Before the advent of modern technology, marketing had gained notoriety for being a cost center. Marketers spent a lot of money on different marketing activities, most of which were virtually untrackable.
Then came Digital Marketing; with the introduction of different marketing analytical tools, marketers can now successfully track most of their marketing activities as well as activities on their website. These Marketing Analytics tools enabled marketers to invest their budgets, efforts, time and other marketing resources wisely to the marketing channels that yielded the maximum Return on Marketing investment (ROI).
What is marketing analytics?
Marketing analytics is the process of tracking and analyzing data from marketing activities, often to reach a quantitative goal. Insights gained from marketing analytics can enable businesses to improve their customer experiences, increase the return on investment (ROI) of marketing efforts, and help craft future marketing strategies.
According to a report conducted by PwC, highly data-driven business are three times more likely to make significant improvement on decision making than company without data.
As a business or a marketer, it’s important to be familiar with the basics of marketing analytics and how it can inform your business decisions.
Benefits of marketing analytics for your business
Understanding how to gather, aggregate, and analyze data from your marketing effort can enable you to extract useful information you can use to make a data-informed decision on your business.
1. Improve the Customer’s Experience
Collecting and analyzing your customer’s data can reveal how your customers are interacting with your product, services and your website.
2. Helps You Calculate and Know Your Return on Marketing Investment
Another importance of marketing analytics is being able to calculate the monetary gain that can be attributed to a specific marketing channels or campaigns.
To calculate the return on marketing investment for a specific marketing effort, use the following formula:
ROI = (Net Profit / Cost of Marketing Investment) x 100
For example, say you release an animated video that explains the benefits of your product, The whole marketing campaign costs you $1500. You then track how many people navigate to the product page on your website immediately after watching the video and seeing that it led to 50 new customers in that given period. If your product costs $50, and each new lead bought one product each, you can attribute $2,500 of revenue to the video. The net profit, in this case, is $1000.
Using the ROI formula looks like this:
ROI = ($1000 / $1,500) x 100
ROI = (0.6) x 100
ROI = 66.6%
Any ROI that has a positive percentage, the marketing effort—in this case, the video—can be considered profitable. Without this data to understand where leads are coming from, calculating the financial impact of a specific marketing effort wouldn’t be possible. ROI calculations can help determine which marketing efforts drive the most sales.
3. Plan Future Marketing Strategies
With the knowledge of your customers and the ability to track your marketing efforts’ return on investment, marketing analytics provides an opportunity for you to create data-driven strategies for your or business or organization.
By analyzing your marketing data, you can discover what’s working, and what’s not. You can also get a full picture of the impact your marketing efforts are having on your company.
Having access to data can enable you to make strategic decisions and feel confident in your marketing efforts.
Want to set up marketing analytics for your business to get adequate data to make data-driven decisions to drive your business growth? Get started here