In a world awash with information, customer data management has become more important than ever. And the potential benefits of this big data revolution are huge — for both companies and customers alike. It’s driving the personalization of customer interactions and helping businesses make better, data-driven decisions.
But managing and safeguarding all this data brings its fair share of challenges. Only by following best practices can you overcome these challenges to deliver a truly first-class customer experience.
Before we get into some specific recommendations, let’s take a look at exactly what customer data management (CDM) is.
What is customer data management?
Customer data management is the process and structure businesses use to gather, store, secure, organize, and oversee customer data. This includes data such as demographics, contact information, interaction history, and website or purchase behaviors.
Data can be collected from a variety of sources and stored in a database. Teams then analyze that information to better understand customers and their needs. For example, marketing teams can use data to create more effective personalized campaigns.
Effective customer data management is incredibly important because it helps you:
- Increase conversions and sales
- Improve customer retention
- Enhance customer experience
Now that we know what customer data management is, let’s review some guidelines for applying it to your business.
10 tips for successful customer data management
While there are countless benefits to using customer data, getting CDM right can seem a daunting prospect. Here are some essential practices you can follow to manage customer data effectively.
1. Protect your data
More and more customer data is transmitted online these days. It’s crucial that businesses guard this data from any unauthorized parties.
Security breaches severely impact customer confidence and affect business revenue — one breach costs an average of $4.24 million. In fact, data security is so important to consumers that 74 percent consider it the most vital element of their online experience, even over convenience.
It’s a good idea to increase your cybersecurity by using platforms with watertight security features, and to ensure you have backup systems in place so operations can continue uninterrupted during emergencies.
2. Be transparent
Transparency is a concern to consumers — 60 percent of U.S. consumers believe they could make more informed decisions if businesses were required to be more transparent about their privacy policies.
Make sure your data collection and privacy policies are clearly visible and provide customers with an explicit opt-in to share information while outlining the purpose behind why you’re collecting the data.
3. Only collect information you need
According to Forrester, 60-73 percent of data goes unused. So, by being selective about the data you collect, you can save time and money while preventing your team and customer data platform from becoming overloaded.
It pays to identify the issues you’re trying to solve and be clear what type of data you need to do that. Perhaps you’ll be getting contact information through forms or gathering feedback through customer surveys. Whatever the data, it pays to have a proper plan for its use.
4. Give customers an incentive
A sizable 57 percent of customers are willing to exchange personal data for personalized offers. So, by giving customers a compelling reason, you can get hold of a lot of useful data. Some businesses offer discounts or enter customers in giveaways or gift card drawings for participating in surveys.
It also helps to collect data at different points across the customer journey, such as during website visits, after support interactions, or after a purchase.
5. Centralize data storage
When data storage is disjointed, your marketing, sales, and customer service teams are limited to using only their own resources and tools. And that’s no good for anyone. By eliminating silos and organizing data into a single, unified view, businesses can centralize workflows to increase efficiency.
Access to a unified source of information also allows agents to provide seamless customer service. Working from a single data set in this way helps bridge the gap between the 62 percent of customers who expect consistent cross-departmental interactions and the 55 percent who think businesses fall short of this.
6. Keep your customer data clean
A unified system means better analytics and opportunities to use real-time data to respond to customer needs and make timely business decisions. But, that relies on having clean, accurate data. Outdated or incorrect information can impact customer confidence and be costly for your business. According to Gartner, companies can lose up to $15 million a year due to poor data quality.
Make sure you maintain data quality through regularly reviewing and purging unnecessary data, duplicates, and inactive contacts. Automated data validation tools can help with this process, too.
7. Set up a data governance strategy
A data governance strategy outlines company-wide standards for naming, storing, processing, and sharing data. It’s a crucial part of customer data management as it establishes policies and procedures for your company to adhere to and assigns data ownership and responsibility to a person or team. Having a standard protocol in place helps ensure data stays front of mind, and teams are aware of their roles in the process.
8. Train your teams
Having a protocol and policy in place is one thing, but ensuring employees are aware of them is another. Train anyone who works with data to use the proper approach and processes. For instance, having consistent data entry procedures can help with data quality, and knowing what potential security threats to look out for can ensure data safety. Don’t forget to run refresher courses and update training to reflect any changes and advancements as they happen, too.
9. Know and comply with data laws
Different industries, such as healthcare and financial services, have specific regulations due to the sensitive data they handle. It’s imperative you know what applies to your particular business. There are other considerations to be aware of as well — the California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR), for example.
Whatever specific regulations apply to your business, make sure you have an easy way for website visitors to consent to providing data, view the data you have on them, and request their data be deleted.
10. Evaluate your tech stack
Implementing the right technology is integral to successful CDM. In fact, 83 percent of marketers say their digital capabilities influence their ability to meet customers’ expectations.
A customer data platform (CDP) provides a way to unify customer data from multiple channels and integrate with other systems, like customer relationship management (CRM) platforms. With a CDP, you have access to customer profiles with all the associated information, interactions, and history, giving a comprehensive view of the customer. Not only that, but by pairing a CDP with a data management platform (DMP) you can push targeted advertising to prospects to improve performance.
Going beyond the data warehouse
With so many new ways to gather, organize, and analyze customer information, it’s critical to have a strategy on how you approach managing that information, as well as thinking carefully about what data you’re collecting in the first place.
The right technology is also a must to ensure your business is on top of your customer data management. That way, you can focus on using customer data to deliver exceptional products, services, and experiences for customers.
What do you think is the most important practice for effective customer data management? Let us know in the comments.