10 Tips for Effective Customer Data Management

In 2008, a consulting firm faced dire consequences when an employee misplaced a USB drive holding sensitive data on 84,000 inmates, leading to the loss of a profitable contract with the UK prison system. The USB drive vanished from an unlocked desk drawer in an insecure area while the employee was on vacation. Its disappearance caused financial losses and damaged the firm’s reputation. 

This incident can be a cautionary tale for you to have the necessary customer data management measures in place. But how do you achieve that? Well, in this blog, we’re going to tell you how you can manage and benefit from different types of customer data. 

Scroll through to the end to learn how to manage your customer data like a pro. Additionally, find out how to analyze them to get actionable insights to obtain a higher conversion rate and turn your current customers into repeat buyers.

What is customer data management

Customer data management (CDM) is the process of collecting customer data from diverse sources to store, organize, and analyze it in order to gain perspectives. 

The reason behind customer data management is to provide your audience with a unique, personalized experience and ultimately improve your service.

Importance of customer data management

• Increases customer acquisition
• Increases conversions and sales
• Improves customer retention
• Enhances customer experience
• Delivers highly targeted experiences to customers 
• Generates leads and closes deals faster than average
• Boosts your marketing and sales efforts
• Mitigates potential risks by making proactive, data-driven decisions
• Presents upsell and cross-sell opportunities

Types of customer data and how to use them

Now that you know the importance of customer data management, let’s get familiar with different types of customer data to learn how to benefit from them.

Personal Identifiable Information (PII) and aggregate data

Any information that can identify an individual counts as Personal Identifiable Information. This may include name, date of birth, address, phone number, email, social security number, etc. You collect this information to offer your clients a personalized experience, like sending them a birthday card. 

Aggregate data, on the other hand, is collected anonymously. It gives you a summary of the demographics of a group of people. For example, the average income of people living in a certain neighborhood, or what kind of content young males like to watch on social media, etc. 

Aggregate data is usually used for statistical purposes. You can use it to narrow down your target market before identifying your buyer persona.

Demographic, behavioral, and psychographic data

The different types of customer data can be categorized into demographic, behavioral, and psychographic information. You can use it to filter out your buyer personas more precisely and accurately. 

Demographic data helps you group your customers by external factors like age, race, gender, education level, occupation, geographical location, income level, type of vehicle they drive, etc. 

Behavioral data tells you how your audience acts or responds. For example, their website visits, website form-fills, emails opened or read, click-through rates, products purchased and amount spent, products left in online shopping carts, number of product returns, your customer support log details, etc.

Combine this with demographic data, and you get answers to questions like which age group or geographical location to target on which social media platforms, how to write an email to attract different age or occupation groups, how the ads can be better targeted, etc. 

Psychographic data, on the other hand, tells you why a customer behaves a certain way or makes a certain purchase. With this data, you can group your customers according to their motivations, values, priorities, personalities, lifestyles, interests, attitudes, opinions, etc. 

Whereas psychographic data is harder to obtain, it offers a deeper understanding of your customers’ psychology and, therefore, proves to be more effective in marketing and sales strategies. For example, do your customers want a sustainable product, or do they focus on how a product looks? Once you know the answer, you can market your product by highlighting the preferred features. 

Since demographic and behavioral data are easier to access, you can use them to paint a rough picture of your target market. After that, utilize the psychographic data to motivate them to convert.

Master data and transactional data

You should separate your customers’ master data from transactional data for archiving purposes. 

Master data is constant information and doesn’t require frequent changes. For example, your customer’s name, address, occupation, etc. You use this information to create a unique customer ID for each customer.

Transactional data changes for each transaction. For example, what items a customer is buying, how much money they’re spending on it, their wishlists, etc. 

You need to separately store master and transactional data because one customer might be buying multiple products. When that happens, you don’t want to keep records of their PII for each transaction. It’ll take up more storage, and you’ll have duplicate information. Therefore, you simply attach the master data to the transactional data using the customer ID.

