Digital marketing makes business decisions more scientific

Digital marketing refers to a marketing method that uses the Internet, computer communication technology and digital interactive media to achieve marketing goals. The author of this article starts from the basic concept of marketing digitalization, analyzes and explains its specific standards and decision-making models, and shares them with everyone.

"Humanity is moving from the IT era to the DT era!" Since Mr. Ma said this in public in 2014, many people are no longer unfamiliar with concepts such as "big data and digitalization."

The emergence of the epidemic this year has allowed us to see many digital business applications and rapid development. For example, the use of digital technology and equipment in medical diagnosis and treatment allows patients to enjoy expert diagnosis and treatment at home.

"In the future, digitalization will become the basic infrastructure of business, just like electricity and the Internet" - this is not a fantasy, but a trend that has already become popular or is gradually becoming popular. It’s not about whether you want to digitize or not, but that you may not be able to survive without digitization in the future, just like electricity and the Internet now, it is almost impossible to survive without them.

Technology is the greatest productivity, productivity changes production relations, and digitalization is the greatest productivity in the next few years.

Seeing this, you may argue that the company I work for is very traditional and I don’t see any crisis or survival issues…

It's like when a flood comes, some people who prepare in advance will run to another high ground and develop happily, some people will not be flooded temporarily because they have occupied a hilltop (for example, some companies monopolize certain advantageous resources), and the rest who are not prepared and have no special advantages will only be drowned.

Maybe, the flood has not completely reached your home yet.

We might as well understand and prepare in advance.

1. So, what is digitalization? Why go digital?

Some people think that digitalization is achieved when a device is connected to the Internet and collects some user data.

In fact, the true digitalization of an enterprise is not just about technology , but also about a real change in thinking, and learning to use digitalization to improve the operational efficiency of your own business and achieve better growth - this is also the role of digitalization.

Whether digital technology can be used to truly improve business operating efficiency is the core of determining whether true digitalization can be achieved. Some people have used a lot of digital technologies, but they have reduced and increased the costs of the business without adding much value. It is worse than using the original method.

But when everyone learns to use digitalization to empower their own businesses, efficiency will be improved. If you remain stagnant, your competitiveness will naturally decline, and being eliminated is only a matter of time.

Digitalization involves many aspects in business, and here I will only talk about digitalization in marketing. If we look at the indicators alone, according to the book Marketing Strategy in the Digital Age, true marketing digitalization needs to meet at least the following five criteria:

1. Connection

Connectivity is the essence of the Internet and the digital age. Without connectivity, there is no digitalization.

Connecting what? In the traditional Internet era, connections were between people and between people and services. But in the era of mobile Internet and digitalization, connections have gone beyond the simple connections between people and people, and people and services, and have also integrated factors such as connections between people and offline, and online and offline. The future may even be an era of the Internet of Everything.

For example, if you go to Alibaba’s Hema Fresh to shop, you can feel the comprehensive connection and experience between online and offline, people and products.

2. Bit-consumer

Bit is the abbreviation of binary digit, which is the smallest unit of information. Consumer bitization is to record and track consumer behavior and convert it into accurate visual data, so as to better grasp consumer dynamics and make more effective marketing decisions.

Many retail stores have begun to transform and upgrade to "bitumenize consumers and consumer behaviors." Take Prada's retail stores as an example. They have already affixed new barcode labels equipped with sensors on all clothes.

With the new barcode labels, information about each piece of clothing picked up, put down or tried on by consumers will be accurately recorded and transmitted to the backend management system. In this way, data such as how many pieces of clothing are tried on and even how many times the clothing is picked up and put down can be analyzed to provide precise direction for the clothing company's next product development, design or purchasing.

3. Data talking

Some say data is the "oil" of the future, and this is not an exaggeration.

Data is the foundation of digitalization. Without data, everything is empty talk. Just like “A good cook cannot cook without rice”.

Only with data can we better understand users and achieve more business growth. This is also the important reason why the first requirement of Alibaba and other platforms when acquiring a company is to be able to use its data unconditionally.

4. Engagement

In the past, once a product was produced, it would sell without any worries and there was no need for consumer participation. In this era of oversupply, there is an overflow of goods. If you do not pay attention to consumer demand and participation and feedback, it will be difficult to sell your products.

