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The data success factor in performance marketing - Part 2

In his 2-part blog article, management consultant Christian Endres explains why data has the power to create a winning momentum for the performance marketing of any company. In the first part of the blog post, you learned how having meaningful data enables marketers to generate more revenue for the same budget. The second part of the article shows the importance of being able to evaluate potential customers effectively.

How well do I know my customer?

Customers have always used different channels to obtain the information they want. In everyday life, customers are constantly exposed to stimuli from radio, TV, backlit billboards and large-format advertising – all designed to influence their purchasing decisions. In order to create greater comparability on the part of suppliers between the channels and consistency between the data silos, the customers themselves and their actions constitute the logical key element. Cookies, logins, Ad-ID, online and offline shopping, shipping addresses, hotline inquiries, pathways and many other factors come into play. These data points must also be coordinated with each other in order to build up a cross-channel picture of the customer.  

In order to visualize customers as accurately as possible, performance marketing also works with personas and segments which are designed to help marketeers put themselves in the position of potential users by means of an extensive description.  This technique helps to improve understanding of how repeat customers differ from impulse buyers, how city dwellers differ from country dwellers, and how single people differ from heads of families.

Measure, analyze and adjust

Once the preparatory work has been completed, the real challenge begins:

  • measuring action and reaction along the entire customer journey,
  • preparing the analysis, and
  • drawing conclusions.

An A/B test will help to check your prepared hypotheses and provide valuable data points from both groups, which can also be evaluated in different scenarios.

With the knowledge gained from this, advertisers can pursue new avenues, measure, analyze and adjust data, and modify their strategies accordingly.  Using this procedure, threshold values will gradually emerge that optimize the setup in detail. Here is an example:

My "Channel X" has a budget of 200,000 euros. Its ratio of new customers (NC) to regular customers (RC) is 40 percent to 60 percent. According to the analyses, 120,000 euros for the RCs are divided 15 percent for impulse buyers, 20 percent for "infrequent buyers", 40 percent for regular buyers and 25 percent for repeat customers. However, analyses reveal that Channel X exerts no influence over impulse buyers or repeat customers. As a result, 48,000 euros – 24 percent of the total budget – can be transferred to more effective customer segments or other channels, thereby increasing its effectiveness.

Depending on the company, sector and market, it may be necessary to include different measuring points and finer details. If you lend less weight to data on new customers on the grounds that their behavior tends to be more active at the beginning and differs too much from that of repeat customers, you should make a conscious decision to do so, or else not segment them at all. Some blurring is inevitable when measuring activity across different devices. After all, tablets are often used by different people.

"Am I deploying my marketing budget wisely?"

Continual measurement, evaluation and adjustment of your data will definitely give you an answer to the question of whether you are using your marketing budget wisely. Thanks to digitalization, marketeers are now able to precisely classify almost every customer behavior or at least, with the aid of attribution models, produce close estimates. This provides the foundation for successful data-driven marketing.

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