Sometimes, master data can also work as transactional data. For instance, if a customer changes their address, you might want to keep a record of both addresses. This helps you track their movement, see if they are moving to a more or less affluent neighborhood, check who your competitors are in that area, etc. 

10 tips for effective customer data management for your small business

Customer data management can be overwhelming over time as your business grows. To avoid that, you need to organize and manage them properly from the very beginning. The tips here will help you smoothly navigate through your customer data and get the most out of it.

1. Develop a customer data management strategy

With a customer data management strategy, you have a plan moving forward. Therefore, make sure you have a defined structure that you and your teammates follow while collecting and managing data.

Uniformity in data collection

Keep in mind that collecting data is only the beginning of the process. You have to find patterns within the data you collect. With those patterns, you get some statistics and insights into your customers. Finally, you take action based on those insights. 

To look for patterns, Collect similar types of data from your customers. That’s why effective communication and collaboration among different departments and teams are really important. It ensures that everyone is on the same page, and the collected data can be transformed into actions.

Quality assurance

It’s mandatory to assess the quality of your data. Otherwise, people might fill in fake information, which is of no use to you.

To avoid this situation, try cross-checking the data you obtain. For example, send a verification code to their email or phone number, check their social media if ethically possible, etc.

Approach re-evaluation

Your initial data management strategy might not be perfect. You might also need to consider more angles along the way as your business grows. However, the data received from your primary plan might not cover those bases.

For this purpose, you need to constantly re-evaluate the data you collect. Identify the issues your business is facing. Find out what information you need to solve those issues. Cross-check with your customer data plan to find out what additional data you require.

This is an ongoing process since the market is an ever-changing space. To stay in the loop, you need to utilize the power of information. Ensuring that your customer data management strategy is always one step ahead, helps you win the market.

Remove duplicity

Duplicate data creates confusion and wastes storage space. Create a central space for storing and organizing data. You can have a particular order, like an alphabetic order, on a unique code to ensure that no information is repeated.

2. Learn when to extract different types of customer data

Information is powerful and has no alternative if you want your business to succeed. And the more information you have, the better your insight into your customers will be. However, you cannot overwhelm them with your data collection attempts. 

Every customer goes through a buyer’s journey. It’s in your best interest to know which information to ask for at which stage.

Top-of-funnel customer data

This is the most basic form of data and is collected at the initial stage of a buyer’s journey. You can ask for this kind of information when a customer has spent at least a minute on your website or downloaded a PDF. 

At this stage, you can ask the customer to sign up for free trials, place CTA buttons strategically, or sign up for your email newsletter, etc. This information isn’t much; however, you can determine the success rate of your email campaigns or your downloadable resources using this data as statistics.

Bottom-of-funnel customer data

This is prior to the conversion stage. At this stage, the customer is already contemplating buying your product or services. With that consideration comes a certain level of trust, where the customer is willing to provide some information to receive your services. 

The landing page form can be an example of how to extract information at this stage since customers who visit your landing page are already considering buying from you.

Current customer data

Your current customers have already experienced your products or services. They can provide insights into the products, and if you provide value, they’ll turn into repeat customers. The customer might also spread word-of-mouth about your product. Word-of-mouth is beneficial for your business because your customers are more likely to trust the experience of a fellow customer than your advertising. 

Therefore, your current customers are the ones you can benefit from the most. That’s why you need to learn their insight on your products. That way, you’ll know how to provide them with a better service. At the same time, your customers will be satisfied because their concerns are being taken into account. 

You have multiple ways to collect current customer data. For instance, when you close a support ticket, you can ask if they’re satisfied with the service. Then you can ask what their experience is after they make a purchase or finish a free trial. Furthermore, you can ask for their opinion on how to improve your products or services after your customers have experienced them for a while.

Create a customer feedback questionnaire unique to your business that will help you deliver value to your customers. See how to use Fluent Forms to transform the questionnaire into a customer feedback form for your website. It’ll make providing feedback an easy and delightful experience for your customers.

