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The complete guide to customer data management
What is customer data management?
What is customer data management?
Customer data management is the process of acquiring, organizing and using customer data to gain an understanding of customers and ultimately, increase conversions and retention through a more relevant customer experience.
Customer data management encompasses the tools and platforms businesses use to collect and analyze customer data, the ethics of customer data acquisition, and data security measures.
The data that is referred to when talking about customer data management is usually first-party data, which is data that is collected and used by your company. This is typically the safest type of customer data to collect because you can create a trail proving exactly where it came from and why it was collected. It’s also the backbone of any good personalization strategy, since it’s packed full of behavioral insights and implied interest.
Another type of related data is zero-party data. This is data which a customer intentionally and proactively shares with a brand. While first-party data helps marketers infer a customer’s interests and preferences, zero-party data provides explicit information to add color to customer profiles.
Two other types of data that are also included in the spectrum of customer data management are second- and third-party data. Second-party data is simply first-party data that has been collected by another company and shared or sold to a non-competitive partner, for example lead sharing for gated eBooks. Third-party data is data that has been gathered by a data-collection company. It is typically the worst quality data to use.
The importance of customer data management
The importance of customer data management
Today’s businesses have access to more customer data than ever before. Customer data management ensures employees don’t drown in this glut of data and instead gives them the high quality data they need for decision making.
Here are some key benefits of customer data management:
- Gives businesses higher quality customer data and helps maintain accuracy, usefulness and cleanliness of data
- Avoids data duplication and the wasted time and costs involved
- Improves targeting and personalization, which in turn boosts customer engagement and retention
- Empowers businesses to make data-driven decisions
- Helps businesses stay compliant with data regulations
- Protects businesses from data losses, thefts and breaches
Customer data management best practices
Customer data management best practices
1) Create a customer data management strategy
Before diving straight into any customer data management technologies and processes, it’s important to develop standards, guidelines and goals to keep your efforts on track.
Consider who will be responsible for managing different aspects of the customer data management process, which data sources you’ll use, where you will store your data and what steps will be taken to ensure your customer data management process is compliant with data protection regulations, such as GDPR.
2) Train your team
Provide training for your team to ensure they understand your customer data management strategy and know how to handle customer data.
3) Keep your data clean
Implement a data accuracy process and perform regular quality checks as part of your customer data management strategy to avoid data decay, which happens when there are changes in email addresses, phone numbers, physical locations and more. Real-time data is important here, since it represents the most up-to-date data and it enables marketers to identify trends and make adjustments to dynamic content (such as personalized product recommendations) in real time.
4) Implement customer data management technologies
Implementing technologies that can automate customer data management tasks such as data integration, profile creation, data analytics and joining up data from various sources to create a comprehensive customer view can help businesses increase efficiency and avoid manual processes.
5) Improve your customer journey
Make sure you put your customer data management efforts to good use by improving your customer journey. Use customer profiles to implement segmentation and deliver a personalized experience to each customer at every interaction they have with your business.
Customer data management software
Customer data management software
Specialist software is typically needed to undertake successful and efficient customer data management. There are different types of customer data management systems to choose from, such as Customer Data Platforms (CDPs) and Data Management Platforms (DMPs). You’ll need to consider your goals and motivations for your customer data management activities to determine which type of customer data management system will work best for your business.
CDP vs DMP
CDPs and DMPs often get mistaken for each other since they both help businesses organize and derive meaning from collected customer data. However, there are several differences, the main one being the type of data each one uses. Here are the 3 main differences between CDPs and DMPs:
1. The type of data they use
A customer data platform collects and unifies customer data across channels and systems to create a single source of truth. CDPs pull zero- and first-party data together to create comprehensive customer profiles, which can then be used to enhance marketing through tactics such as personalization.
A Data Management Platform collects third-party data sources (such as cookie IDs and other anonymous data points) to create anonymous audience profiles, which are typically used as targets for advertising and acquisition marketing.
2. Their use of customer identities
A customer data platform collects personally identifiable information (PII) on users, since this is necessary for creating detailed customer profiles. Good CDPs ensure you’re collecting PII in an ethical way by having very strong data security and helping you set data standards to make sure website visitors have opted in to your data collection, and also giving you the ability to delete visitor data if necessary.
DMPs, on the other hand, typically collect and manage large anonymised data sets. Anonymity is essential to the DMP’s role as a way to exchange information about audiences without violating personal privacy. Unfortunately, this makes it harder to confirm that the data has been collected in an ethical and legal manner.
3. Data retention
A customer data management platform retains data for longer periods of time, since customer profiles will become richer and more accurate with more data. A good customer data platform will also allow your customers to request access to or deletion of their data, and some CDPs even let you set limits on how long your customers’ data is held.
Conversely, DMPs retain data for shorter periods of time, typically 90 days. This is because fresh data is generally considered best for advertising campaigns, i.e. an advertiser would want to target people who are interested in a particular sector or topic right now, or have been interested in the past 90 days at most, as opposed to people who were interested in the topic 5 years ago.
Overall, a Customer Data Management Platform empowers you to access and store customer data in a single source to create a single customer view (SCV), which can then be used to improve the customer experience through personalization and targeting.
Data Management Platforms give you access to massive data sets and allow you to gather new audiences, however they can’t help you differentiate since the same information can be retrieved by your competitors and other users of the same DMP. They also offer less control over how you use and label the data.
How Fresh Relevance can help
How Fresh Relevance can help
A personalization campaign will only ever be as good as the data that’s fueling it. With Fresh Relevance personalization platform, you can collect data seamlessly across all digital and offline touchpoints, unify it and use it to power your omnichannel marketing.
Fresh Relevance acts as a real-time CDP by enabling you to:
- Collect and store real-time customer data from any source to create a unified profile of each shopper
- Put those customer insights into action in personalized cross-channel campaigns
- Identify and engage customers across any device they use, in line with the latest privacy legislation and changing cookie landscape
- Create unique, granular segments based on behavior or stage in the customer lifecycle and purchase funnel
- Surface insights about your customers and uncover new opportunities with our audience analytics
Learn more about Fresh Relevance’s customer data management solution.
FAQs
How do you keep track of customer data?
To effectively track customer data, establish a centralized database. Use Customer Relationship Management (CRM) software to collect and update data consistently. Employ data validation processes, and adhere to data privacy regulations.
What are the best practices for data management?
Data management best practices include establishing clear data governance policies, ensuring data quality through validation and cleansing, securing data with robust cybersecurity measures, implementing effective data backup and recovery procedures, and complying with data privacy regulations.