Marketing analytics: why is it important for your business?
We live in an age in which everything that we do to promote our businesses is inherently measurable. We can track everything from who’s visiting our website to how often people are clicking on our links and whether or not they’re going on to make a purchase.
Digital marketing analytics has gone from being a niche industry to being a default part of every marketing campaign, with the industry predicted to be worth over $10 billion by 2030.
But why is it so important for your business? Let’s take a closer look.
Why Business Analytics is Important
The main reason that business analytics is so important is that it allows you to monitor the direction in which your business is heading. It’s like having a route map as you embark upon a road trip. If you’re taking advantage of business analytics, you can measure the impact that each of your marketing efforts is having.
This is important because it will help you to track whether you’re generating a return on investment (ROI). This is the holy grail for marketers, because it means that they’re making more money from their marketing efforts than they’re spending to generate it.
To calculate your return on investment, there’s a simple formula that you can use: [Total Profit from Marketing Efforts] divided by [Total Spent on Marketing Efforts].
Marketing analytics come in because they provide you with that first figure, allowing you to track how much money you’ve generated from your marketing efforts. Note that you should calculate your ROI using net profit rather than net income, because generating $1 million in net income might not mean much if you’re spending $990,000 on product and distribution costs.
Marketing Analytics as a Decision-Making Tool
Determining a return on investment is by far the most common reason why people turn to marketing analytics, but it’s not the only one. Analytics can also be a super useful decision-making tool because they provide you with insights into the way your business should develop.
For example, ecommerce companies can use analytical data on the searches that people have been running to identify potential gaps in their inventory. If they sell clothing and people keep searching for dressing gowns and not finding any, it can be a sign that they should add dressing gowns to their inventory.
Analytical data can provide all sorts of insights that can help to guide your company. You can start to gather data on your customers, such as the regions that they’re visiting from and the languages that they speak, so that you know where best to create distribution centres or whether to localise your website content into an additional language.
Analytical software is also what powers some of the most powerful tools that marketers have access to, such as customer relationship management (CRM) software. This allows you to then deliver personalised content to every visitor, providing a much more tailored experience and ultimately improving your chances of making a sale.
Analytics is also vital because the technology allows you to carry out testing. With a good analytics platform in place, you can run scientific multivariate tests, which are also called A/B tests and split tests.
We used the word “scientific” deliberately, because that’s exactly what they are. The idea is to change only one thing at a time and to monitor the effect that it has. On a landing page, for example, you could test two different calls-to-action to see which encourages the highest percentage of visitors to convert into leads or customers.
The idea behind doing this is to carry out a campaign of slow but continual improvements, similar to the marginal gains approach that gold medal winning Team GB Cycling coach Dave Brailsford used. Marketers can use this approach to test things, to find out the best performer out of two different variants and then to make that the new default. Once that’s done, it’s time to test something else.
There are Conversion Rate Optimization agencies and contractors that do this type of work and generate tens of thousands of dollars from simple changes and user testing. If your curious to explore this, reach out.
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Analytics are marketers’ secret weapons, allowing them to identify what’s working and what isn’t so that they can better deploy their marketing initiatives. The ultimate goal is to do more of what works and less of what doesn’t so that you’re making the most out of your time and money.
The good news if you’re still struggling to identify the best marketing analytics tools to use is that we can help you out by pairing you up with an analytics agency to help you to get the job done.
We specialise in acting as middlemen, bringing together the best marketing agencies with the people who need their help the most. So if you’re ready to get started with marketing analytics tools, reach out to us today and find out more. We look forward to hearing from you.
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