Despite customer data being at the heart of modern digital marketing strategies, collecting customer information is only half the battle. To extract business value from it, you have to manage a customer database and analyze client information strategically. That's why in this article we will discover what CDM or customer data management is and its main principles and best practices.

Whether you are just starting to collect customer data or looking to improve your existing CDM strategy, this guide will help you.

What Are The Different Types of Customer Data

Before we discover what is customer data management, let's take a look at the different types of customer data and the benefits of each of them for business.

• Identity data. As the name suggests, this type of data covers basic information about the customer, like their name, email, phone, and address. This data type is the starting point for any marketing personalization.

• Quantitative data. Quantitative data covers everything that can be measured – for example, the number of website visitors or social media followers, the number of customers in a specific segment, and so on. The benefit of quantitative data is that it allows businesses to track performance metrics, identify trends, and make data-driven decisions.

• Descriptive data. This type of data is also called attribute data since it covers specific customer attributes that are descriptive by their nature. For example, it can include customers’ suggested income, describe purchased products, or descriptive preferences, like size or color.

• Qualitative data. The main advantage of qualitative data is that it provides direct insight into customer behavior, needs, and preferences. It includes but is not limited to social media comments, customer feedback, and customer service interactions.

• Behavioral data. Recently, we discussed the specifics of buying behavior and behavioral data in our dedicated guide. In a nutshell, this is all the information about customers' actions and interactions, like the number of orders made per a certain period of time or a website dwelling time.

• Psychographic data. Psychographic data is the information that describes customers as personalities, covering their interests and lifestyle, which, in turn, shape their shopping decisions. When collected and analyzed together with behavioral data, it allows for developing hyper-personalized marketing campaigns and improving the product or service according to the customers' expectations.

• Firmographic data. This type of data matters for B2B ecommerce companies since it describes organizations, their size, location, and business needs. With the help of this information, B2B companies can better define business opportunities and also create targeted marketing campaigns.

What Is Customer Data Management (CDM)

Customer data management is an umbrella term that covers the processes of collecting user data, storing, organizing, and analyzing it. Managing customer data requires using dedicated software that collects this information across different channels, consolidates it in a single dashboard, and allows for its safe storage and comprehensive analysis.

While customer data management opens a lot of winning opportunities for businesses, it also requires companies to follow the next customer data management principles.

• Transparency. This is the core principle of GDPR, according to which businesses should be transparent about the customer data they collect and the ways they use this data. The customer should also provide their consent to their data collection.

• Data minimization. The businesses that manage customer data should also make sure that they only collect and process those pieces of information that are necessary for specific business or marketing purposes. Unnecessary data should be securely deleted.

• Data security. Customer data management techniques used by the business should prioritize features of data security, which involves implementing data encryption, access control, and data backup practices.

• Ethical considerations. When creating a data management strategy, companies should also ensure that they aren't using customer data in such a way that can harm individual users or society as a whole.

Benefits of CDM in Terms of Sales and Marketing Strategy

Let's find out why is data management important and what benefits it can bring to businesses.

• Improved customer targeting and personalization. Client data management and analysis are at the heart of more effective, targeted, and personalized marketing campaigns. Having an understanding of customers’ needs and preferences, businesses can leverage more advanced customer segmentation and provide better-tailored product recommendations.

• Increased customer retention and loyalty. Leveraging customer data management best practices also allows for improving customer experience across different touchpoints, such as website personalization, chatbots, and email marketing, especially when these communication channels are part of an omnichannel marketing strategy.

• Better sales forecasting. Usually, customer data management software comes with powerful data analytics that enables businesses to make data-driven predictions of future sales, depending on customer behavior patterns, sales-heavy holidays, and other factors.

• Competitive advantage. Competent customer data management and analysis create opportunities for making more informed business decisions. With these insights in mind, companies can create custom-matched products and services accurately tailored to the expectations of their target audience. In the long run, this is also an opportunity to future-proof an eCommerce business.

How to Choose the Right Customer Data Management Platform: CDP, DMP, or CRM

However, leveraging all the benefits above would be impossible without the right customer data management platform. Let's take a look at the existing customer data management solutions, and discover how they differ from each other.