3. Train your team

Training your team has no alternative. Your hard work isn’t going to pay off unless your team members are doing things right, because you’ll have to repeat everything they do, wasting time and resources. 

Moreover, if your team members are not trained, they might even lose data accidentally. Losing data is not something you recover from easily. Besides, there is also the risk of data leaks if everyone is not trained properly.

Therefore, make your team well aware of the way you manage data, and make sure they’re capable of handling sensitive information and extracting actionable insight from it.

4. Avoid data silos

Often, different teams collect different types of data based on their needs, and they store it separately. The problem with that is that one team cannot access data collected by another team. 

To put it simply, different teams might have different types of data on a particular customer, which the teams are unaware of. Instead, if every team had access to every piece of data, they’d have a clearer picture of said customer. As a result, they’d be able to provide better value. 

Another issue with a data silo is that the same basic data could be stored by multiple teams, which is a waste of storage. 

To avoid these problems, you need to create a central data management system. This way, every team can access and update all the data, which makes everyone’s job easier and saves time and resources.

5. Ensure data security and privacy

Your customer trusts you with their data. It’s your responsibility to honor that trust. Follow these practices to avoid data breaches.

Encryption

Encryption is the process of turning plain text into encrypted text that can only be decrypted by a digital key. 

The concept is to switch characters with different characters. Unless one knows the key, the encrypted data won’t make any sense to them. 

Advanced algorithms use a combination of up to a thousand characters to encrypt your data, which makes it pretty impossible to decipher it without the actual key.

Access control

Access control authorizes your permission to access a digital space in the same way preapproved guest lists determine if you’re welcome to a party. 

Some of your customer data is way too sensitive, and not everyone on your team needs access to it to get their job done. You can implement access control in those scenarios. 

For example, you can password-protect different levels of information, and your teammates can access them using their credentials on a need basis. You can also implement multiple-factor authentication, which basically verifies the identity of the person trying to access the data by more than one means.

Regular security audits

You need to regularly check your company’s systems and infrastructure for vulnerabilities. It’s great if you have someone on your team for this purpose. If not, you can hire professionals. They run different security software, conduct network scans, and take necessary measures to ensure the safety of your data.

Governance

Data governance is your data management policy during its life cycle, from acquisition to use to disposal. It’s the collection of principles you implement to ensure data is secure, private, accurate, available, and usable.

Compliance

Data compliance refers to the practice of abiding by the legal and regulatory requirements, industry standards, and internal policies related to the collection, storage, processing, and sharing of data. Key data compliance regulations include the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), etc.

Being compliant with these policies makes your business trustworthy. This ultimately helps your customers feel more comfortable sharing information with you.

6. Monitor and update customer data

Outdated data is of no use to you. That’s why you need to constantly monitor your customer data, so you can update them immediately in case of any changes. 

For example, track your customers’ wishlists to find any changes in their interests. That way, you can always keep up with your customers. And since your suggestions meet their newly developed interests, they’re more likely to buy from you.

Additionally, you can provide self-service capabilities for customers to manage their data. For instance, they can have their own profiles. Once there’s a change in their life, they can update those data themselves. You can have automation for those new data to replace the old ones in their place in your main customer database.

7. Enable cross-channel integration

Cross-channel integration is a marketing endeavor that helps you offer your customers a unified experience using multiple channels. For example, if you write a blog post about an issue that your business can solve, you post on social media how you solve it. Later, you can send your leads emails sharing the experience of someone whom your business helped overcome the said issue. 

You don’t know where you can reach your customers. For that reason, you can’t rule out any marketing platform. Take advantage of social media, ads, websites, and other offline and online marketing platforms, and make sure there’s consistency in your activities across those platforms. 

This way, your customers receive a more personalized experience and are more likely to take the intended action.

