and as such, it's making big money.
According to Clickz.com, data-driven marketing is one of the fastest growing industries in America. Stephanie Miller, vice president of the Direct Marketing Association, says that the sector is tremendously profitable. In 2012 alone, she claims, it added $156 billion in revenue to the U.S. economy, creating more than 675,000 jobs in the process.
The more precise marketers get with their data, the better. By gaining a better understanding of each individual consumer, companies can sharpen their approach to marketing. While the data-driven marketing economy (DDME) has pumped a lot of money into the industry, it's also been enlightening for advertising professionals.
"Individual level consumer data helped marketers optimize expenditure on interactive and direct response marketing, both offline and on," Miller stated. "It reduced inefficiency in matching producers and customers, or increased effectiveness, or both. A second consequence of the DDME was to improve the accountability of marketing investments."
It's vital, though, that companies pay attention to data quality when working with large banks of information. If they're working with consumer data that's dishonest, misspelled, outdated or otherwise inaccurate, companies run the risk of making rash decisions based on misinformation. If they step up their emphasis on quality data, they have the potential to accomplish great things.
Improving existing relationships
Quality data won't just help companies reach new customers - it will also empower them to improve their relationships with the customers they already have. If businesses can take a long look at their most loyal consumers, analyzing when, where, why and how they spend their money, they can offer more personalized service that will surely please these customers. Part of the beauty of customer data is its ability to make already strong relationships even stronger.
Accelerating sales intelligence
Every retail chain out there is looking to reap the benefits of information mining and data analysis, and they're all feeling the competitive pressure to outdo each other. One way a store can get a leg up is to access its information for faster results. If shoppers are purchasing a certain item on a given day or within a given hour, retail companies can access that information instantly and use it to influence their future choices. They need information that's accurate and timely, though.
Adjusting customer service
Companies can improve their customer relationships by examining the ways that people like to get in touch. Some consumers prefer to call their favorite companies over the phone, while others would rather use emails, web chats or communications via their mobile devices. Retail businesses can cater to people's needs by paying closer attention to these various preferences, but only if they're gathering accurate information on their customers' tendencies.
Measuring true value
One key application of marketing data is being able to measure the efficacy of each initiative. Every time a retail company implements a new plan, whether it's a novel sales practice or a reformed approach to customer communications, it should be able to gauge how effective the strategy will be. Ideally, they would be able to measure that effectiveness in dollars - how much does the new practice add to a company's bottom line? Data quality is essential to making this determination. If business leaders are able to gather accurate information about the specific effects of their new strategies, they can make intelligent decisions about the future of their enterprises.