• A customer data platform (CDP). So, what is CDP? A CDP collects customer data across various systems, like a business website, mobile app, email marketing, and social media. Then, it consolidates this data into a Single Customer View (SCV) which can be used to create targeted and personalized marketing campaigns.

• A data management platform (DMP). This system collects and manages data from various sources, such as cookies, mobile devices, and third-party data providers. Then, this data is used to segment the audience into groups and target advertising campaigns. The main difference between a CDP and DMP is that the first focuses on the customers of a specific company, while the second gathers third-party users' data.

• A customer relationship management (CRM) platform. CRM systems, in turn, focus on customers’ interactions with the brand, such as sales, marketing, and customer service. This type of customer data is collected with the goal of improving customer retention and loyalty. So, the main difference between a CDP vs CRM is that the first provides a complete view of the customer journey, while CRM focuses on managing customer interactions.

CDP vs DMP vs CRM – a comparison chart

How to Create a Perfect CDM Strategy

After the main differences between CDM tools became clear, let's find out how to get started with customer information management step-by-step.

1. Identify your business goals. Define what goals you pursue before getting started with customer database management. Do you want to run an omnichannel marketing strategy? Or the goal is to improve your relationships with the customers? Depending on the answer, you will be able to decide what type of customer data to pay attention to and what tool to use for this goal.

2. Define your customer data. Depending on the goal defined in the first step, you will have to collect different types of customer data. For example, if the goal is relationship improvement, then you need to be more focused on purchase history, customer feedback, and social media engagement. But if the goal is to build omnichannel marketing campaigns, you will need to focus on customer behavior data, like abandoned carts, product views, and so on. Depending on the data type you would like to collect, choose the CDM platform that is best matched with it. For example, in the latter case, you will need an omnichannel CDP, like Yespo.

3. Establish data governance policies. In the next step, establish data governance policies to ensure customer data is accurate, secure, and compliant with regulations such as GDPR and CCPA. This may include policies around data quality, data security, and consent management.

4. Create a data management plan. A data management plan is the framework according to which your customer data will be collected, stored, and used. This may include processes for data collection, data cleansing, data integration, and data activation.

5. Monitor and optimize. Monitor your CDM strategy regularly and optimize it based on your business goals and customer feedback. Use customer data to identify opportunities for improvement and make data-driven decisions.

Customer Data Management: Best Practices from Yespo

Yespo is a customer data platform that enables customer data collection, analysis, and behavior-based marketing automation. Here is how our platform can help you get started with customer data management.

Build a Single Customer View

With the help of Yespo, you can get started with customer data management by creating a Single Customer View. This is a unified profile of each customer that consolidates their demographic data, purchase history, and data on interactions with your marketing campaigns. With this information in mind, you will be able to develop more targeted and personalized experiences for your customers.

Leverage customer segmentation

Based on the customer data you have collected for a Single Customer View, you can segment the users into groups and tailor your marketing messages to each of them. For example, Multiplex, one of the largest cinema companies in Ukraine, achieved 50% more sales with the help of simple location-based segmentation. With the help of Yespo, the company was sending personalized incentives to the customers with an offer to visit their favorite or nearest cinema, resulting in skyrocketing ticket sales. As an option, you can also develop personalized and segment-based email marketing campaigns, sharing the most relevant offers with your best buyers, new customers or VIP clients accordingly.

Run customer data-driven omnichannel marketing campaigns

The opportunities of Yespo CDP aren’t limited to customer data collection and marketing automation. With the help of our platform, you can build an omnichannel marketing strategy, consolidating all the communication channels into a single system. Based on your customer data and their behavior patterns, you can set up custom omnichannel workflows, reaching out via email, website pop-ups and mobile push notifications, instant messengers, and SMS.

Conclusion

Summing up, customer data management becomes a critical process for companies eager to extract the maximum value from customer data. A competent CDM strategy can provide businesses with several competitive advantages, such as improved customer targeting and personalization, optimized operations and decision-making processes, and compliance with data privacy regulations.

Using the right customer data management tool is also crucial for leveraging all these benefits for your business. Yespo is a customer data platform that collects client information across multiple data sources, consolidates it in a centralized place, allows for running automated marketing campaigns, setting up omnichannel communication workflows, and tracking CDM performance in real-time.

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