Published on August 04, 2021/Last edited on August 04, 2021/5 min read
The incredible power of customer data cannot be overstated. When brands are able to tap into insights to better understand customers' experiences, they're able to deliver on the promise of customer-centricity, and see gains in key business outcomes like customer engagement, lifetime value, profitability, retention, and growth.
And it's not just us saying so. Customer-centric businesses are 60% more profitable than the competition and companies serving up superior customer experiences generate nearly 6X the revenue of competitors with sub-par experiences, according to Forbes.
Here's everything marketers need to know about customer data—how to get started collecting it, what's important to collect, how to use it and, ultimately, how to respect individual customer privacy.
In many cases, “data” means different things across different teams, departments, and organizations. That's why an important first step when beginning to collect customer data is aligning on an internal data collection strategy for your company. While your data strategy will ultimately be tailored to your brand and your customers' needs, there are some basic steps every company can take to get started in a thoughtful manner.
Data Collection 101
Step 1: Identify your marketing goals
Step 2: Identify the custom user data needed to support your efforts
Step 3: Collect only information that
Step 4: Make sure the data you collect
While every company's needs will vary, at a high level, here are the three main kinds of customer data brands collect:
1. Demographics and personal information. Also known as attributes, these can be collected when a customer first creates an account, or can be sourced from click-to-install advertising campaigns (such as ones targeting certain age groups or locations). These can include:
2. Preferences. Depending on your company, you may ask your customers questions via a preference center or other feedback loop to gather intel about which content topics they care about or which products or services they’re interested in. These can include:
3. Behaviors/events. Behavioral data is made up of all the customer actions your customers are taking across your apps, websites, email lists, and more. These can include:
For many brands, the challenge isn't necessarily what information to collect, but what to do with it. That's why per some estimates, more than half of the customer data that gets acquired sits unused.
With batch and blast (and spray and pray) marketing having shown to be ineffective, not to mention off putting, instead of aiming for mass appeal, savvy brands—from Burger King and Overstock to Canva to IBM—put their customer data to work to serve up marketing that's truly personalized at the 1:1 level using the following tools and technologies:
Between the EU’s General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), and Apple’s recent focus on privacy with iOS15, it's crucial for brands to have a strategy in place for adhering to customer data privacy standards.
At a regulatory level, that means being compliant with GDPR, CCPA, HIPAA, and whatever new regulations come along. At a human level, that means following basic customer-centric data do's and don'ts:
1) DO...make it clear why you’re asking customers for their information. Explain how collecting and storing the details you’re asking for will benefit them and improve their customer experience.
2) DON'T...be creepy. Use your best judgment about how you put customer data to use. The day someone turns 65, it's probably best to send them a friendly "Happy Birthday" greeting or a retirement-planning guide, rather than, say, a guide to estate planning.
3) DO...ask for information at the right time. Establish an onboarding process that gathers information over time, continually communicating the value of each new request and asking only when the request is logical. No one likes sharing information before they know the value of doing so.
4) DO...offer a preference center. This can be a web page or app section where customers can adjust their opt-ins and otherwise manage their experience. Customers should have the freedom to personalize their preferences and tell you what they actually want to hear about (and how often).
The best laid data collection and customer data strategies can be foiled by technology—when systems don't speak to each other and share key customer details in real time. Get our guide to today’s marketing tech stacks and data ecosystems and learn how real-time, streaming data can help you eliminate silos in your MarTech stack and enable more effective cross-channel customer engagement.