Our world is driven by data. By 2025, global data is projected to grow to 175 zettabytes. What happens to all this data? For some businesses, they use this customer data to gain unique insights to improve things like sales performance or the customer experience. Data can also be used to analyze or guide decision-making and future activities. These can include things like streamlining internal processes to making financial decisions.
What is Customer Data?
Customer data is the information that companies collect every time customers interact with them–both online and offline. It gives you a more definite customer profile, lets you know the customer’s behavior, and gives you an in-depth look into the customer journey.
first-party and third-party data allows you to understand your customers better, and as a result, you can enhance your customer’s experience and strengthen customer relationships.
Generate more quality leads. By understanding your customer profile, you can find out the specific demographic groups that are interested in your product, so can tailor your marketing campaigns to them more effectively.
Increase customer retention. Because customer data reveals people’s behaviors, pain points, and preferences, you can also serve existing customers better, by constantly working to address their concerns and meet their needs.
Create a seamless customer journey. Customer data gives you a holistic understanding of your customer journey and lets you know which parts of your processes work, and which need improvement.
Predict sales and marketing trends. Data helps you see market trends and sales patterns more clearly, letting you plan ahead to make the most of seasonal swings or changing consumer preferences.
Plan out more efficient and effective marketing efforts. Customer data can even tell you which of your strategies and campaigns works best for improving sales performances and hitting targets. It also gives you insight into how to improve.
There are four major types of customer data:
1. Identity Data
Identity data or personal data is the foundation of a customer profile and helps companies identify each of their customers. It includes:
Name: First and last name
Demographics: Age, gender, etc.
Location: City and country where they live
Contact details: Email, mobile number, etc.
Social media details: Instagram, Facebook, and Twitter handles
2. Descriptive Data
Descriptive data gives a more in-depth look at customers than identity data. It tells a little bit of the customer’s story and helps businesses how they provide value to their customers.
The kind of descriptive data that’s most useful varies from company to company, depending on your industry. But here are some examples of basic descriptive data that many organizations track:
Career information: Current employment status, industry, income, etc.
Lifestyle information: Type of home, pet owned, dietary preferences, hobbies, etc.
Family information: Marital status, family size, etc.
3. Quantitative or Behavioral Data
Quantitative data is information about a customer’s engagement with your business through their actions, reactions, and transactions. It includes, but is not limited to:
Transaction information: Includes the recency and frequency of purchases, and how much customers typically spend on a purchase
Email communication information: Open rates, click-throughs, response rate, dates, etc.
Online activity information: Website visits and click-throughs, product views, social media engagement, etc.
Customer service information: Communication dates, query details, CSAT scores, etc.
4. Qualitative Data
Qualitative data goes one step further, helping you understand the personality of your customers and the why behind every action, interaction, and reaction. Some examples of qualitative data are:
Motivation information: Why did they make this purchase? What made them choose you over another option? How did they hear about you?
Opinion information: How would they rate your services and products?
Attitude information: Favorite color, food, etc.
Common Pitfalls of Customer Data
With all the available customer data companies have at their disposal to enhance the performance of customer service, sales, and marketing efforts, a remarkable 73% of companies still do not use it effectively. And out of those who do practise data collection, only 12% analyze it.
This is because, with Big Data being so, well, big, it can become overwhelming to process.
What makes it scarier are the news headlines reporting about data privacy breaches that result in business losses, customer distrust, and lawsuits, among other things.
In 2013, Adobe had reported that people were able to hack their system. Thieves stole about 3 million customers’ credit card information and login data. While in the same year, Yahoo experienced attackers compromising real identifications, email addresses, telephone numbers, and birthdates of 500 million users.
The good news?
All these pitfalls of customer data can be prevented by leveraging digital tools, such as customer data platforms (CDP), and practicing good customer data management.
What is a CDP?
Customer data platforms (CDPs) or data management platforms (DMP) are types of software that collects real-time data across all of your customer’s touchpoints and organizes them to create a 360-degree customer profile. It produces a customer database that is accessible by other SaaS software and systems that your company uses.
Customer data platforms are not to be confused with customer relationship management tools, which also collect and analyze customer data, but are only focused on sales. While a CDP gathers information from all possible platforms–from emails to customer relations to social media–so that your company has relevant data, a CRM only collects data that only has value to sales, such as your bestselling products and buyer personas.
Here are the main differences between a CDP and a CRM. A CRM:
Only collects data of existing and potential customers, while a CDP collects data on even anonymous visitors.
Focuses on sales, but a CDP tracks the lifetime customer behaviors and the entire customer journey.
Can only track online activities, while a CDP collects both offline and online data.
While a CRM is a helpful business tool to boost sales performance, it has many limitations. 52% of surveyed sales leaders around the world say that they are losing revenue because of the shortcomings of their CRM system, such as its inaccessibility to all parts of the organization and inability to predict churn. A customer data platform lets you overcome these issues, because it combines all customer data in one platform that can be accessed by various softwares and digital tools.
