Managing data effectively and unearthing insights from it has always been mission-critical for SaaS marketers.
In fact, The Economist, back in 2017, touted “data” as the world’s most valuable resource.
Fast forward to 2023, we can witness how data is revolutionizing marketing. Experts state that worldwide data will reach 175 zettabytes by 2025, creating massive opportunities for marketers to create engaging customer experiences.
According to McKinsey, data alone is ineffectual. The approach to utilizing data is what determines marketing outcomes and revenue.
While numerous frameworks are used to harness the power of data for marketing, the two most common are the data-informed approach and data-driven approach in decision-making - and the difference is not just semantic!
In this post, we will discuss their differences, advantages, and disadvantages. This can help SaaS marketers understand the most appropriate approach - data-driven or data-informed - for generating quantifiable returns for their firms.
So, let’s get started.
Data-Informed vs Data-Driven: Why Bother?
These terms are more than mere buzzwords. Every tech-driven company, be it Google or Apple, made its way to the top by leveraging data. Data guides everything from tracking of fundamental metrics like revenue and burn rate to success metrics. And that’s how successful firms leverage data to guide their decision-making process. They go for data-driven or data-informed in decision-making and gain a competitive advantage.
But the catch is - data never tells the complete story or what you need to do exactly. Hence, it’s important to know whether -
- You want data to guide your decision-making process (data-driven approach) OR
- You want to let data act as a check on your intuition (data-informed approach)
It’s important to understand the difference between data-driven and data-informed decision making and how they can help you build value that resonates with your users.
Let’s dive into the details and understand the difference between data-driven and data-informed approaches to decision making. We will also share data-driven or data-informed examples to clarify how each impacts business decisions and outcomes.
What Is a Data-Driven Marketing Approach?
If you Google data-driven definition, it says - ‘determined by or dependent on the collection or analysis of data.’
In simple terms, data-driven marketing allows marketers to make strategic decisions based on data analysis and interpretation. It leverages data (customer, market, operations, SaaS products) from multiple sources to gain comprehensive insights into customer behavior.
These insights allow marketers to understand their audience's pain points, interests, and needs, thus enabling them to make informed data-driven marketing decisions that impact revenue.
The data-driven approach empowers marketers to track relevant metrics and optimize the campaigns. This significantly minimizes the business risks that might arise from guesswork, incorrect assumptions, and biased opinions.
Here’s an example depicting how a SaaS brand can leverage data-driven marketing.
Scenario: A SaaS brand wants to launch a new product. Their previous SaaS product launched five years back was a bestseller. Presently, this product has gone obsolete.
(The target market’s needs are ever-evolving!)
Plan of Action: The SaaS business should perform target market research and consistently track the audience during the pre-launch, launch, and post-launch phases.
- Pre-launch: The SaaS business must leverage customer demographics data, including the target market’s challenges, interests, needs, age, location, etc. This can help understand the audience’s needs and build a SaaS product that fits the bill.
- Launch and post-launch phase: Marketers can use advanced analytics software with predictive and prescriptive analytics to create successful demand-generation marketing campaigns for the product launch.
- With predictive analytics, marketers can dig deeper into historical and present data of the target market and predict customer behavior.
- Prescriptive analytics can help them take the next-best actions (NBAs) and deliver the best marketing campaigns that attract, engage, and transform prospects into loyal customers.
Moreover, these tools allow marketers to consistently track their performance by monitoring relevant metrics. This helps them make data-driven campaign optimization decisions, thus improving the effectiveness of their efforts.
What Does it Mean to Be Data-Informed?
If you ask me data-informed definition, it’s the marketers’ ability to analyze and leverage data to make decisions. Besides data, marketers use their experience, research, and personal insights to draw apt conclusions.
In short, human intervention + data = data-informed approach!
The key thing to understand here is data alone is not responsible for the outcomes.
For a data-informed approach to making decisions, marketers require -
- Solid systemic thinking,
- Ability to understand complex data
- Awareness of their biases
- Attitude to learn from and accept failures.
Here’s a simple example depicting the data-informed marketing approach.
Scenario: A SaaS campaign isn’t achieving the expected ROI. The firm’s CAC (customer acquisition cost) is rising, and marketers are desperate to understand why and work on the factors negatively impacting it.
Plan of Action: There could be multiple reasons for poor CAC, the most obvious being inappropriate targeting. In this case, SaaS marketers can collect customer data and analyze various aspects -
- How closely does the target audience align with the ideal buyer persona?
- Is the content relevant and helpful to the target audience?
- What’s the weakest link of the failed campaigns? (for example, whether the ad campaign had a poor conversion rate or the targets dropped after a specific email)
- Did you emphasize lead quantity over lead quality?
In data-informed decision-making, marketers can draw conclusions from customer insights, take input from the marketing team, conduct research, and based on all these calculations, they can take steps to improve the CAC.
What Approach Should You Leverage for Your SaaS? Data-informed vs Data-Driven
Ideally, both!
