The Importance of Customer Data Management For Your Business

What is customer data management?

Customer data management (CDM), refers to a company's customer data management strategy, tools, processes, and standards. Customer data management includes data capture, storage, organization, and utilization.

The goal of CDM is to convert customer data into detailed, meaningful customer profiles that sales and marketing teams can use to improve customer interactions. It enables businesses to better understand the needs of their customers and tailor messaging to increase customer engagement and retention.

The CDM is concerned with data security and ethical data practices. Customer data management encompasses more than just sales and marketing, necessitating collaboration with legal and IT departments. The collaboration ensures that the organization's approach to CDM and the use of related technologies is fair and in accordance with applicable legislation and guidelines.

Why does customer data management matters?

Customer information is one of the most valuable types of data that businesses can use to improve their marketing and sales efforts. It may help businesses better engage with their customers and provide a more personalized experience, whether it's behavioral data (how long a customer stayed on your website before making a purchase) or identity data (what job titles customers have).

Outbound communications that are influenced by customer behavior and characteristics can be critical to a successful sales and marketing strategy. Personalization was once considered a nice-to-have rather than a commercial necessity, but that has changed. Today, it's all about personalization.

Customer data not only helps with personalization but also serves as a road map for businesses to find similar customers in the future. Understanding your ideal customer's thoughts and behaviors is essential for marketing and sales success.

Organizations can go from guessing how to reach out to their customers to knowing exactly how to do so by collecting, storing, and analyzing client data.

A brief history of customer data management

Master data management (MDM) and customer data integration are two terms that are used interchangeably (CDI). One could argue that customer Data Management was the first generic term- as soon as companies began collecting data about their customers, they had to figure out what to do with it and how to turn it into profit.

Customer relationship management (CRM) systems, which recorded and maintained data about known customers, ushered in CDM technology in the 1990s. DMPs started as AdTech in the 2000s, with data warehouses largely maintaining cookie IDs and generating look-alike audience groups for targeted internet ads to unknown buyers. Then, starting in the mid-2010s, customer data platforms (CDPs) brought the two together in a single platform, with features including multichannel campaign management, tag management, and data integration. The requirement to collect data, regulate its quality, and keep it fit and available for usage has been constant throughout this history.

Organizations may now expose previously unseen interconnections and connections by breaking down departmental silos and combining customer data with product data and other information, resulting in genuinely 360-degree customer insights that serve as the core of an enterprise strategy.

How does customer data management affect us?

The process of obtaining, organizing, and evaluating data about your consumers is known as customer data management (CDM). It's a critical method for improving customer acquisition, contentment, and retention rates, as well as customer visibility and communication tactics, data quality, and revenue.

That's quite a list, but when presented with the facts, the overwhelmingly favorable outcomes are difficult to overlook.

Here are some reasons why CDM should be your primary concern-

Saves money on ads

Getting new consumers is difficult, but a customer database may help you communicate with them without having to spend a fortune on ineffective, distant advertising.

Calculates CLV

According to the 80/20 rule, your existing clients account for a whopping 80% of your sales. Once they've walked through your door, keep them by creating a strong customer loyalty program that provides personalized, positive experiences, resulting in committed brand advocates who generate very valuable word-of-mouth marketing.

Strategic decision-making

Collecting relevant consumer data will enable you to better segment your target market, identify buying trends, and personalise individual communication methods, all of which will lead to better-informed, real-time strategic decision-making.

Increases sales

Various touchpoints, multiple devices, round-the-clock consumption, and both online and offline participation can make the customer's path to purchase long and unexpected. Data from each stage of the client journey can be analyzed to identify performers who can be helped to increase sales efficiency.

Benefits of customer data management

Any company that wants to expand its client base or currently has a large number of customers might benefit from customer data management. While B2C or D2C brands are more likely to focus on developing a CDM strategy, B2B businesses can also benefit from CDM to better define their user base and upsell their existing consumers.

Here are some benefits of customer Data Management-

1. Better insights

Internal teams can gain a lot more insight from data that is revisited, analyzed, and reviewed regularly.

2. Improved decision-making

Real-world consumer data can assist businesses in making better audience targeting decisions. Pay-per-click ads, organic and paid social media posts, and email marketing will all benefit as a result.

3. Reduces the possibility of duplicate data

Sales and marketing teams may locate client profiles with consistent and accurate data in one place if you utilize a software solution to handle customer data. This reduces the possibility of duplicate data within the company.

4. Supporting compliance

In terms of how to acquire and manage consumer data, your company may have obligations depending on where your clients live. If your company follows regulations and recommendations, it will avoid potentially large fines.

5. Supporting scaling

As a company grows, it needs repeatable operations with minimum manual labor. Many of the procedures required for CDM may be automated with the correct solutions for customer data management, allowing your staff to focus their efforts elsewhere.

6. Better customer experience

Customers have a better experience with CDM because their experiences are more tailored to them. Businesses can wisely use customer data to automate the right communications to reach customers at the right time.

Customer data management best practices

Companies must now develop a CDM strategy that includes data governance, data access, master data management, data catalogs, metadata management, and other components because they cannot take an enterprise approach to the customer without also taking an enterprise approach to customer data.

Here are a few best practices for customer data management-

Create a standard definition of customer

A consumer who buys from one of your lines of business regularly could nevertheless be a prospect for another. Anyone who has purchased in the last five years may be considered an active client by one department, but if their last transaction was more than a year ago, they may be removed off the list by another. Use your enterprise-wide business goals to agree on how to identify and describe customers as you decide which customer traits to track and manage.

Unify data and insights across systems

Using artificial intelligence (AI) and natural language processing (NLP) across systems, you can automatically combine transactional data (orders, quotes, incidents, assets, entitlements) and interaction data (webchats, call notes, etc.) into an intelligent omnichannel customer view that is searchable across all structured and unstructured data. For more effective analysis, strategy, and execution, the goal is to build a uniform 360-degree picture of the customer across marketing, sales, fulfillment, finance, and corporate teams.

Keep customer data clean, protected, consistent, and actionable

You can't expect your data to provide good analytics on which to base your actions if you can't trust it, so treat it like the strategic asset that it is. Collect all of your key consumer data in a data lake or equivalent repository that can handle nearly infinite concurrent tasks or jobs and works seamlessly with analytics tools and other applications. Implement privacy safeguards throughout the data pipeline. To ensure that your data is fit for use, transform, cleanse, enrich, and standardize it before sharing it across applications. Use new AI and machine learning capabilities to boost efficiency and productivity while automating data management tasks as much as possible.

Best technology for customer data management

A customer data platform, often known as a CDP, is the most important tool for a customer data management system. CDPs serve as a central hub for customer data management, utilizing a variety of processes to connect to various data sources and correlate data to customer profiles in real-time. This information can range from details about the customer's identification to details about the actions they conduct about your company's operations. Customer data management dashboards are available in the top CDPs, and some even create real-time analytics for real-time interaction management.

CDPs ingest and display both first-party and third-party data data that comes directly from the customer to the company and data that comes from a third party to the company. While both forms of data are valuable, first-party data is always preferred since organizations can verify whether or not the client agreed to their data being used and stored.

CDPs are generally utilized for programs and campaigns by sales and marketing teams, but the data analytics they provide about customers can be used by other internal departments as well.

CDPs ingest and display both first-party and third-party data that comes directly from the customer to the company and data that comes from a third party to the company. While both forms of data are valuable, first-party data is always preferred since organizations can verify whether or not the client agreed to their data being used and stored.

CDPs are generally utilized for programs and campaigns by sales and marketing teams, but the data analytics they provide about customers can be used by other internal departments as well.