Marketing analytics is the process of tracking and analyzing data from marketing efforts, often to reach a quantitative goal. Insights gleaned from marketing analytics can enable organizations to improve their customer experiences, increase the return on investment (ROI) of marketing efforts, and craft future marketing strategies.
According to a report conducted by PwC, highly data-driven companies are three times more likely than their less data-driven counterparts to see significant improvements in decision-making. Whether you work with marketers or are one yourself, it’s important to be familiar with the basics of marketing analytics and how it can inform your organization’s decisions.
Understanding how to gather, aggregate, and analyze data can enable you to extract useful insights you can use to make a data-informed impact on your organization.
Collecting and analyzing your users’ first-party data can reveal how they feel about their interactions with your product and website. Whether their feelings are explicitly stated (for instance, in a survey) or implicit in their behaviors (for instance, leaving the website shortly after loading the page), having this qualitative and quantitative information can allow your organization to make changes that address their needs and increase the potential for leads to become customers.
Another important function of marketing analytics is calculating monetary gain that can be attributed to specific marketing channels or campaigns. To calculate the return on investment for a specific marketing effort, use the following formula:
ROI = (Net Profit / Cost of Investment) x 100
For example, say you release a video explaining the benefits of your product that costs $1,000 to produce. You track how many people navigate to the product page on your website immediately after watching the video and see that it led to 30 new customers in a given period. If your product costs $50, and each new lead bought one, you can attribute $1,500 of revenue to the video. The net profit, in this case, is $500.
Plugging this into the ROI formula looks like this:
ROI = ($500 / $1,000) x 100
ROI = (0.5) x 100
ROI = 50%
Any time ROI is a positive percentage, the marketing effort—in this case, the video—can be considered profitable. Without data to understand where leads are coming from, calculating the financial impact of specific efforts wouldn’t be possible. ROI calculations can determine which marketing efforts drive the most sales and prove projects’ value.
With knowledge of your customers and the ability to track your marketing efforts’ return on investment, marketing analytics provides an opportunity to create data-driven strategies for your organization.
By analyzing marketing data, you can discover what’s working, what hasn’t worked, and how your customers feel about their experiences with your product and website. You can also get a full picture of the impact that marketing efforts are having on your company.
With that information, you can plan for the future. What should you do more of to reach your quantitative goals? Which effort failed to generate new leads and should be dropped from future plans? Data analytics helps you strategize and answer these kinds of questions.