Customer data management: 8 best practices for CDM success

When it comes to keeping your customers happy, you might consider better service, faster response times, or deeper discounts. However, according to the Zendesk Customer Experience Trends Report 2024, 70 per cent of customers will not even consider your product or service if they feel your data security is subpar.

Proper data collection and management are absolutely essential for ensuring that your company avoids data breach issues and the resulting loss of customer trust. Beyond that, well-managed data can optimise customer support, deliver more personalised interactions, and even boost sales by better understanding your audience’s needs.

In this article, we’ll dig into what customer data management entails and break down eight strategies you can implement right away to protect your data, build trust, and create a seamless customer experience (CX).

More in this guide:

• What are the benefits of customer data management?
• 8 best practices to manage customer data
• Frequently asked questions
• Streamline customer data management with Zendesk

What are the benefits of customer data management?

The value of effective customer data management can include:

• Increased customer acquisition

• More upsell and cross-sell opportunities

• Enhanced customer trust
• Improved customer retention, customer lifetime value, and customer loyalty
• Higher customer satisfaction

• Increased competitive advantage through better personalised experiences

• Stronger customer relationships

Effective CDM allows businesses to truly understand their customers and use that knowledge to drive better business outcomes.

8 best practices to manage customer data

Though customer analytics can provide a lot of value to companies, the process of collecting it must be done properly. Here are eight customer data management best practices to ensure data quality, security, and usability.

1. Take security seriously

In our CX Trends Report, a majority of leaders (56 percent) admitted to experiencing a data breach or cyberattack targeting customer data in the past year. The cost of a security lapse goes beyond financial penalties and lawsuits—a tarnished reputation could drive customers away for good.

Here’s how to keep your data safe:

• Implement strong data encryption protocols.

• Use multi-factor authentication to access customer service analytics.

• Regularly update and patch all software and systems.

• Use firewalls and anti-malware tools.

• Perform regular security audits and penetration testing.

• Develop and maintain an incident response plan.

Investing in customer data protection is an investment in your company’s future, which is money well spent.

2. Gather information ethically

Being upfront about what data you’re gathering and how you plan to use it isn’t just good practice—it’s a requirement under laws like GDPR and CCPA. Plus, customers appreciate transparency. In fact, 75 per cent of organisations believe that a lack of customer data transparency could lead to increased churn, according to our CX Trends Report.

Here are a few ways to ethically gain consumer insights:

• Use clear language about what data you’re collecting and why.

• Allow customers to opt out of data collection that makes them uncomfortable.

• Make it easy for customers to manage their data preferences.

• Provide an easy-to-understand privacy policy that outlines your data practices.

Also, regularly review and update your data collection practices to ensure they remain ethical and compliant with evolving regulations.

3. Decide what you really need

Too much data—known as data saturation—can overwhelm your company with information and hinder decision-making. Hackers can also gain access to data you shouldn’t necessarily have. On top of that, outdated or irrelevant data that sits around too long becomes "dirty," leading to inaccuracies and poor decisions. It’s like keeping expired milk in the fridge—it’s only a matter of time before it starts to stink up the place.

Instead, focus on collecting data that improves customer service and directly supports your business objectives. Ask yourself:

• Is this data critical for decision-making or improving customer experience?

• Who will use this data, and how will it be applied?

• Does this data have a defined purpose and value?

• Is this data up to date, or are you holding onto it "just in case?"

The key is to be selective. Ditch anything that doesn’t have a clear use case or benefit, and make sure every data point aligns with what you’re trying to achieve. This way, your data works for you—not the other way around.

4. Invest in the right software

Choosing the right customer data platform (CDP) is important for creating an analytics environment that builds trust in data quality and streamlines workflows. The right solution can help you integrate data from various sources, ensure data accuracy, and provide actionable insights.

The ideal CDP should integrate with your existing tech stack, provide easy-to-use analytics and customer data visualisation tools, scale with your business growth, and offer robust data security features, like:

• Detailed data access logs

• Advanced data retention policies

• Personal customer data redaction

• Role-based data masking

• Advanced encryption

Align your software choice with your business needs and ensure it supports compliance with data protection regulations. Investing in the right CDP can significantly improve your data management capabilities and drive better business outcomes.

5. Unify your data

Customer data is scattered throughout email platforms, CRMs, social media channels, and other platforms. This fragmentation makes it challenging for businesses to build complete customer profiles. Unifying your data ensures everyone in your organisation sees the same information.

To effectively unify your data:

• Implement a central CDP that can aggregate data from multiple sources.

• Create unique customer identifiers to link data across different systems and touchpoints.

• Establish data governance policies to ensure consistency in how data is collected, stored, and used across the organisation.

• Create accurate customer segments to group customers based on shared characteristics.

• Regularly audit and clean your data to eliminate duplicates and resolve inconsistencies.

Creating a unified customer view enables consistent messaging across all channels, personalised experiences, more accurate customer segmentation analysis, and more efficient customer service.

6. Leverage AI

By incorporating artificial intelligence (AI) into your CDM strategy, you can automate complex processes, uncover hidden patterns, and make better decisions based on actionable insights.

Here’s how you can leverage AI data analysis to optimise your data management efforts:

• Sift through mountains of sales data to identify trends, anomalies, and high-value opportunities.
• Continuously learn from new data to refine customer segmentation and improve targeting.

• Use algorithms to identify and fix errors in your data, such as duplicate entries or inconsistencies.

• Analyse feedback to understand common pain points and gauge customer sentiment.

• Integrate data from various touchpoints to deliver highly personalised experiences in real time.

• Track consumer behaviour and anticipate future trends based on historical data.

AI tools can transform raw data into actionable insights, leading to more informed decisions, better customer experiences, and an enhanced CDM strategy.

7. Train your team

Data management is only as strong as the people handling it. The reality is that most teams aren’t fully equipped to deal with data privacy and security complexities.

In fact, our CX Trends Report found that only 28 percent of leaders say their teams have advanced knowledge of data privacy best practices. That’s not a good look when you’re trying to show customers they can trust you with their information.

Here are some ideas to get everyone on the same page:

• Don’t make data training a one-off event. Incorporate it into your onboarding and keep it fresh with regular updates.

• Gamify the learning process to make it fun and engaging. Use quizzes, simulations, or role-playing exercises to reinforce what they’ve learned.

• Complex data privacy laws can be hard to remember. Provide your team with easy-to-access resources that outline key points.

• Use case studies of real-world data breaches or security missteps to show the consequences of not following cybersecurity best practices.

Empowering your team with the necessary knowledge and skills mitigates risks while creating a company-wide culture that values protecting customer privacy.

8. Think about access

Who really needs to access your customer data? Limiting access to only those who need it can prevent accidental (or intentional) data mishandling. Implementing a "need-to-know" basis for data access can help:

• Reduce the risk of data breaches.

• Ensure compliance with data protection regulations.

• Maintain customer trust by limiting the exposure of sensitive information.

Consider implementing role-based access control (RBAC) systems that grant data access based on an employee's job responsibilities. Regularly review and update these access permissions to ensure they remain appropriate as roles and responsibilities evolve.

Frequently asked questions

Streamline customer data management with Zendesk

Managing customer data is no small feat, especially when trust, security, and CX are on the line. But with the right strategy and tools, you can turn data into a competitive advantage, delivering consistent, secure, and personalised customer interactions at every touchpoint.

Ready to simplify your customer data management and build deeper customer trust? Learn more about advanced data privacy and protection from Zendesk.