Whether you own a fledgling start-up or run a legacy multinational corporation, the biggest asset you have is customer data.
The more you know about who purchases your products and services, and also why, when, where and how they do it, the more power you gain over the market.
This information forms your customer base. It helps you to keep your finger on the pulse of the market, and to provide the relevant messaging to the right people at the right time so that they continue to stay loyal to your brand. It also helps to expand your customer base and explore newer opportunities.
Ultimately, it creates that crucial connect that forms a long, enduring and profitable relationship.
From gathering information about your customer, the next step is managing customer data.
Is Gathering Data A Modern Phenomenon?
“Customer data” isn’t something that sprang up in the last few decades.
Rewind to 18,000 BCE. Paleolithic tribes marked notches in bone and sticks to record trading activities and then probably compared these records to make predictions for future transactions.
Just over 4000 years ago, the abacus was invented and was used in Babylon. Around the same time the world’s first libraries were established and these were the earliest forms of data storage. Among them was the great library at Alexandria that stored an enormous collection of scrolls.
In ancient Greece a prototype of the modern computer was developed to track dates for holding the Olympic Games.
Much later, in the 17th century AD, statistics was developed by John Graunt to make a note of plague deaths. In the 19th century, there were more notable breakthroughs. The term “business intelligence” was first used, the US census bureau developed a tabulating machine to record data. It was developed by Herman Hollerith who went on to found IBM.
In 1965, the world’s first data center was established by the US government to store tax returns. The Internet, Big Data and the mobile phone have contributed to taking data to the next level.
Data collection has evolved over the millennia and today we have access to humongous volumes of it.
The real question is what are we doing with it.
Data has the potential to transform businesses, truly engage with the customer and build lasting relationships. It helps to plan better products and design better services, increase your conversion rate, match customer expectations, and keep the business customer-centric.
The type of data you collect informs a deeper and wider understanding of your customer. It ensures that they stay connected with your business and develop lifelong value. They begin to trust you with some of their personal information so that you can serve them better.
Data arrives from various touch points along the customer journey and experience. It may be different in quality and quantity at different stages. Throughout the history of marketing, the goal has been to make sense of the mammoth amounts of data that comes pouring in. There are a few main categories of data that include:
Standard Data: Demographic information such as name and address, gender, age, location and income for individuals and firmographic information about companies such as type of industry, and revenue bracket are types of basic data that can be collected. This data helps to segment the market and divide it up into usable and knowable chunks.
Engagement Data: Information about the type, level, frequency of interaction with your brand is valuable because it provides knowledge about how the customer interacts with your brand. It also gives you insights about their journey. You can gather this from reviews, social shares, page-views and ad clicks, email queries and requests for demo.
Behavior Data: The customer’s observable actions as they interact with your brand, product or services give information about their behavior. This is slightly different from engagement data and is used by different industries in various forms. Tech companies can access behavioral data via account login, licenses, additions, downgrade, deactivation or utilization of features. Other firms do it via their purchase orders and invoice details. Your website is a great resource for mining behavioral data.
Attitude Data: is perhaps the closest you can ever get to your customer’s way of thinking. It offers a true and first-hand account of their attitude to your brand, products and services. It is available through online reviews, social media, satisfaction surveys, support ticket comments and interaction with your customer reps.
Managing Customer Data
83% of companies, according to an IBM report, reveal inaccuracy in data and this results in companies working with wrong or irrelevant data in their decision-making process.
The process of acquiring, storing, organizing and analyzing data to serve your customers better helps to build deeper, stronger and healthier customer relationships.
Having a reliable and accurate customer database helps companies to:
- improve customer retention
- boost sales and revenues
- reduce lead costs
- enhance customer relationships
- optimize your ROI
The field of CDM (customer data management) is an area where first-party data (directly collected from the customer) is used. To ensure that this data can be used effectively and accurately, it’s important to keep certain aspects in mind.
Strategy for Data Governance: This helps you to determine what data is important and how it must be collected to avoid confusion. Having a strategy in place helps you to on-board your entire team as far as data alignment, validation and collection enforcement are concerned. The focus should be only on critical and valuable data. Your team should know who requires this data, how it helps and whether it’s truly necessary to collect it.
Problem of Silos: As every data analyst knows, the biggest obstacle to data integration is data silos. Data collected from various departments stay within these blocks and fails to give you the big picture. For instance, carts are being abandoned on your shopping site, and your website analytics team has to share this information with your development team. Similarly, data gathered by sales, finance and marketing teams has to converge. This allows you to create more personalized relationships, reduce customer acquisition costs and reward loyal customers.
Privacy and Confidentiality: The average cost of annual data breach in the US is $7.9 million. Ensure that you manage your customer data on a reputed, well-established platform that offers top-level data security. Even a single breach can break customer trust for ever. Guard your customer’s data diligently or you could lose your reputation.
Compliance: As a responsible business owner, it’s vital that you stay in compliance with current regulations regarding collection, storage, use and analysis of data.
Tools: Choose the correct data to collect, store, analyze and manage data. With huge amounts of data pouring in, it’s wise to have a complex and multi-layered system rather than a primitive one. Use a DMP (data management platform) to collate data arrive via first/second/third parties, cookies, behavioral data to create the right market segmentation.