Phil Lauterjung

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Why Should You Care About Data Driven Marketing?

November 10th, 2009 |

Author: Phil Lauterjung

Whenever I come across a new study or research report the first question I usually ask myself is why should I care? Is there something I can learn or use that will help me? I think most people have the same attitude. At least I hope so, otherwise I’m not as normal as I think I am.

So when I came across a new white paper by the Aberdeen Group called Data Driven Marketing I approached it with the same level of skepticism. I already know that marketing is important and that data can help make intelligent decisions. Right away I’m thinking that this looks like another wonkish rendering of what should really be common knowledge. Quality data drives effective marketing – end of story.

I decided to skim through it to see if they had any meaningful insights, or just a lot of data to support using even more data. If you’re familiar with Aberdeen they use a similar format for all of their studies. They break down about 200+ companies (small, medium, and large) into what they call Best-in-Class, Industry Average, and Laggards. I don’t know about you, but I wouldn’t want to be known as a laggard at anything. Of course it is all data driven.

On page 17 there was a chart that stopped me cold. It compared the performance of the companies in respect to their use of data driven marketing. The difference was staggering! In fact that was the word they used – staggering. Given that these are researchers not prone to hyperbole the use of that word was very unusual.

The growth in revenue experienced by the Best-in-Class (BIC) companies was 63%, by Industry Average companies it was 12%, and by Laggards it must have been pretty bad because they had a typo that equaled the BICs. When I give you additional stats you will see why that had to be a typo.

In the area most companies are interested in – growth in customer profitability – BIC companies had an increase of 13%, Industry Average companies had an increase of 1%, and Laggards had a decrease of 12%.

In terms of customer acquisition, BIC companies showed an annual increase of 12%, Industry Average companies an increase of 1%, and Laggards a decrease of 13%.

The other statistic that was very interesting was Best-in-Class companies increased their marketing spend by 5% in 2009, and the Laggards decreased their spend by 10%. It would seem to be very clear that decreasing marketing during a recession is not a good idea.

Keep in mind that these aren’t a bunch of large companies with huge marketing budgets and staff to support that. The total number of companies surveyed was 272. Of those 19% were considered to be large companies (over $1 billion in annual revenue), 25% were mid-sized ($50 million to $1 billion), and 56% were small companies ($50 million or less).

Tomorrow I’ll post some of the researchers suggestions as to what Laggards and Average companies can do to improve.