There are numerous CDPs in the market to choose from, and it can take a while to find the one that fits your organization best. So, here’s a list of the top CDPs available on the market, to save you time and energy searching for the best options available:
Segment collects and manages customer data in a single platform, so you can make real-time, data-driven decisions, personalize the customer experience, and customize your customer data pipeline.
Emarsys leverages advanced AI to create an omnichannel marketing solution that is fully automated. It also offers metrics customized to your industry and delivers results that are customer-centric, but also channel-agnostic, to achieve authentic 1:1 customer personalization in all your marketing and sales activities.
Developed by marketers for marketers, Exponea is a fast-growing company that offers unique AI marketing and sales solutions. They specialize in retail and e-commerce businesses and offer add-on packages that build on your CDP’s existing capabilities.
With a customer data platform at its center, Optinmove gathers, segments, and analyzes customer data so that businesses can make data-driven, actionable decisions. They also leverage AI to automate actionable insights which can be used to optimize marketing performance.
Tealium’s goal is to create better solutions for companies to collect, unify and leverage customer data through tag management, an API hub, a CDP, and other data management tools.
Best Practices of Customer Data Management
Although customer data enhances customer experiences and helps companies meet or exceed customer expectations, you must also take the steps to actively secure and protect the data your business is collecting.
Here are eight best practices that you can follow to maintain data privacy (and comply with laws like GDPR) while tracking customer behaviors:
1. Know your Objectives
What is the reason that you are collecting customer data? Are you doing it to find out your customer profile? Is it to automate processes? Or are you just looking into your customer’s behaviors to gain insight for marketing activities? How do these purposes tie in with your company’s overall goals?
By outlining the objective of collecting customer data, you only keep track of the data that is relevant to you. As a result, not only will your system be less crowded with unimportant data, but you and your team will have a clearer idea of what to do with the data once it’s collected.
2. Prioritize Security and Protection
Security breaches have increased by 67% since 2014 and can cost organizations millions of dollars. It therefore goes without saying that you need to prioritize the security and protection of all the customer data you keep.
So, prepare a concrete plan on how you plan to keep customer data safe and protected before you start collecting it. Also, prepare a backup plan, just in case your data storage gets breached, so you’re ready if the worst happens.
More importantly, invest in a reliable and established CDP, a backup system, and train your employees regarding customer data privacy and security.
3. Be Transparent
Remember: you are collecting private and sensitive information about your clients. And it is your customers who will be impacted the most in the event of a security breach.
So, dedicate a portion of your website to inform clients of your security policies and how you plan to use their data (this is required by law if you’re operating in Europe). Also, give the customers the option if they want to provide certain information or not, like allowing them to opt out of certain cookie settings.
By doing this, you not only protect your business, but also gain the customer’s trust.
4. Regularly Clean Up Your Customer Data
A cluttered system not only slows you down, it can also affect costs and your customer’s confidence in you.
By cleaning up your customer data from inconsistencies, duplicates, and old data, you ensure that your data is accurate and you decrease the number of potential mistakes or system errors that could be caused by having too much inaccurate data. Consider the following when cleaning up your data:
Audit your data
Centralize your data across all departments to avoid silos
Have a consistent format for your data
93% of businesses who have experienced data loss for ten days or more file for bankruptcy within a year. Thus, backing up data should be an important and regular process for your company.
Here’s what you should consider when drawing up your backup plan:
What backup storage best suits your business?
Where will you store the backups?
What is your recovery plan for restoring systems using your backups in the event of data loss?
Backups keep all your data safe and secure, allow you to prepare for any type of disaster, and help ensure that your system is running seamlessly at all times.
6. Leverage Digital Tools
Technology is here to help you, so how you leverage it matters. Customer data platforms are one of the best ways to manage your data. However, you should remember not to choose just any CDP. Instead, make sure to choose one that:
Best aligns with your company goals
Fulfills your needs and provides the functions that you are looking for
Uses and is accessible by all your employees across different departments
7. Train Your Team
All of these steps will be useless if your team doesn’t understand what to do with the data they’ve collected and how to keep it safe. So, investing in training and education for your team on how to handle customer data is a must.
By doing so, you will not only be able to save money in the long run, but you will also be able to avoid critical situations and create a data-driven culture at every level of your organization.
All Customer Data in One Phone
What if we told you that all the customer data and analytics your company generates is accessible from your phone?
What if we also told you that you can interface with your customers through that same program, acting as a helpdesk and letting you manage customer relationships on the go?
With Aircall, you not only get to interact with customers in real-time from any device, but you can also make actionable and data-driven decisions based on the relevant customer data that Aircall has gathered, analyzed, and segmented for you.
Aircall leverages AI to automate processes for efficiency and integrates various apps and platforms to give you all the advantages of a CDP and a CRM in one app, which gathers data from various omni-channel customer touch points.
Ready to leverage data to create an amazing customer experience and build stronger customer relationships? Aircall’s cloud-based phone system helps you streamline customer data collection and get the most out of the data you collect – leading to better marketing and sales performance for your business overall.
Published on February 22, 2023.