A customer database helps you improve customer retention, increase revenue and increase the value of each customer. Read on to find out the ins and outs of customer data management.
The more you know about prospects, the better you’ll be able to cater to them. Customers want to feel unique and cared for and don’t want to be treated as a number. But without the right data to support you in personalising your approach - how will you ever be able to give them all that?
“The best way to leverage customer information is turning it into value for your customers. When you truly understand your ideal customer, you’ll be able to entice them with an offer to suit their needs and wants - which in turn boosts your sales.”
What is customer data management?
Customer data management is the way in which you keep track of information you collect about customers. This includes collecting, analysing, organising, reporting and sharing of customer insights throughout an organisation. A customer database can consist of contact information, past purchases, future needs, and any other information that can help you meet your prospect’s wants and expectations.
By actively managing customer information, you’ll be able to:
- Attract new customers
- Identify trends (e.g. seasonality)
- Build customer loyalty
- Increase the value of each customer
Why do you need a customer database?
With the right information, you’ll be able to generate leads, build better customer relationships, and close deals. The way you harness that information and how effectively you convert that data into ways to improve your business will ultimately set you apart from competitors.
The main benefits of a customer database according to IBM:
Which data should you collect?
Here’s an overview of relevant data that’ll help you paint a clear picture of your customer:
1. Contact information
- Customer name
- Contact info (email, address, phone number)
- Preferred method of contact
- Items purchased
- Value of previous sales
- Time of purchase
- Method of payment
- Due invoices
- Hobbies, interests
- Income level & background
- Survey results
- Complaints, questions or feedback they provided
- Last interaction and outcome
- Customer happiness score
All this info can help you assess whether your current efforts are bearing fruit - or not. What percentage of people go on to buy from you again, and why? Understanding trends among customers and prospects will help you personalise communication and improve your approach based on actual insights.
Among others, it enables you to:
- separate regulars from one-time buyers
- understand how people move through your sales cycle
- see what actions lead people to buy - or walk away
How can you collect customer data?
Understanding your customer requires a thoughtful analysis of where and how to collect the right data. By defining which information is most significant, you can start measuring and analysing better ways to engage them, and ultimately sell more. You can start by collecting customer information from just a handful of sources:
- Website forms
- Purchase orders
Keep in mind that you’re asking for something: phase you request for information in a way that appeals to your customers. Explain why you need the information you’re asking for, for instance: “so we can learn more about you and provide you with a service more suited to your personal needs, please fill in…”. You could also offer a discount on their next purchase if recurring customers fill out your survey or participate in your competition. Collecting data has to be either unobtrusive or incentivised - after all, it’s a way of exchanging value. Think about what’s in it for your customers.
Tip: when it comes to gathering customer information, you don’t need their full background at once. Ask new questions every time you get in touch, when people visit your website, or when they make a purchase. This is called ‘Progressive Profiling’.
Applying this principle will gradually build trust in your business, while you continue to learn more about the person you’re dealing with, as Aaron Ross states in his highly acclaimed outbound sales book “Predictive Revenue”.
How can you store customer data?
There’s a variety of tools available to store customer data. Early on, you could store data manually by using Excel or similar spreadsheet software. But as your data becomes more detailed or as your business starts to grow, you’ll need specific software to help you store, track and make sense of all that information. It may be wise to invest in the right tools from the get-go, rather than having to adjust once you run into the limitations of spreadsheet tools.
The most time- and cost-efficient way to manage customer information, is to use an all-in-one Customer Relationship Management (CRM) solution.
Important tip: regardless of what software you decide to use, make sure you store information in one database, so everyone can contribute to the same file. ‘Data redundancy’ occurs when the same piece of information is held in two separate places. Eventually, you’ll update only one database and forget the other, which will only lead to loss of time and human error.