Marketing data analytics models have become crucial in the modern business landscape, where data plays a vital role in decision-making. The rise of digital marketing channels and the increasing availability and complexity of customer data have paved the way for the development of sophisticated data modeling techniques.
In this blog, we’ll explain what marketing data analytics models are, and how they can help marketers to optimize their campaigns, and gain a competitive edge. Let’s start by defining what data modeling is.
What is data modeling?
Data modeling is the process of creating a structured representation of data to understand relationships, attributes, and rules for effective analysis and management. Data modeling involves creating mathematical or statistical representations of marketing data to uncover patterns, relationships, and trends.
These models can be built using various techniques which we can split into supervised and unsupervised learning.
Supervised learning: this covers analysis that has a goal in mind you want to predict and includes:
- Regression analysis
- Predictive analytics
- Machine learning
Unsupervised learning: this covers analysis that explores data and includes:
- Topic modeling
What are marketing data analytics models?
A marketing data analytics model is a framework used to analyze and interpret marketing data to gain insights and make informed decisions. It involves collecting, organizing, and analyzing data to understand customer behavior, trends, and preferences, enabling businesses to optimize their marketing strategies and improve overall performance.
Why should marketing data analytics models matter to marketers?
The rise of digital marketing channels, social media, eCommerce platforms, and advanced analytics tools provided marketers with a wealth of data that needed to be harnessed for meaningful insights. Leveraging data models for marketing analytics purposes is a powerful way of structuring, analyzing, and deriving valuable insights from this vast amount of data.
The outcomes that data modeling aims to achieve are versatile. Firstly, it helps in understanding customer preferences and segmentation, enabling businesses to tailor their marketing efforts to specific target audiences. Data modeling also aids in predicting customer behavior, such as purchasing patterns or churn rates, allowing companies to proactively respond and optimize their strategies. Data modeling also allows marketers to map and analyze the customer journey, identifying touchpoints, pain points, and opportunities for engagement.
Additionally, it helps in assessing the impact of marketing initiatives and allocating resources effectively. By analyzing historical data and running simulations, businesses can make data-driven decisions, optimize marketing budgets and forecast future outcomes. These are just a few examples of what outcomes data modeling might aim to achieve within the marketing spectrum.
What types of marketing data analytics models can marketers use?
There are lots of different models that marketers can use to optimize marketing activities, and each business is going to have a unique set of needs to consider when deciding what combination of data models will work best for them. Here are a few common types of marketing data analytics models, along with an example of the kind of question they can help marketers to answer:
Customer Lifetime Value (CLV) models
Category: Predictive modeling / regression analysis
Explanation: These models use regression-based models to predict the potential value a customer may generate over their entire relationship with a company. Marketers can use CLV models to identify high-value customers and tailor their marketing strategies accordingly.
Example: Identifying customers that have a high likelihood of making repeat purchases to offer them exclusive loyalty rewards to increase their long-time-value.
Time Series Analysis
Category: Predictive modeling
Explanation: This model analyzes data over time to identify patterns, trends, and seasonality. Marketers can leverage time series analysis in tandem with Marketing Mix Modeling (MMM) or Multi-Touch Attribution (MTA) to forecast sales, demand, or website traffic, enabling effective resource planning and campaign optimization.
Example: Identifying how much budget I should allocate for Q4.
Category: Machine learning
Explanation: Recommendation systems use machine learning algorithms like collaborative or content-based filtering to provide personalized recommendations to users, suggesting products, content, or services based on their preferences and behavior. A subset of this is Market Basket Analysis, which analyzes the relationships between products or services which are frequently purchased together. Marketers can use market basket analysis to identify cross-selling or upselling opportunities, personalize recommendations, and optimize product bundling strategies.
Examples: An online book retailer suggesting books based on a user's past purchases and genre preferences.
Identifying product bundle promotions that are most likely to increase the overall order amount.
Lead Scoring / Churn Prediction Models
Category: Machine learning / predictive modeling / Likelihood of X
Explanation: Lead scoring models can involve various machine learning algorithms, such as logistic regression, decision trees, random forests, support vector machines (SVM), or neural networks to assign scores to potential leads based on various factors, such as demographic information, online behavior, and engagement level. Marketers can prioritize leads with higher scores and focus their efforts on those with the highest conversion potential. Similarly, churn prediction models forecast the likelihood of customers leaving or discontinuing their relationship with a company. Marketers can use these models to proactively intervene and retain customers at risk of churning.
Examples: Identifying the most promising leads by using a lead scoring model to assign scores to leads based on their job title, company size, and level of engagement with marketing content.
Identifying customers that are likely to end a subscription and offer them personalized discounts or incentives to encourage them to stay.
Explanation: Segmentation models use clustering models like k-means clustering or DBSCAN (Density-Based Spatial Clustering of Applications with Noise) and group customers into distinct segments based on shared characteristics or behaviors. This helps marketers tailor their marketing strategies to specific customer groups, delivering more relevant and personalized campaigns.
Example: Identifying which ad creative creates the most conversions for people aged 18-25.
These are just a few examples of the various data analytics models that marketers can use to analyze marketing data, gain insights, and make data-driven decisions. The choice of model depends on the specific objectives, available data, and the nature of the marketing challenge at hand.
What are the benefits of marketing data analytics models?
As you may have already guessed, there are lots of benefits that can be gained from data modeling. The main ones include:
- Data-driven decision-making: Data models enable marketers to make informed decisions based on objective insights and evidence, reducing reliance on assumptions or guesswork.
- Improved marketing ROI: By identifying the most effective marketing channels, campaigns, or strategies, data modeling helps optimize marketing spend and maximize return on investment.
- Enhanced customer understanding: Data models provide insights into customer behavior, preferences, and segmentation, allowing marketers to deliver more targeted and personalized marketing initiatives.
- Proactive customer retention: Predictive models help identify customers at risk of churn, enabling proactive retention strategies to retain valuable customers.
- Campaign optimization: Data modeling enables marketers to test and optimize marketing campaigns, messaging, and creative elements, leading to more effective and engaging marketing initiatives.
- Competitive advantage: Leveraging data models gives marketers a competitive edge by enabling them to uncover market trends, consumer insights, and emerging opportunities before competitors.
- Improved customer experience: By understanding the customer journey and analyzing customer feedback, data modeling helps identify pain points and opportunities to enhance the overall customer experience.
- Strategic planning: Data models provide valuable insights for long-term strategic planning, enabling marketers to align their marketing goals with broader business objectives and drive sustainable growth.
By harnessing the power of data modeling, marketers can unlock actionable insights, drive marketing effectiveness, and build stronger customer relationships.
In summary, marketing data analytics models empower marketers to make data-driven decisions, optimize marketing efforts, enhance customer engagement, and achieve measurable results.
By leveraging these models, marketers can gain a competitive edge, drive growth, and foster long-term customer relationships.