Moreover, the cost of involving consumers in the business decision-making chain is getting lower and lower, and consumer participation is more important. For example, Wikipedia is a process in which users participate in editing.

5. Dynamic Improvement

In the past, if you wanted to improve a product, the entire cycle from collecting customer feedback to providing feedback to the factory would take more than a year. In today's rapidly changing environment, this feedback cycle is too long.

Today’s consumer data is updated very quickly, and demands are constantly changing. Enterprises also need to adapt quickly to changes, provide rapid feedback and iteration, and make dynamic improvements in order to keep up with the ever-changing world. Moreover, with the popularization of various technologies, the cost of achieving dynamic improvements is becoming lower and lower. The key is a timely change in thinking.

For example, when Xiaomi was founded in 2010, it changed the update frequency of its mobile operating system to once a week. Although this was a somewhat "abnormal" approach at the time, it achieved dynamic improvement based on user feedback, making the product truly user-centric.

To sum up, if we want to achieve comprehensive digitalization, we must use mobile Internet, the Internet of Things, etc. to realize the interconnection of all things between people, people and things, and things and things, and achieve high connectivity such as "instant connection" and "continuous connection"; and be able to track changes in user behavior data at any time, let data speak for each link, and realize user participation in the connection to achieve dynamic improvement of the enterprise.

Current e-commerce is a typical example of comprehensive digitalization, because customers can form comprehensive digital operations that meet the above five standards from purchase to ordering and browsing to logistics, to receipt and subsequent feedback and evaluation.

Because all the behaviors of users in online shopping can be digitized, companies can also monitor each link in real time and make dynamic improvements (your browsing on the platform, the time you stay on each interface, collections, comments, purchases, etc. have been digitized)

However, it is still difficult for most companies to meet the above five standards. This is due to obstacles such as technology costs, changes in thinking, management models and corporate inertia.

My personal opinion is that we should not digitize for the sake of digitization. We must understand that the essential purpose of digitization is to improve operational efficiency.

So if we cannot meet the above standards at present, we can partially achieve or make full use of digital thinking to optimize our business operating efficiency and marketing decision-making efficiency.

2. Decision-making Model for Digital Marketing

Numbers serve marketing, not marketing serves numbers.

The purpose of digital marketing is to use digital technology and thinking to better understand and retain users, thereby better achieving goals such as product sales growth.

Before sharing the marketing digital decision-making model, we need to understand the difference between digital decision-making and traditional marketing decision-making models.

According to the viewpoint in the book "The Age of Big Data", the era of big data has brought great impact on human thinking. The most important of these is: using correlation rather than causality to understand the world, and knowing "what" is more effective than "why" to solve problems.

The main purpose of traditional marketing teams in conducting consumer insights is to find out the reasons behind consumer behavior, that is, why they buy or do not buy a certain brand of products or services, why they like or dislike them, and what kind of concepts or attitudes consumers base their decisions on. Such causal inferences will become an important basis for our marketing decisions.

Consumer portraits based on big data are more about correlation analysis, discovering implicit correlations in massive data, which provides us with a new path for consumer insight and decision-making.

Okay, now let’s introduce how to make digital marketing decisions. I have summarized a "digital marketing decision-making model". The key is to understand the thinking mode behind this decision-making model.

This model mainly consists of two modules. One is the user portrait module on the left, which forms a user portrait based on data collection, data mining, data modeling and verification steps. The other is the “Marketing Strategy and 4P” module on the right.

The "user purchasing behavior" in the middle is the key connection point between the two modules. Without the previous user portrait, it is difficult to predict the user's purchasing behavior. After predicting the user's purchasing behavior, it will be more effective to formulate marketing strategies and measures.

Let's expand on this:

1. “Digital” User Portrait

Understanding users essentially means understanding their profiles.

User portraits are like mirrors, reflecting the user's virtual image. The closer this virtual mirror is to the user's actual situation, the more accurately it can predict the user's needs and behavioral motivations, and thus formulate more effective marketing strategies and measures.

The digital user portrait I am talking about here is different from the ordinary user portrait.

In digital user portraits, it is necessary to restore the various characteristics and trajectories of consumers through various tags according to big data calculations, and to put consumers into context and connect the manifestations of these characteristics. In this way, the marketing strategy can be both accurate in data and effectively cut into the consumer's life trajectory.

