Feature
The Gist
- Personalization impact. Effective customer data management (CDM) allows businesses to offer the personalized experiences that consumers crave.
- Data security priority. Prioritizing data security within CDM practices protects consumer information, builds trust and helps compliance with regulatory standards.
- Tool selection insight. Choosing the right customer data management tools, such as CRMs, DMPs, CDPs and BI tools, is crucial for streamlining data tracking and driving strategic decision-making.
Editor's Note: This article has been updated on March 13, 2024 to include new data and information. The original content was authored by Tom Regan.
The more businesses understand their customers — where they live, what they like or dislike, what influences their purchasing decisions, etc. — the easier it is to provide a good customer experience.
One Statista survey revealed that 56% of consumers expect marketing offers to always be personalized, and 73% said they expect companies to understand their unique needs and expectations.
How can brands tap into that personalization? It all comes down to data. And handling that data appropriately, including not alienating customers by asking for excessive information, or worse, losing that data, means companies must practice good customer data management (CDM).
What Is Customer Data Management?
Customer data management (CDM) centralizes customer information to improve decision-making and personalize experiences. It involves collecting, analyzing and securely storing data from various touchpoints, allowing businesses to understand consumer behaviors and preferences. Effective CDM practices help improve customer satisfaction and offer a competitive advantage in a data-driven market.
3 Types of Customer Data
When creating a customer data management plan, you must understand the different types of data you collect. Once you do, you can decide which data categories fulfill your business functions and improve the customer journey.
Data falls into three types:
1. Identity Data
Most websites collect this relatively basic information when customers make a purchase, download an asset (such as an ebook or white paper) or subscribe to email updates.
Identity data includes the customer's:
- Name
- Date of birth
- Gender (with "Prefer not to say" or "Undefined" options)
- Phone number and phone type (landline or mobile)
- Email address
- Home address (including city, state, zip code and country)
2. Attribute Data
Attribute data tells you a bit more about each customer. Companies or organizations can collect attribute data using surveys, phone interviews or interactions in a chat box. This data helps you create a complete picture of your customer as you move toward an ideal customer profile.
Attribute data includes the customer's:
- Job title (including boxes for retired or self-employed)
- Income level (asking for ranges is better than asking for specifics)
- Marital status
- Number of children
- Vehicle (including make, model and year)
3. Behavioral Data
Behavioral data offers clues on how potential or current customers interact with your company, including online and in-store.
Behavioral data includes:
- How many times a person visited your website
- How long they stay on a page
- How many emails they opened and read
- If they place items in a shopping cart but leave the website before purchasing
- What goods or services they buy, how often and the price they paid
- If they return products and how often
- If they shop in-store and how often compared to online visits
- If they use a rewards or loyalty card when shopping in-store
All of this data helps you create the ideal customer profile. It will help you focus your marketing efforts and speak directly to the kind of customer for whom your product or service solves a problem.
Related Article: Explore Customer Data: Definition, Types & Usage
9 Principles to Improve Your Customer Data Management
Any business that wants to achieve even a tiny improvement in data collection needs to learn how to manage customer data appropriately. Observing the following principles helps your business get the most out of your data collection efforts while ensuring your customers continue to enjoy a positive experience.
1. A Data Governance Strategy
Data governance helps identify the data you need and how you will collect it. It's also a playbook for all employees on how to collect data, where to store it and how to secure it.
Data governance involves standardizing the collection of data across your business. It ensures you collect all data according to your company’s principles and relevant legal regulations. Plus, any changes you make to data collection efforts must go through the correct channels.
2. Targeted Data Collection
Just because you can collect certain data points doesn’t mean you should. If you do, you might encounter a data deluge — so much information that you don’t know what to do with it all.
Be specific. Proper client data management means only collecting the data you need to help your company. You should audit and check every piece of information you collect. Ask yourself:
- Who needs this data?
- How does this data help build our company and make a better customer experience?
- If we don't collect this data, would it hinder our operations?
3. Avoiding Data Siloes
Silos may work well on a farm, but a data silo can be a problem. You don't want every department in your company to collect data and then not share it — or worse, duplicate their efforts by collecting the same data.
Sharing data improves customers' experiences with your brand. When the departments in your company collaborate on customer data management, you achieve a 360° picture of the customer journey. Nothing is more frustrating for a customer than speaking with a representative and being asked questions they already answered during another interaction. Data collaboration eliminates these frustration points.
4. A Focus on Data Security
Cyber attacks more than doubled in 2023, according to a CB Insights report. In fact, the global average weekly cyber attacks per organization hit an all-time high of 1,258 in the second quarter of 2023. The average cost of a data breach has also grown 15% in the last three years. While the average data breach costs companies $4.5 million, the largest threats drive losses of more than $100 million.
Securing data must be one of your business's top priorities. Not only can overlooking this step cost your organization time and money, it can also erode consumer trust.
Learning Opportunities
Webinar
Apr
23
AI: The Essential Vitamin for a Healthy CX
Join us as we unravel the mysteries of AI adoption and discover the key to unlocking a thriving CX ecosystem.
Register
Webinar
Apr
23
Navigating Market Dynamics: Leveraging Reputation to Propel Business Growth
Join us to uncover the secrets of mastering reputation management in today's competitive environment.
