Customers want your business to connect with them on a personal level. To do that, you need to understand their needs and wants fully. The more data you can collect on customers, the better insights you'll have to help you deliver personalised experiences. As long as you can successfully process and analyse that data, of course.

Customer data management and analysis are crucial to short-term operations and long-term growth and, therefore, must be an integral part of your marketing strategy. Keep reading to learn about the benefits of customer data management for businesses, the types of tools available, plus tips and best practices for creating an effective strategy.

What is the role of customer data management (CDM)?

Customer data management (CDM) relates to the lawful collection, storage, protection and usage of customer information for obtaining insights into what customers want, need, think or feel. The insights gleaned ultimately help a brand improve its offering and boost customer satisfaction.

Customer data management consists of the following components:

  • Data acquisition – customer data must be gathered transparently and ethically (with customers' consent). All data should be digitised and entered into a reputable data platform to keep it centralised and secure.

  • Data storage and maintenancedata hygiene involves checking records for errors and cleaning up your database regularly to ensure customer data is accurate and current.

  • Aggregation and organisation of data – summarising large amounts of customer data and organising it into a useful format.

  • Extracting insights from data – a crucial part of customer data management, where you begin to analyse and make sense of the data gathered.

  • Leveraging critical data insights – identifying the actions and decisions to take to achieve specific business goals.

The benefits of CDM for businesses

Good customer data management allows you to deliver on-point communications and experiences at the right time to increase customer loyalty. Specifically, CDM gives you the following advantages:

1. Convenience

Even small businesses may need to handle and manage enormous volumes of data. By implementing a customer data management strategy, collecting and storing data is made simpler, quicker, efficient and secure.

2. Centralises data

Customer data can come from various sources – social media, purchase history, web analytics, support tickets, complaints, leads, phone call records, emails, SMS messages, and more. Customer data management consolidates all consumer data in one place and makes it accessible to the right people, such as support agents, salespeople and marketing teams. The data can be referenced and used for a range of objectives, such as cross-selling, improving customer loyalty and delivering better service.

3. Rapid data analysis

Data is only valuable if it's correct. With data hygiene a continual process, customer records and notes are always up-to-date, accurate and relevant. In a volatile, ever-changing field like marketing, being able to access and analyse reliable customer data massively increases the chances of a campaign having a notable impact.

4. Access to real-time insights

Customers' attitudes, opinions and behaviours can change very quickly, especially if external factors come into play, such as an economic downturn, new competition or regulatory changes. What customers said in a satisfaction survey six months ago may be totally different to what they're now saying on social media. By accessing real-time insights, it's possible to make informed business decisions that serve customers' needs in the moment.

5. Ensures data compliance

Data compliance is one of the biggest challenges every business must tackle to keep customer data safe and avoid the serious consequences of breaching data protection laws and regulations. Customer data management helps ensure compliance with regulations and guidelines and helps increase trust among your customers.

6. Helps with scalability

Customer data management can indirectly make it easier to grow and scale your business by reducing manual processes and repetitive tasks. (In turn, it helps reduce human error.) For example, you can automate data entry, data cleansing and report building. And because customer data is held in a single place, it's easy and quick to share with other team members or departments.

7. Improves the customer experience

Providing a brilliant customer experience involves bringing together all customer interactions from multiple touchpoints so you can understand who customers are, what services or products they've bought, which channels they like to use, and what issues or feedback they've communicated previously. Customer data management helps you get to know your customers and deliver a consistent and tailored experience that always meets their needs.

8. Aids personalisation

By having a single view of customer interactions and history, you can build helpful customer profiles and use them to deliver highly relevant and personalised marketing campaigns and transactional communications that grab attention. For example, you can send targeted emails, SMS campaigns or newsletters to cross-sell other products specific customers might be interested in.

9. Boosts customer engagement

The end goal of customer data management is to increase customer engagement and retention. That in itself is a key priority for any business, as it costs much more to acquire new customers than it does to nurture existing ones. By delivering personalised experiences, you'll boost retention, increase customer lifetime value and drive revenue.

Data insights concept

Tools you can use for customer data management

There are three main types of tools which contribute to good customer data management – customer data platforms, data management platforms and customer engagement platforms. Here's an overview of what they do and how they differ.

Customer data platforms (CDP)

CDPs are software solutions that consolidate data from multiple sources and channels to create a single, centralised customer database and a complete profile for each customer. They can help you carry out advanced audience segmentation and deliver better personalisation and engagement with a view to retaining customers and boosting revenue.

Features of a good CDP include:

  • A user-friendly yet comprehensive CDM dashboard.

  • Real-time functionality – automated data cleansing for accurate record keeping and real-time analytics and reporting.

  • The ability to collect data from multiple data sources for every customer.

  • Seamless data integration.

  • Access control and permissioning features for staff.

  • Being fully compliant with local and global data protection laws, e.g. GDPR, PSD2, CCPA, TCPA and PIPEDA.

  • Strong data security – not only in how the tech is built but also because it gives a single, streamlined view of customer data (so you don't have multiple copies of customer records across your organisation).

