While data analytics was once simply a “nice to have” advantage that big businesses monopolized, today it’s a universal business essential. Recently, up to 60% of all companies use data and analytics to enhance overall business output.
This includes small businesses, which have been increasingly open to embracing analytics. In fact, since 2020, a whopping 67% of small businesses are embracing data analytics initiatives. On average, it’s even estimated that these small businesses spend about $10,000 annually on this. But while we know that data and analytics can help with inventory, staff performance, and pricing decisions, just how does it play into marketing?
What is data analytics to begin with?
Data analytics is a scientific process of taking raw data and processing it for actionable insights. Using automated techniques, tools, and algorithms, data analytics can help businesses optimize their overall performance and operations.
Data analytics has become so critical among businesses that it has spawned a massive demand for data professionals. According to the US Bureau of Labor Statistics (BLS), graduates of data and research analysis can expect up to a 25% job growth, which is higher than average compared to other occupations. Annually, this creates about 10,200 openings for analysts, most of which come from business sectors. As a result of this, educational institutions are adjusting their offerings to meet the need for more data analysts. This is why higher education curriculums for data science programs cover essentials like data mining, deep learning, predictive modeling, data visualization, and price analysis. Not only does this create enough talent to satisfy the need for analysts, but also ensures that all graduates will be valuable to essential industries like marketing and bustling sectors like the start-up community.
Within marketing, data analysts can process data that will illuminate the best course of action for revenue, growth, and consumer expectations. Usually, this is done in regard to the release of a new product or service. However, data analytics in marketing is also best done on a regular basis regardless of whether something new is launching or not. In this way, businesses will always have an accurate pulse on their output.
What are the benefits of data analytics in marketing?
Rather than spending large sums of money on a blanket approach, data analytics in marketing helps you hone in on campaigns that are more sophisticated, streamlined, and relevant to your target market.
Because data analysis usually focuses on purchase trends, point-of-sale transactions, and consumer habits, campaigns can be designed and delivered in a manner most appealing to your customers. This can come in the form of customized ads and personalized shopping experiences that make your campaign much more meaningful.
Since a targeted campaign is also more likely to be well-received, this means that your marketing effort may even bring in new customers.
Effective marketing is not just about selling a product or service. Rather, it’s also about creating a reliable and recognizable name for your business. After all, consumers tend to engage in transactions with brand they’re aware of and have an affinity for.
With data-driven marketing, businesses can determine and share the most effective customer-specific content to improve brand recall. A study on retailers has shown that brand recognition can increase annually by up to 2.7% with data analytics. For small businesses, brand awareness can secure long-term sustainability and growth.
Understanding what your competitors are doing is one way of advancing your own efforts. Not to be confused with espionage, competitor analysis refers to a deep dive into your major competitors’ products, marketing tactics, plus their fails and successes. With this information, you can gain valuable intelligence that will help you avoid similar mistakes, make use of effective strategies, and create critical differentiating factors.
Among small businesses that are often vying for the same consumer pool, having a competitor analysis can ensure that your marketing efforts will be more appealing. This will help encourage customer loyalty and retention. The phenomenon known as “The Loyalty Effect” indicates that even a 5% rise in customer retention can equate to a profit increase of 25% to 100%.
How can small businesses start using data analytics?
Determine your goals.
First, you need to identify what marketing goals your data should be working towards. This can be done either by pinpointing problems that need solving or milestones that need reaching. For instance, during the height of the COVID-19 pandemic, small business surveys stated that 47% used data to improve customer interactions, while another 50% used it to improve sales. By similarly finding specific instances in which your data can add value, insights gathered will be much more relevant.
Clean existing data.
On average, small to medium-sized businesses manage around 78 terabytes of data. Every 12 to 18 months, this is expected to grow by another 50%. That said, unless you’ve been practicing strict data hygiene, your data is probably “dirty.” If this dirty data is used for analysis, it may cause inaccuracies. Consequently, before you start any data analysis, make sure to clean your data in-house or with a data expert. This will ensure that the data you process is updated and timely.
Collect, categorize, and process your data.
Finally, present the data to your partner firm. Although many small businesses like to keep operations in-house, data analytics is better left to the professionals who have the experience and tech to maximize it. Once your data is with your selected firm, complement this by improving how data is presented internally, too. In this way, the insights you get from your firm can better improve data-driven decisions. This means making data more accessible, understandable, and applicable. By doing so, you’re taking full advantage of the data analytics you’ve gathered, and your marketing tactics will be better guided.
Because data analysis is quite sophisticated, it’s not always the easiest initiative for small businesses to adopt. However, once you’ve familiarized yourself with the best way to utilize it, data analysis in marketing can be one of the best investments.