Good customer data management (CDM) helps businesses create more personalized and effective marketing campaigns. According to McKinsey, companies that constantly use customer analytics and data to drive marketing are 23 times more likely to acquire new customers.
Businesses can collect customer data from various digital and traditional sources, including social media, website interactions, and transactions. In the U.S. alone, customer data is predicted to grow by 40% yearly.
Well-managed data can help businesses personalize customer experiences, understand customer behavior, and make better marketing and product development decisions. Conversely, poor customer data management is not only ineffective but puts your company at risk.
The recent introduction of the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) regulations has made it even more important for businesses to be diligent about customer data management practices.
The loss of third-party cookies has made first-party data a necessity. Because you collect and control first-party data directly from customers, it has higher accuracy and quality. It also means that you need a strong customer data management system to collect, store, and protect it.
We’ll dive into best practices for customer data management, so you get the data you need to power your marketing.
Table of Contents
- What Is Customer Data Management?
- Benefits and Features
- 4 Types of Customer Data
- Customer Data Management Best Practices
What Is Customer Data Management?
Customer data management (CDM) is the process of collecting, storing, maintaining, and analyzing customer data. It’s a crucial tool in any business for it helps personalize customer experiences, understand customer behavior, and improve customer retention.
Even more, businesses can gain trust in the information they receive from customer data. This is due to the transparency provided by customer data management. It also gives a chance for new knowledge of the target market, customer profile, and customer trends.
Customer data management aims to provide a 360-degree view of the customer. This means having all the necessary data in one place to access and analyze easily. Then, this data can be used to improve customer relationships, target marketing efforts, and make better business decisions.
Benefits and Features You Should Look for in Customer Data Management Platforms
Customer data management platforms come with a variety of features and benefits that can help businesses better manage their customer data. Think of B2B, B2C, or D2C brands that have a sales team, customer service team, or marketing automation platform. These businesses require a customer data management platform that can store customer data and help segment, clean, and enrich it.
When choosing a customer data management platform, look for one that offers the following benefits and features:
1. Centralized
Customer data comes from many sources from CRMs, mobile apps, website analytics, digital advertising platforms, sales and customer service teams, and more. With all these sources, customer data is scattered across multiple departments and programs. Even worse, companies end up with siloed data that can’t be used to its full potential.
Take the example of sales and marketing teams. The sales team has valuable data on customer interactions, but it’s siloed in their CRM. Meanwhile, the marketing team has paid ad analytics, but it’s siloed in each platform. As a result, neither team can get a holistic view of the customer.
Fortunately, a centralized customer data management platform brings all your customer data together in one place. This way, the managers, sales, and marketing team can have a complete view. Consequently, they can work together to improve customer experience and retention rates.
2. Secure
With the average cost of a data breach now exceeding $3.8 million, data security is more important than ever before. Fortunately, customer data management platforms have built-in security features to keep your data safe and company compliant.
For example, many customer data management platforms use 256-bit SSL encryption to protect data in transit. This is the same level of encryption used by banks and other financial institutions. Additionally, most customer data management platforms also offer role-based access control. This means you can control who has access to your customer data and what they can do with it.
3. Accurate
Another critical feature to look for in a CDM is data accuracy. Inaccurate data can lead to bad customer experiences, missed sales opportunities, and even legal problems.
For example, if you have duplicate entries in your customer database, you could end up sending the same marketing email to the same person multiple times. Not only is this a waste of time and resources, but it could annoy your customers and lead them to unsubscribe from your email list.
Similarly, if you have inaccurate data, such as outdated contact information, you could email a customer who no longer wants to hear from you. This could again annoy your customers and damage your relationships with them.
To avoid these problems, look for a CDM platform that offers duplication and data cleansing features.
4. Scaleable
As your business grows, you’ll need a customer data management platform that can scale with you. A platform that’s not scalable will quickly become inefficient and difficult to use.
For example, let’s say you have a sales team of 10 people and a customer database of 10,000 contacts. If your CDM system isn’t scalable, each salesperson must manually search through the entire database whenever they need to find a contact. This is time-consuming and quickly becomes impractical as your team and customer database grow.
On the other hand, a scalable platform will let you segment your customer database, so each salesperson only has to search through a small subset of contacts. This is much more efficient and ensures that your sales team can quickly find the contacts they need.
4 Types of Customer Data
Every business has its unique target audience, sales process, and way of analyzing the marketing and sales pipeline. With that uniqueness comes different types of customer data. Through customer data, marketing and sales teams can better target their audiences, understand marketing leads and the sales pipeline, and know when a deal is most likely to close.
There are four main types of customer data: identity, engagement or interaction, behavioral, and attitudinal.
Identity Data
As the name suggests, identity data is information that can be used to identify a customer. This is the information a customer might give when they first interact with your business or fill in a form on your website.
