Information is power.
This expression takes its full meaning when talking about customer databases. Indeed, the more you know about your customers, the more you will be able to please them. Nowadays, CRMs are vital tools for companies.
The raw material they provide you with is what your sales team need to build and manage your whole strategy. With it, you can improve your customers’ loyalty, convert your prospects into customers, and increase your income and the value of your portfolio, while saving time on your internal management. It would be a shame not to use one.
What is a customer database?
Here is what a customer database tool does for you: it combines, aggregates, compiles and analyses your customers’ data. Consider it as a huge library containing relevant information for your work: from simple contact information (address, email, phone) to specific information or transaction details. Your customer database feeds on the public and private information that the sales team receive.
Each database has a different purpose based on which industry you work. The database for real estate agents who are selling, chasing and prospecting is not the same as the database for lawyers who want to centralise the history of their interactions and time spent with their customers.
Quite often, you will come across database drafts containing fragments of information in Excel files spread across folders and subfolders of an internal network. Sometimes they complement each other with a shared address book, or with a locally developed database. Either way, updating and managing the data can quickly turn into a nightmare. Don't be scared by their seemingly complex nature, databases are first and foremost here to make your life easier.
The 6 secrets of a good customer database
Secret #1: Quality
To be useful and usable, the data you input in your database must be sorted and optimised. Avoid duplicates and unnecessary information that clutter customer records and bring no value. It can be quite complicated to make ERPs, CRMs, data from social networks, accounting tools and email marketing services like MailChimp communicate. The quality of data is therefore essential to ensure the good operation of your database and its ability to interconnect with third-party solutions.
Secret #2: Availability
Everyone does not work in the same premises, with the same schedules or needs. Some teams work remotely, at home or abroad, while some managers work on weekends or late at night, and sales people are constantly on the road. Because of this increasing mobility and huge changes in work habits, information must be easily and quickly accessible at all times. Whether it is from a smartphone, a computer or a tablet, all your collaborators must be able to access your customer database. It also needs to be available and accessible online, even when your office is closed.
Secret #3: Security
Piracy, attacks and data theft are now part of everyday business. Your teams must work without fear of loss or corruption of data that would compromise a business relationship. Your database must be equipped with systems of defence and backup to avoid the increasing variety of attacks. From ransomware to phishing, social engineering to untreated security threat, there are multiple ways to access corporate data. You need to take all necessary precautions to avoid becoming a victim.
Secret #4: Compliance
Since May 2018, a European regulation called GDPR (General Data Protection Regulation) has transformed the way companies collect, manage and secure the data they are responsible for. Each piece of information must have a purpose, be secured, and collected via the explicit and informed consent of the user. All your databases must therefore comply with the GDPR or face financial penalties that could permanently impact your cash flow and your reputation.
Secret #5: Uniqueness
Data is a living matter in constant evolution that needs to be checked, enriched and updated at every opportunity. For example, is your customer IBM or I.B.M? Or is it I BM? I-B-M? Uniqueness is crucial in a customer database, especially when it comes to creating and designing analytics and reporting for your management. The more unique your data is, the more valuable it will be.
Secret #6: Updating
Whether it's a change of address, product reference, certification or the return of an order, each interaction must be duly completed and each action must be documented. This is why you must audit, clean and update your customer database on a regular basis. Because the data is interconnected and has strong strategic potential, it feeds many third-party tools to track the evolution of a customer's life cycle or a commercial offering.
How to collect data for my database?
Data collection is key. The database is just a container. While the container needs to be efficient and operational, its content is its most valuable asset. In addition, for data collection, compliance with the GDPR must be at least as important as the collection strategy itself. There are hundreds of different sources of data available to businesses to enrich their databases with customer data. They can be classified into three categories:
First-party data
This is data that belong to your company. It can include customer order histories, product inventories, prospect interactions, decision maker identities, professional contact information, etc.
This data is collected as part of regular customer contact, or when a prospect agrees to share it with you when they subscribe to a newsletter, a webinar, leave a message on your website, etc. Some first-party data can also be purchased from service providers according to specific socio-demographic criteria.
Second-party data
This is data that a third party organization makes available to you for a limited time. This is a very framed use that occurs in the context of an event sponsorship for example. You can retrieve all the data of visitors to a trade show or conference, or subscribers to a blog or newspaper to perform a one-off action. If these people then interact with your services, they become first-party data. Otherwise, the data remains the property of the organization that made them available to you.
Third-party data
This is data that does not belong to you, but with which you can interact. It is typically coming from advertising on social networks where you can filter and target prospects in a very fine way, but without this data belonging to you. When people come in contact with you after a collection operation via a landing page for example, this data becomes first-party data.
What data can I (or should I) collect?
While there is no absolute answer that works for all companies, there is a common foundation. Knowing what kind of information your customer database should hold is a choice as commercial as technical.
Your customer database should ideally contain:
- All the details of your clients and key contacts of their companies.
- Practical data on the clients companies (latest news, calls for tenders, financial health, annual reports, etc.).
- History of interactions (emails and telephone exchanges, meeting notes, product quotes, accepted and rejected quotes, invoices sent and paid, etc.).
- History of past orders and purchases.
- A personalized scoring on each client's business potential.
Creating a customer database is a work that structures your business approach and that is common to all companies. From very small businesses to large corporations, control and knowledge of this data can make all the difference in a commercial prospecting approach. The potential associated with the identification, the prospection and the act of sale can be hugely increased if you know how to deal with customer data and have the right tools to leverage it.
