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Customer data guide – how to collect, store and profit from it

October 8, 2011

Every business, regardless of its size or area of expertise, has the ability to generate data on its customers. This may be relatively simple information about the customer, their location, and the products and services they have purchased, to more in-depth and complex data on their behaviour when browsing online or detail on their personal or financial circumstances.

The skill comes in understanding what data is potentially valuable to your business, and crucially how to generate usable insight from this data, to release its value in practical and profitable ways. However many SMEs are put off from exploring the world of customer insight; either because they perceive it to be too difficult and costly, or because of the bad press regularly given to examples of ‘data breaches’ and the ‘big brother’ mentality of consumers when questioned on how they believe their data is being used.

But SMEs should investigate customer data, regardless of the added pressure of the current economic uncertainty we’re all facing; the value it can bring to a business, in supporting sales, improving relationships with existing customers and helping in the acquisition of new customers shouldn’t be ignored. Hopefully by considering the following, more SMEs can take their first steps towards the benefits of being customer data literate.

What data should I collect?

There are certain basic data elements that are a vital prerequisite of more advanced data activity. The customer’s name, address and contact details like phone number, mobile and email address are all important basics, and will enable you to communicate with them.

Then, more advanced data elements can be appended to this background information; details of previous communication and transactions made with the customer, their purchasing history and communication preferences (e.g. do they prefer email to phone or post) can all provide valuable insight into the customer, what they’re interested in, and what makes them tick.

How do I store customer data?

It’s here that the dirty word ‘database’ comes into play. Many will be put off by the thought of investing in an expensive and complicated tool for managing data, but this is a somewhat old fashioned view of the database.

On the market today are a large number of databases, from ‘off the shelf’ products to more bespoke solutions, all designed to make the storage and crucially the accessibility of customer data an easy and inexpensive task. And for a first foray into using data, even a simple database can do the job, whilst being flexible enough to grow and evolve as the way you use data becomes more advanced.

How do I convert raw data into usable insight?

Again you don’t need to be an expert to derive intelligence from customer data. Many of the database and analytical tools available provide an excellent grounding in how raw data can be converted into usable insight.

Simple steps, like building a list of customers to be targeted by a new marketing campaign, demonstrate the underlying principles of direct marketing. By making various data selections, a target group can be identified (perhaps based on customers who have purchased a particular product, or who are of a similar age and financial background) and marketing budget invested in communicating with them on a specific offer.

Insight can be used to identify and model your best customers, so data on new prospects can be purchased, and these potential customers accurately targeted.

How do I turn this insight into profit?

Instead of simply throwing budget at promoting your products and services at a mass audience, the process of using customer data to better targeted marketing and communications activity ensures investment in marketing is as efficient as possible, generating substantial return on investment.

Testing is also an important part of the data-driven marketing process. Even the biggest brands will experiment with different target groups, offers and marketing channels. In doing so the most optimum approach can be identified for every campaign, further enhancing its profitability and success.

Taking your first data-driven steps

There are other considerations, such as making sure data is clean and up to date (and ‘suppressing’ data to remove customers who have moved house for example), but the above outline should give any SME a helping hand in taking its first steps into the world of customer data. And with the wide range of easy to use tools on offer, and help and advice available from data bureaus, the benefits of a data-driven future are within reach.

For further information on customer data, try our guide – Top 10 data protection pitfalls for SMEs – and how to avoid them

About the Author

This article was kindly provided by Dave Gurney, Operations Director, Alchemetrics