(Comparison between ordinary user portraits and digital user portraits)

(Source: KMG Research)

There are four steps to forming a digital user portrait:

First: Data Collection

First, find the appropriate data source based on the company's strategic needs and business goals. For example, user consumption behavior data, third-party data, CRM data, etc., and then collect data.

Second: Data Mining

Processing based on the collected data may include the following actions:

• Data cleaning – removing duplicate or incomplete data.
• User identification - Determine the uniqueness of multiple user IDs. Because the same person may have ID accounts from different channels.
• Data classification - divided into user attribute data (gender, age, city, etc.) and user behavior data.
• Establish a label and weight system - labeling is the process of classifying, refining and summarizing the significance of people, objects, events or scenes, because labeling is an important prerequisite for precision marketing analysis; and weight is a quantification of degree or probability, indicating the user's preference for a certain behavior, probability or the weight of the same action at different locations and times.

Third: Data Modeling

Use association rules, clustering, logistic regression and other methods to analyze various data and find the correlation between the data. Then the rule summary and correlation logic are used for modeling.

For example, if you are selling facial masks, you can analyze your target users to find out through which channels and when they are more likely to place orders for your products, and then develop more marketing promotion activities based on this model.

Fourth: Verification

The above data model is verified to ensure that the model accurately captures the user's characteristics and reduces the bias of the model.

For example, if you run a restaurant and find that desserts sell best on Saturdays (maybe there are more children on weekends), you can prepare the inventory of desserts for every Saturday in advance based on this discovery. Then, if we verify that this is the case, we can formulate relevant measures.

Finally, based on verification, some accidental related findings or data that do not accurately reflect the facts are eliminated, and the remaining model is used to form a user portrait. Such user portraits will not have too much deviation when applied to the company's marketing decisions.

The next step is to predict the user’s demand motivation and purchasing behavior based on the user portrait’s labels and models, and the last step is the “Marketing Strategy Decision and 4P” module.

2. Marketing strategy and 4P changes

User portrait is only a reference for decision-making, but the marketing decision-making process requires the use of various marketing thinking and consideration of various comprehensive factors to make marketing strategy decisions and related measures. Among them, in the classic marketing 4Ps, the digital 4Ps may change to "dynamic and interactive", which are the characteristics of "dynamic improvement" and "participation" mentioned earlier.

(1) Product:

In the digital economy, products place more emphasis on a model of co-creation with users. It will also enable the creation of personalized product services on a large scale, which is based on accurate analysis of enterprise cost assessment and user portraits.

(2) Pricing:

The pricing model has also gradually moved from standardized pricing to a dynamic pricing model, which can dynamically price according to different users, different times, and different scenarios, thereby optimizing product profitability.

The difference between this and the current "big data killing of old customers" in hotels is that "killing old customers" is to maximize profits based on the spending power and brand loyalty of different users (which users will dislike)

Digital dynamic pricing is based on different user needs, achieving a win-win value for users and enterprises.

(3) Channel (place):

The traditional distribution channel is a model from factories to dealers and then to various retail terminals, while the digital channel is a "people-oriented" distribution model, which is person-to-person distribution and is not limited to a certain channel. This requires good channel benefit design and model reconstruction.

For example, the current WeChat business and community group buying models partially meet this feature, but have not yet fully realized the "person-to-person" channel model. This involves some relatively complex policy, technical and business system issues. With the popularization of digital technologies such as blockchain, I believe things will get better and better.

(4) Promotion:

Traditional promotion methods such as advertising and promotions tend to be one-way communication, while digital promotion strategies place more emphasis on users’ social communication, with users actively helping us spread the word. Because once users buy your product, marketing has just begun, and a series of post-purchase measures are the key, such as user relationship management.

Of course, there are many other factors involved in digital marketing decisions, such as the source of data, verification of user purchasing behavior, and support from other departments of the company. Due to space constraints, we will not elaborate on them here.

In short, the historical process of business digitalization and marketing digitalization has arrived, and the era of making business decisions based solely on feelings and experience will gradually fade away.

The future will definitely be an era where people make full use of digitalization to improve decision-making efficiency. Experience will be useful, but making good use of digital experience will make you more competitive and make business decisions more scientific.

Author: Mr. Monster

Source: Mr. Monster (ID: Mister-shou)