A good example of identity data will include:
- Name
- Email address
- Home address
- Phone number
- Date of birth
- Gender
This data is important as it can be used to segment your customer database. For example, you might have a segment for customers who live in a certain area or customers who have recently had a birthday.
Engagement or Interaction Data
Engagement data is information collected when a customer interacts with your business. This could be data from an online purchase, a phone call with customer service, or even just browsing your website.
Some examples of engagement data include:
- Products purchased
- Pages visited on a website
- Emails opened
- Emails clicked
- Calls made to customer service
This data can be used to understand a customer’s interests and needs. For example, you might send a customer that previously purchased a bag of dog food a targeted email reminding them in a month or so to top up their supply with a second purchase.
Behavioral Data
Behavioral data is data that’s collected about a customer’s online behavior. This could be data from their social media activity, browsing history, or the emails they open and click.
Some examples of behavioral data include:
- Social media posts
- Likes and comments on social media
- Browsing history
- Websites visited
- Emails opened and clicked
This data can be used to understand a customer’s behavior. For example, if you see that a customer has visited your website multiple times but hasn’t made a purchase, you might want to send them a targeted marketing email with a discount code.
Attitudinal Data
Attitudinal data is information collected about a customer’s attitudes and opinions. This could be data from a customer survey or social media posts and comments.
Some examples of attitudinal data include:
- Survey responses
- Social media posts
- Likes and comments on social media
This data can be used to understand a customer’s needs and wants. For example, if you see that a customer has made a negative comment about your product on social media, you might want to reach out to them to rectify the situation.
The four types of customer data help businesses and marketers to understand their customers better and target their communications.
Customer Data Management Best Practices
Business success these days depends on data-driven decisions more than ever before. Companies are sitting on a goldmine of valuable customer data, but they often don’t know how to use it.
A report by Forbes found that only 22% of companies are satisfied with their ability to use data to drive business decisions.
When implementing best practices for customer data management, consider the following:
Develop a Data Governance Plan
Data quality should be a priority for any business. As the expectations for data quality continue to rise, so does the need for a data governance plan. How can managers, directors, and C-suite executives ensure errors are found and corrected before they cause problems?
There are many factors to consider when developing a data governance plan, but some key elements include:
- Appointing a Chief Data Officer (CDO) or other senior executives responsible for data quality
- Creating and enforcing policies and procedures around data collection, storage, and usage
- Implementing technologies to automate data quality checks
- Conducting regular audits of data quality
Ensure Data Privacy and Security
As companies increasingly collect and store sensitive customer data, they must also be aware of the risks associated with it. In 2018, over 1,500 data breaches were reported worldwide, exposing over 446 million records. This problem is only getting worse, with the number of data breaches increasing by 27.4% in 2019.
To protect customer data, businesses must ensure that they have adequate security measures. This includes:
- Encrypting data at rest and in transit
- Implementing access controls to restrict who can view and edit customer data
- Storing customer data in a secure data warehouse
- Backing up data regularly
In addition to security, businesses also need to be aware of data privacy regulations, such as the General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CCPA). These regulations set strict rules around how customer data can be collected, used, and shared. Businesses that don’t comply with these regulations can face significant fines.
Only Collect What You Need
One of the fundamental principles of data privacy is data minimization, which means only collecting the data you need for a specific purpose. If you’re collecting customer data for marketing purposes, there’s no need to collect sensitive information like credit card numbers or home addresses.
This principle also applies to how you get data. You should only collect data that you can get legally and ethically. For example, you shouldn’t buy data from third-party sources or scrape it from the web without customer consent. In addition, you should be clear about why you’re collecting data and what you’ll do with it.
Set Up a Data Cleanup Process for Accuracy
Once you’ve collected customer data, keep it up-to-date. Customers move, change their contact information, and churn all the time. If your data is out-of-date, it can lead to poor marketing and sales decisions that cost you money.
Set up a data cleanup process. This process should include:
- Regularly auditing your data to identify errors and outdated information
- Correcting or deleting inaccurate data
- Adding new data as it becomes available
- Updating your data regularly
Centralize Your Customer Data and Pull Insights
Data is only effective if it tells a story. If your data is siloed, you aren’t getting the full picture. Look for a CDM solution that centralizes data, including data from offline and online sources, in a single location.
Once the data is centralized, you can start to pull insights from it. For example, you can use data analytics to create personalized customer experiences, understand buying behavior, and track the success of marketing campaigns.
Conclusion
Proper customer data management can help you create personalized marketing messages that reach your target audiences when they are most likely to convert.
Customer data management is an ever-evolving field. At Goodway Group, we’re well-versed in helping clients utilize their customer and marketing data to create effective, data-driven marketing decisions. Contact us now to learn more about how we can help you get the most out of your next marketing campaign.