  • Integration capabilities, for example, so you can use it with third-party marketing platforms and a range of communication channels.

  • Scalability to give you more advanced features as your business grows.

  • Personalisation capabilities, e.g., pulling data from a customer record into a chat conversation or marketing campaign.

Data management platforms (DMP)

A data management platform is similar to a customer data platform in that you can use it to collect, store, organise and use data from multiple sources, including first-party, second-party and third-party data.

The difference between a CDP and a DMP is that DMPs are most often used to collect and analyse non-personally identifiable information, such as website cookies and anonymous behavioural data, usually for a short period of time. While a DMP can collect and analyse first-party data, such as customer email addresses, demographics and purchase history, it can only be used to create anonymous audience profiles and insights. A DMP enables you to:

  • Carry out targeted advertising and retargeting.

  • Create personalised experiences tailored to segmented audiences.

  • Monetise your own data (by purchasing, collecting and analysing second and third-party data.)

A CDP and a DMP can be used together to strengthen your customer data management efforts. You can, for example, use a CDP to organise your first-party data and then integrate it into your DMP to create audience profiles for marketing purposes.

Customer engagement and customer relationship management platforms

A customer relationship management platform can be used to manage and keep track of interactions with customers and leads. A customer engagement platform, on the other hand, does this too but also gives you a holistic view of customer behaviour, empowering you to make truly meaningful connections. Both platforms are useful in helping you deliver a positive customer experience.

By integrating a CEP or CRM into your data management infrastructure, you can enhance the functionality of your customer data platform. Here's a scenario of how this might work:

  1. A customer opts in to receive promotional material from your business via a signup form on your website. In doing so, they consent to be contacted via texts to their phone number.

  2. This information is first integrated into an individual customer record within your customer data platform.

  3. The information passes from the CDP to the CEP, which is already integrated with a reliable SMS API.

  4. Through the CEP, you can then start sending the customer SMS marketing campaigns about new products, special offers, flash sales, loyalty programme information and more.

Important elements of your CDM strategy

Before implementing your customer data management strategy, consider which team members will be responsible for the different aspects of your CDM process and assign responsibility accordingly. Also, pay keen attention to the following:

Data collection – determine the types of data you want to collect and analyse, e.g., identity data, demographics, behavioural insights or engagement data. Then, decide which data sources you'll use. Next, choose the right tools/platforms for your data management needs.

Data storage – part of data compliance is understanding where and how data is stored. If using multiple tools or cloud services, check the cybersecurity of each system and whether the data is stored locally or offshore. Have a backup plan in place to ensure you can recover customer data should the unthinkable happen. Also, consider how to transition from your existing customer database to your new system. How will you safely dispose of confidential paper records or spreadsheets if these are used?

Data governance strategy – set standards for how data is collected, stored, used and disposed of within your organisation. In your data policies, detail who can access the different types of data you're collecting. Ensure your policies comply with legal requirements, then share them within your organisation.

Data compliance – familiarise yourself with the data protection laws that cover your customers and audience and make sure all procedures are being followed to the letter. For example, if you collect user data from your website (which most sites do through the use of cookies), you'll need to display a notice explaining this and ask web visitors to give their consent.

Customer data management best practices

Use these best practice tips to get the most out of your customer data management strategy:

  • Utilise all possible channels and touchpoints for data collection – such as your website, social media, SMS marketing audiences, live chat conversations, complaint tickets – and even clicks on a landing page CTA. Customers will interact with your business in a variety of ways, so the more channels you tap into, the better intelligence you can gather.

  • Only collect the data you need – if you don't need to collect and track sensitive personal data from every customer, then don't. It's one more dataset you'll need to protect. Avoid data overload by carrying out data cleansing and validation and removing duplicate information. Specify what metrics you want to track and standardise data-sharing processes.

  • Maintain proper documentation – so all teams can understand your data management system and be on the same page. This is helpful when teams in different departments need to collaborate.

  • Use automation – to reduce repetitive tasks and streamline processes.

  • Train your team – not just on your customer data management process but on the technology you're using to implement it. All teams need to be on board with your CDM process, particularly customer-facing ones, seeing as they will be directly connecting with customers.

  • Use secure systems – check the security protocols for any online tools you're using and ensure all possible measures are taken to protect customer data.

  • Optimise the customer journey – revisit your motive for good customer data management – to improve the customer experience and boost customer retention. Use your data insights for exactly these reasons!

Happy customer shopping online

Customer data management: an essential process

Customer data is one of the most valuable assets your business has. It's intelligence at your fingertips – but it's only useful if the data is accurate, up-to-date, analysed and used for the right purposes.

Good customer data management can positively impact several business functions, including marketing, sales and support. With the right tools in your arsenal, you can form a holistic view of every customer, access real-time insights and tick the boxes for data compliance. Furthermore, customers are the ones to ultimately benefit – through cohesive, highly relevant and personalised experiences.

Before you go, check out our comprehensive guide to customer engagement in 2023.