Customer Data Management: Top Benefits and Best Practices
Data is the new oil that propels businesses to success. As the foundation of every contemporary company, it helps devise plans, develop strategies, and nudge all stakeholders in the right direction toward achieving goals.
Collecting customer data is necessary to create a perfect product-market fit and gain a competitive edge.
Numerous digital solutions make it pretty straightforward, but managing that data is another story. It’s a time-consuming and arduous process that can become overwhelming quickly and pile up useless information if you’re not careful, leading to poor decisions and security concerns.
What is customer data management?
Customer data management (CDM) is organizing, cleaning, validating, and analyzing information in a customer database and sharing it across the board to help all stakeholders improve processes, products, and services.
Depending on your business needs, you can collect and manage the following customer data:
● Contact – names, addresses (physical and email), phone numbers, job positions, and job titles;
● Demographic – age, gender, location, education, employment, income level, marital status, and homeownership;
● Psychographic – interests, product and brand preferences, opinions, values, personality traits, lifestyle habits, etc.;
● Behavioral – website and mobile app interactions like visits, clicks, views, and purchases;
● Firmographic – company structure, size, location, funding, revenue, growth rate, job postings, and other company identifiers from internal sources and third-party B2B data lists;
● Technographic – companies’ tech stacks that B2B organizations offering SaaS solutions can use.
This information is essential to improve market research and analysis (e.g., competitive, risk, and market growth analyses), marketing and sales efforts, lead generation strategies, conversions, sales,
and revenue. However, failing to manage it properly could negatively affect decision-making and hinder your growth.
Benefits of customer data management
Managing your customer data ethically and effectively will provide your company with the following advantages.
Keeping up-to-date, relevant, accurate data
Customer data changes over time, making many CRM records incorrect, inaccurate, and unusable. Add multiple data points different departments use, and you risk inconsistent, incomplete, and duplicate data. This so-called dirty or rogue data can lead to poor decision-making.
Improving your CDM process to revise, update, and analyze your CRM records regularly will help you keep high-quality, usable data.
Making data-driven business decisions
Proper customer data management helps improve audience targeting and lead segmentation, scoring, and nurturing. You can make data-based decisions for better marketing, lead generation, conversion, and sales strategies.
You can meet the needs of 91% of consumers who prefer personalized customer experiences, some of the essential factors for more sales, a higher ROI, and a sharper competitive edge.
Staying compliant with data privacy laws and regulations
The US doesn’t have a singular federal data privacy law. Different industries and sectors have specific privacy laws and regulations, including the HIPAA (Health Insurance Portability and Accountability Act), the ECPA (Electronic Communications Privacy Act), and the COPPA (Children’s Online Privacy Protection Act).
The CPPA (California Consumer Privacy Act) is the only state-specific data privacy law governing minors’ information collection and use.
Let’s not forget the GDPR (General Data Protection Regulation) that protects EU residents.
Managing your customer data according to the data privacy laws and regulations that apply to your company will help you avoid hefty fines and build trust, credibility, integrity, and loyalty.
How to manage and protect your customer data
The key to developing a successful CDM strategy is to gather customer data ethically and store it securely to comply with data privacy laws and security standards. Here are the best customer data management practices to use.
1. Develop a data governance strategy.
Build a framework that standardizes data collection across departments, creating the processes, standards, and documentation structures for ensuring accountability and compliance.
Ensure alignment between people and processes, creating a strategy that clears any confusion and helps all stakeholders gather, track, and manage customer information ethically.
2. Collect only critical data.
The more customer data you gather, the higher your chances of personalizing experiences, addressing pain points, and satisfying clients. However, you don’t want to ask for unnecessary information that makes your customers question your credibility and reliability.
Always collect and manage only the data you’ll use, information critical for better decision-making and providing real value to consumers.
3. Automate data cleansing and validation.
Some of your leads and customers may have a new email address, phone number, last name, or job. Your CDM strategy must consider such changes to prevent data decay.
That’s where data cleansing and validation come into play. These processes are time-consuming but necessary to do regularly. Automating them eliminates the risk of human error and ensures accurate, up-to-date, consistent data.
4. Eliminate data silos.
Failing to develop a data governance strategy leads to data silos, which can be a nightmare for customer data management.
Utilize a CDM system to centralize customer data and help all stakeholders track relevant information and share insights across departments seamlessly.
5. Enhance data security.
Data breaches and leaks are expensive and can severely damage your brand reputation. Enforce the latest security standards and practices to safeguard your company and customer information, creating an impenetrable infrastructure that builds trust and increases transparency.
Ethical, strategic, and responsible customer data management helps companies grow and provide real value to consumers. It opens the door to personalized experiences and data-driven decisions, builds trust and credibility, and inspires long-term loyalty, ultimately increasing sales and revenue.
It requires specific steps to reap all those benefits, so follow the practices above, and you’ll develop a successful CDM strategy that leads to soaring success.