The data-driven marketing approach prioritizes customer data and ensures marketing efforts align with and are relevant to customer interests and behavior. It empowers them to track relevant metrics and make calculated decisions, thus improving campaign performance.
On the other hand, data-informed marketing leverages marketer and stakeholder inputs for meaningful business impact.
Finding a balance between both marketing approaches can help your SaaS company gain a competitive edge.
But if your SaaS marketing team doesn’t have the required bandwidth and can only opt for one, here are their advantages and disadvantages to consider.
Advantages of Data-Driven Marketing
- No human intervention or emotional component is involved in data-driven marketing strategies.
- High-quality, accurate, data-driven strategies can help marketers make profitable decisions.
- It offers insights that create revenue streams while minimizing costs. Marketers can track top-performing channels and tactics and allocate the proper marketing budgets to acquire leads.
- With the correct data (historical and current), SaaS marketers can predict accurate customer behavior (future) and create demand-generation campaigns, pivotal to fostering positive marketing ROI.
- With a data-driven approach, marketers can identify customer needs across various journeys, touchpoints, and operations. They can track relevant metrics to identify improvement areas. This strengthens customer relationships and enhances operations.
No wonder several industry leaders, including Harvard Business School, consider this approach proactive and better than others.
Disadvantages of Data-Driven Marketing
- Implementing data-driven marketing is challenging, especially without accurate data and customer insights.
- Poor data quality can impact the marketing ROI.
Advantages of Data-Informed Marketing
- This approach relies on the marketer’s research and experience along with data.
- When performed right, a data-informed approach can help marketers create unique, innovative strategies to acquire and retain customers.
- It helps marketers build a roadmap to continuous improvement by allowing them to incorporate their inputs.
Disadvantages of Data-Informed Marketing
- Marketers’ and stakeholders’ perspectives can influence decision-making. This often can lead to negative marketing ROI.
- The biased decision-making paired with the complexity of multiple inputs can delay decision-making, thus impacting the campaign outcomes.
Data-Driven versus Data-Informed Summed Up
Here’s a table summarizing both the frameworks involved in using data for decision-making.
Introducing Revlitix: The Advanced Data Analytics Platform That Automates Analytics for You
Now that you have a grasp on the advantages and disadvantages of data-informed and data-driven marketing, you might be wondering: How to determine and implement the better approach for the firm?
Count on Revlitix!
Revlitix is an advanced marketing analytics-equipped revenue marketing platform to empower marketers to create profitable marketing strategies, irrespective of their approach.
This state-of-the-art tool helps stitch and crunch accurate data quickly and efficiently from multiple sources to generate actionable insights and recommendations. Besides, it offers collaborative playbooks packed with built-in next-best actions (NBAs).
Gain quick access to advanced analytics-driven insights (predictive and prescriptive), determine the next-best actions, and solve all marketing surprises - all within seconds.
Whether you are sold out for data-driven, data-informed, or both, Revlitix can be your reliable partner in integrating with top MarTech platforms, automating ad hoc analysis, and maximizing marketing efficiency with collaborative playbooks and built-in Next Best Actions.
Here’s why Revlitix can elevate your marketing analytics game -
- It’s built and vetted by experts with over 15 years of experience.
- It allows you to build relevant, customized marketing ROI dashboards.
- It offers 100+ impressive, pre-designed, drag-and-drop dashboards with a 30-second set-up - No kidding!
- It effortlessly integrates with advanced Martech platforms - Google Ads, Bing Ads, Google Analytics, Hubspot, LinkedIn, Salesforce, and Google Search Console (in only three clicks!) This helps you build strategic marketing campaigns.
- It saves effort, time, and resources involved in coding! Revlitix is a no-code platform! You don’t have to write a single line of code.
- It helps track crucial KPIs like- customer acquisition cost (CAC), customer lifetime value (CLTV), and others. You get the complete freedom to select the KPIs according to the stakeholder’s needs.
So, power your marketing initiatives and ensure high revenue with Revlitix!
The Final Verdict: Which Way to Go - Data-Driven or Data-Informed in Decision-Making?
Data-driven marketing involves leveraging data “as is,” while a data-informed approach incorporates the “human element” to manipulate the decision-making.
Both approaches have their advantages and disadvantages, as shared in this post.
Analyzing the mentioned data-informed and data-driven decision-making examples to weigh the pros and cons combined with the marketing goals can help you determine the apt method for your firm.
Find a balance between the data-driven approach and the data-informed approach to determine your competitive edge. The method you use will be largely determined by the circumstances.
The rule of thumb -
- Use the data-driven approach when you need to make decisions based on quantitative input
- Use the data-informed approach when you need to rely on qualitative input as well
Irrespective of your decision, you will need a reliable data analytics platform like Revlitix to fetch accurate, high-quality data and track relevant metrics to ensure a positive marketing ROI. It can empower your team to spend the majority of time leveraging the data rather than mining it from multiple sources in the first place.
So, steer your marketing efforts toward success with Revlitix!
