Customer Data Management Filing

5 best practices for customer data management

9 min read
Erik Deckers

In today's golden age of big data analytics, customer data management has become an integral part of any company's marketing efforts.

Customer data is more than just a list of customers and their phone numbers. It's anything you want it to be — contact information, purchasing and payment history, demographic information, psychographic information and even social media updates.

But it's not enough just to keep track of everything in a spreadsheet. In fact, you shouldn't even use a spreadsheet — you need a proper database or customer relationship management (CRM) system such as SalesForce, HubSpot or Marketo. You need to properly handle customer data management, know what it is you should be collecting, and know how to keep it safe so you can use it to keep track of customers and prospects, as well as measure sales and marketing efforts.

What is customer data management?

Customer data management is the process of collecting, managing, cleaning, and analyzing the personal data of customers for a particular company, organization — or secret cabal.

By combining customer data with purchase history, companies can predict sales trends and determine the success of sales campaigns, past sales performance and future behavior patterns, and nearly anything else you can think of.

For example, banks can combine a person's information with their financial transactions and use artificial intelligence to not only make fast decisions on loans and credit cards, but also create customized financial products and banking experiences in real time.

Why is customer data management important?

Next to your company's financial data, your customer data is the lifeblood of your company. If you lose that, you might as well just shut your doors. (In fact, some companies do, which is why you always need an entire disaster recovery plan in place, but that's for a different article.)

Best practices for customer data management

These are the five best practices for customer data management, which can help you find the best information to collect, understand what and why you need to have accurate data, and what you can do to keep it safe.

  1. Choose critical data carefully.

  2. Don’t collect it all at once.

  3. Clean your data.

  4. Validate your data.

  5. Keep your customer data secure.

Let’s look at each practice in more detail.

1. Choose critical data carefully

Do you ever hold onto things that you "might need, just in case?" A lot of companies do this with the data they collect — as much as they can, without having any kind of strategy in mind, and squirrel it away like people on TV's “Hoarders.” That’s pretty bad customer data management.

Are you collecting fax numbers? Do you even have a fax machine? Why would you — in the holy name of high-speed broadband — ever need a fax machine again? You wouldn't, which means you don't need to collect fax numbers. And if you're not going to ship actual products to people, do you need their mailing address? You really only need an email and phone number.

Finally, be sure to keep track of how your customers found you in the first place, as well as what messages they respond to. Whatever else you might collect, always keep this particular piece of information, because it lets you know which of your marketing messages are effective.

Customer Data Management Computer

2. Don't collect it all at once

If you're offering products — eBooks, newsletter subscriptions, etc. — to people in exchange for their information, don't collect it all at once. Maybe I've become impatient, but I get irked any time someone wants information beyond my name and email for a simple newsletter. When they start asking for more than six pieces of data at once, I'll just cancel everything and close the page.

This is especially true if you're doing some kind of trickle campaign where you're going to send people information in stages.

Rather than ask people for their name, email, address, phone number, blood type, and the name of their kindergarten teacher, think about customer data management and only ask for two pieces of information — name and email — to get their customer record started.

Then, after you've invited them to get another piece of content — special report, webinar, infographic — ask for another piece of data. As you give them more, ask for a little more.

Not only will this help drive them further into your sales funnel, but it helps you decide what kind of information you need from people, especially if point No. 1 is sometimes subject to change.

Editor’s note: Looking for a streamlined solution for creating elegant email campaigns? Check out GoDaddy Email Marketing.

3. Clean your data, people!

I used to work at a direct mail agency years ago, and one of the most frustrating things to us was when people didn't clean their data. Well, only little frustrating, since we were often paid to clean and validate their data for them.

But I've seen other instances where companies just wasted all kinds of money on dirty data.

My sister-in-law used to receive a free magazine for teenage girls at her parents' house until she was well into her late 30s. In fact, it only stopped because her parents moved out of town. I've gotten mail sent to three different (incorrect) spellings of my name at the same address. And I still get mail for the previous owner (now deceased) of the house I live in now.

I always think about how much money was wasted in printing and mailing those unnecessary pieces, and wonder how many more they're sending out each month, week, or day.

Good customer data management means updating out-of-date information, merging and de-duplicating your records, and deleting entries of people who have no longer been in contact with your company over a long period of time.

For example, some email newsletter platforms will tell you which people have not opened your email newsletter for several months, so you can email those people one more time and ask them if they would still like to receive your newsletter. If they don't respond, or say no, then you can remove them from your list, which improves your deliverability numbers and helps you stop wasting time and energy sending them things they don't want.

4. Validate your data

Customer data management can be something as simple as asking people to enter their email a second time on a subscription form to confirm that they did it correctly the first time. Or send a double opt-in confirmation email to the address they gave you. Or send a download link to your eBook directly to their email, instead of putting it on a second web page, as a way to stop people from entering fake email addresses.

There are also plenty of off-the-shelf data verification tools that can ensure people are giving you correct data, and many of them integrate smoothly with most CRM platforms out there. Use them to validate email address, phone numbers and mailing addresses.

I may have listed this as item No. 4, but data accuracy supersedes everything.

You can't reach people if their contact information is wrong. Bad data means unsent emails, unsent emails means unread marketing, and unread marketing means lower sales.

Bad data also means bad mailing addresses, which means wasted money on printing and postage. I don't know how many hundreds and thousands of dollars that magazine publisher wasted on my sister-in-law, but they sent her a magazine for 17-year-olds for 20 more years. How many more hundreds and thousands did they waste on sending it to other former teenagers?

Even a simple glance at the age of a reader's record could have clued them in and they could have eliminated anyone who had received the magazine for more than six years. Even a 10 percent reduction of the mailing list could have meant a 10 percent reduction in mailing and production costs alone.

Customer Data Management People

5. Keep your customer data secure

You need backups and more backups. One backup on the company server is not enough. Hell, for my own laptop, I have three different backup systems: a WiFi-based backup system, a USB external hard drive and a cloud-based backup system — and that's just for one person.

Good customer data management means not only keeping several backups, but keeping your data very secure.

This is especially important if you have confidential or private information, like credit card numbers, Social Security numbers, personal health information, personal financial information, and so on. A data breach of this information will not only be terribly inconvenient for your customers, it can be very expensive for you to fix. (Make sure your business insurance covers cyber/data breaches.)

This also means restricting the levels of access among your employees. Only a few people should have complete admin access to your data, while others can be given editor-level access, and still others should be only given read-only access.

Rather than giving several people the ability to add new records or make major changes to customer data, create a system where only a few people can approve changes, but others can make provisional changes and additions that have to be approved by the editors (sort of like Wikipedia). This keeps people from dumping reams of half-completed, incorrectly formatted records into your system.

Treat your data well

Customer data management best practices can mean the difference between costly marketing plans, poor sales performance, and poor analytics results. By following these best practices, you can ensure your data is clean, validated, and secure. Treat your data well, and it will treat you and your company well in return. Ignore it or treat it badly, and it will fail you every single time.

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