Data-driven marketing vs. conventional marketing

Chapter 1

Essentials of Data-driven Marketing

In order to thoroughly elaborate the effect and the importance of the data-driven marketing and decision making, here are a few stunning examples that has revolutionized giant corporations’ styles:

1.?????Nike

Given the competitive field of sportswear, Nike took in time and assertive decision to propel toward a data driven promotional model, in a way that avoided to use outsource services or to develop a in house team with required expertise. Nike went further and acquired Zodiac Inc. in 2018, which happened to one of the momentous data analytics organizations of the time. The day that this merger took place, the vice president and chief digital officer of NIKE (Adam Sussman) stated publicly:?

“We’re adding world-class data-science talent and best-in-class tools to power 1:1 relationships with consumers through digital and physical consumer experiences.”

What has Zodiac brought to NIKE that the act of its acquisition, deserved such admiration and attention?

Today there is not much information that NIKE has missed about their customers, while it might seem petrifying for the public, but this quality insight, has facilitated the journey of the sportswear giant toward transformation and data-oriented marketing.

NIKE’s initiative to boost direct sales to customer, named “NIKE DRIECT”, alongside the conventional retail model and wholesalers, generated 10 billion USD extra sales revenue during 2018 only. This figure is projected to grow significantly, through enhanced collection, treatment and analysis of captured further in-depth data, with the purpose improved understanding of the customers behavior and proper segmentation.

For instance, the Nike application, offers users a “Nike plus” rewards programs for a special segment of the members, enabling them to access new launched commodities prior to others and engages them to the events, with priority.

Then there are things like the “Nike Training Club” and “Nike Run Club” apps, which track workout and running statistics and provide users with audio guides during training sessions. The added value that these innovations bring to the customer experience extends, enriches and deepens Nike's relationships with its customers and encourages them to buy directly from NIKE.?

1.?????Netflix

Is the pioneer in using data captured from users’ habits or behaviors, to feed a recommendation model.

Netflix goes far beyond that in terms of harnessing the power of data.

Netflix executives have publicly declared that the success of their 2013 hit “House of Cards”, was due to a series of crucial decisions based on data analytics. Netflix algorithms indicated that the series was likely to be popular with Netflix subscribers based on: the subject matter, the success of the original British television series among a similar demographic, and the appeal of Spacey and Fincher.

According to New York Times, company executives offered actor Kevin Spacey and director David Fincher contracts without even watching a pilot.

Now that the prominent role of data-driven decisions?seems to be evident, lets see what are the essential metrics to be applied;

1. Brand awareness

2. Test-drive

3. Churn

4. Customer satisfaction (CSAT)

5. Take rate

6. Profit

7. Net present value (NPV)

8. Internal rate of return (IRR)

9. Payback

10. Customer lifetime value (CLTV)

11. Cost per click (CPC)

12. Transaction conversion rate (TCR)

13. Return on ad cost spent (ROA)

14. Bounce rate

15. Word of mouth (WOM) (social media reach)

By looking at these metrics, the first ten items have been already practiced in classical or conventional marketing model.

In the following chapters, all the items will be discussed in details and the cultural, infrastructural and human capital requirements will be briefly broached, for the transformative voyage toward data orientation mindset. ?

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