8. Create data visualization

When analyzing data, visualization helps a great deal. Often, visualizing data helps you see the connection that you’ve been missing. You can create charts, graphs, Gantt charts, dashboards, color-code-friendly databases, etc. to view your data. This is helpful for both gathering insights and forming statistical information.

9. Offer incentive

Offering your leads something of value in return works as a great motivator when you want to obtain their data. It can be valuable content, an ebook, pdf, tutorial, a free sample, or a free trial of your product, etc. When they receive value from you, they begin to trust you. With that trust, they’re more likely to share their information with you in exchange for the value you provide.

10. Back up your data

The one thing you cannot miss is having backups of your customer data. And you need more than one backup. You might think that your security system is ironclad, and that you won’t need backup, but you’re wrong. You won’t need backup until you do. And if that time comes, without those data backups all your hard work is gone. 

Information is gold. And you can’t afford to lose it. That’s why you back up all your data. In fact, update the backups regularly as well, but try to never need it. 

Follow these customer data management tips to manage your customer data like a pro and unlock the full potential of that data to convert your customers.

Customer data management: best practices

There are some best practices regarding the collection and use of customer data as well. Take these into account while you’re managing customer data, and you’ll delight them continuously with your marketing efforts.

1. Practice Ethical Data Sourcing

Get your customer’s consent whenever you need to extract data from them. Your customers aren’t opposed to sharing information with you, especially since that information can help them receive a better experience. However, they expect to be asked politely for that information instead of you accessing it illegally. Therefore, ask them for any relevant information that you require, explain to them why you’re asking for that information in case it’s not basic, and offer incentives if necessary when you require data.

2. Identify the Information Worth Capturing

It’s really important to find out which information is valuable to your business. Undoubtedly, every piece of information is useful. However, if you ask for too much information, you’ll scare away your customers. That’s why you only ask them questions you can benefit most from. Create a structure based on these questions, and follow the format when asking your customers and leads for information.

• Which data will help to optimize the customer experience? 
• What kind of data is required to improve the conversion rate? 
• Will it affect sales and marketing efforts if a particular piece of data isn’t captured? 
• Which channels should be given the top priority for data collection?

3. Focus on relevant data for relevant results

If you want results, you need to pay attention to the relevancy of the data that you collect. For instance, how your customer feels about your product and other similar products is relevant information. 

If you own a restaurant business, you need to find out whether your customers prefer local or foreign cuisine. What their spice preference is. Take note of the average orders to get an idea. If you want to level up, pay attention to the aesthetics of your customers and update your interior accordingly, etc.

4. Implement customer data management technologies

Whereas you can do all the work manually, having customer data management technologies saves you time and energy. Invest that time and energy elsewhere that a technology can’t achieve. 

If you have data management software, you’re less likely to make a mistake. In fact, it’s automated, so a lot of your marketing gets done without you having to lift a finger. For instance, you can have a CRM, and it’ll take care of your email marketing as well as generating leads. 
Add a beautifully designed form on your landing page with all the relevant questions. You can create this form using Fluent Forms, the fastest form builder plugin. This will allow you to have the entries from those forms imported to your Google Sheets, Notion, or Trello workspace automatically.

5. Segment and Analyze Data

Often, looking at data as a whole only shows you the surface of what you’re looking at. For that reason, segment and categorize your data. A single piece of data might fall into different categories. When you analyze data, keep all that in mind. Shuffle and reshuffle your data, and look for patterns. The more you look into data, the more likely it is that you’ll get a deeper insight. Hence, create different angles to look at data to gain multiple perspectives.

Conclusion

Your business mostly depends on two things. How good your products or services are and how well you can reach your audience. The key to reaching them is utilizing their data, i.e., analyzing their data to get insight into where you can reach them, what they want to see, how they want to be approached, etc.

Follow the tips and best practices provided here about customer data management to understand what your leads and customers want. Once you know what they want, you can come up with a more personalized experience for them, and receive a higher conversion rate and customer retention in return. 

Let us know how you manage your customer data and don’t hesitate to reach out to us in case of any queries.

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