Register
Webinar
Apr
24
The State of Outsourcing: At the Crossroads of AI, Quality, and Cost Savings
Learn how companies can maximize the results from their outsourcing investments.
Register
Webinar
Apr
30
Supercharge Contact Center Efficiency with Generative AI
Learn practical strategies to reduce post-call documentation time by over 8 minutes.
Register
5. The Right CDM Platform
Whatever customer data management system you select, ensure that it meets all up-to-date security standards and laws. Keep an eye out for changes to the platform you’re using or potential risks that might arise. You must also constantly review your security policies and improve them.
6. A Data Accuracy Process
Let's say one of your departments collects information on the date of purchases using the MM/DD/YY format. However, another department collects similar data using the DD/MM/YY format. This setup can result in a lot of confusion and useless data.
Marketing data management includes going through your data stores and eliminating this bad data — information that’s inaccurate, outdated, redundant or improperly formatted.
To avoid bad data going forward, your data collection efforts should involve as few humans as possible. The more human hands that touch data collection, the more likely you'll find mistakes and inaccuracies. Using automatic data validation tools help eliminate this problem. Another idea is to perform a data audit regularly. Cleaning out old, no longer valuable data leads to fewer mistakes and happier customers.
7. Compliance With Data Regulations
Customers care about data privacy. While people may not mind you collecting data if it ensures better experiences, they still want you to ask for permission. Plus, they may be willing to share some data points but still want to maintain privacy in other areas.
You need to ask customers what data you can gather from them. In some cases, you’re legally required to do so. For instance, you might have to conform to data laws and regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). You should also inform customers what your data collection processes look like. Transparency here is the key to winning customer trust.
Think about what happened when Facebook allowed Cambridge Analytica to collect user data without bothering to tell people what they were doing. When it became public, it created many financial problems for Facebook and legal issues for Cambridge Analytica.
8. Multiple Data Backups
Unintentionally losing data can be hard to do. However, the day may come when a power outage, natural disaster or employee mistake will result in a significant loss of information. In fact, according to Netwrix, human error is the number one reason for data loss, followed by phishing attacks and poor password policies.
Every business and organization, regardless of size, should have a data backup and recovery plan in place as part of their customer database management.
9. Ongoing Team Training
Why bother creating a user data management plan if your employees don't know how to implement it? Even better, seek feedback from your employees about ideas for your CDM plan. The employees on the front lines of data collection will likely have useful suggestions for protecting, sharing and using it.
Regardless, every member of your team who handles data management or data collection needs to know and understand your company's data governance strategy. That includes all areas such as data collection, marketing, legal and IT.
Related Article: What Is a Customer Data Platform (CDP)?
What Are the Benefits of Customer Data Management?
Customer data management provides businesses with a multitude of benefits, including:
- A unified view of customer interactions across all channels
- Enhanced data accuracy and accessibility
- Improved data security
- Increased opportunities to upsell and cross-sell
- Increased customer retention and loyalty
- Higher customer acquisition rates
- Increased campaign effectiveness and return on investment (ROI)
- Greater customer satisfaction and trust
What Tools Are There for Customer Data Management?
A number of customer data management solutions are available, with each designed to cater to different aspects of the data management process.
Customer Relationship Management (CRM) Systems
Customer relationship management systems streamline the tracking and management of all customer interactions and data. CRMs help businesses build a comprehensive database of customer information, including contact details, purchase history, preferences and interactions across all touchpoints.
A CRM can enable sales, marketing and customer service teams to access real-time, actionable insights, fostering personalized customer experiences and improving relationship management.
Data Management Platforms (DMPs)
Data management platforms focus primarily on collecting, organizing and analyzing large volumes of data from diverse sources, including first-party data, third-party data and online interactions.
DMPs are particularly valuable in digital marketing, allowing advertisers to segment audiences, tailor messaging and optimize advertising campaigns across various channels. Although not exclusively for customer data, DMPs play a vital role in understanding broader market trends and customer segments.
Customer Data Platforms (CDPs)
Customer data platforms are a more specialized and comprehensive customer data management solution, integrating data from multiple sources to create a unified, persistent customer database that is accessible to other systems.
CDPs collect data across all customer touchpoints, providing a 360-degree view of the customer journey. Unlike CRMs and DMPs, CDPs focus on aggregating and unifying complex data sets to provide a single customer view.
Marketing Automation Platforms
These tools automate repetitive marketing tasks, such as email marketing, social media posts and ad campaigns. By leveraging marketing automation, businesses can make sure they not only collect and manage customer data effectively, but also use this data to engage customers with personalized marketing messages at scale.
Business Intelligence (BI) Tools
Business intelligence solutions are essential for analyzing complex data sets and transforming them into actionable insights. BI tools aggregate data from various sources, including customer data platforms, to perform in-depth analysis, reporting and data visualization.
While not exclusively focused on customer data, these tools are important for leveraging that data to inform broader business strategies.
Related Article: CMSWire's 2024 Customer Data Platform Market Guide
Support Customer Data Management With Positive Practices
Clean, accurate data backed by a management plan can help you attract new prospects, create a better experience for your current customers and improve your bottom line. The more attention you pay to customer data management, the more ways you can use collected data positively.
