Customer data management (CDM)

Customer data management is essential for marketing and other teams to make strategic decisions, remain compliant, and serve customers well.

What is customer data management?

Customer data management (CDM) is the process a company uses to collect, store, organize, and act on information about its customers. CDM involves elements like: 

• Tools or platforms
• Documented processes
• Strategy
• Security practices and governance

When a company manages customer data well, teams can access the data they need quickly and securely. Then, they can put data insights into action — also known as data activation. Each team uses customer data differently:

• Marketing uses customer data to segment audiences and target messaging and campaigns
• Sales uses customer data to personalize conversations with prospects and customers
• Support uses customer data to solve problems effectively

Strong customer data management also helps protect customer data in line with privacy regulations, such as the General Data Protection Regulation (GDPR).

Customer data management vs. data management

Customer data management and data management are related but different. CDM involves storing personally identifiable information (PII), such as names and email addresses, gathered through first-party methods like website forms. CDM guides various marketing, sales, and customer service efforts. 

Data management is used primarily to target advertising using third-party data, like website cookies, and it includes anonymous data such as IP addresses. 

When it comes to the platforms used for each of these processes, the distinction is similar. Data management platforms (DMPs), which focus primarily on the collection and storage of third-party data, are more narrow in scope than customer data platforms (CDPs). Whereas CDPs collect data from all sources — with a focus on first-party data — DMPs rely heavily on anonymous sources like cookies, devices, and IP addresses and assist primarily with advertising rather than all of marketing.

Why is customer data management important?

Effective customer data management helps companies make better decisions by understanding customers efficiently. When you know your audience, you can better serve the people in that audience.

Customer data management is also important because of growing privacy concerns and regulations. Companies must handle customer data carefully to maintain customer trust, avoid costly data breaches, and remain compliant with regulations like GDPR and the California Consumer Privacy Act (CCPA). 

The role of customer data management in marketing

One major benefit of using a customer data management system is that it allows marketers to create clearly defined customer profiles through segmentation. Using first-party customer data, teamscan create better marketing campaigns and messaging that appeal to specific audience subsets, so people know the product or service is right for them.

Benefits of strong customer data management programs

Stronger personalization

When companies manage customer data effectively and create well-defined customer profiles (of individuals and audience personas), they can personalize the entire customer journey. Personalization may look like:

• Individualized product recommendations based on past orders or browsing history 
• Targeted campaigns, including retargeted digital ads and email drip campaigns
• Customized messaging that matches an individual’s needs and pain points
• Omnichannel interactions that recognize customers across channels and integrate all of their experiences

Control of your data 

Customer data management solutions help companies stay in control of their data through tagging and organization, tracking and measurement, governance, and data insights. Data collection isn’t enough — savvy brands need to protect, clean, and update their data over time.  A CDM program helps them do that.

Ability to activate first-party data

A customer data management process helps companies collect first-party data directly from customers, allowing them to take action and make decisions based on that data. Direct methods of data collection include customers’ pageviews and clicks (first-party data) or survey responses and newsletter signups (zero-party data). These methods are more consent-based and build better trust with customers than third-party methods like cookies that track consumer behavior from site to site. 

Moreover, Google has announced its plans to phase out third-party cookies for 1% of Google Chrome users, and the other 99% will soon follow. Markers need to rely more heavily on first-party data collection and activation going forward.

Privacy compliance

When armed with a CDM strategy, companies have documented processes to keep data secure and protected. A customer data management platform ensures proper access controls and oversees audience consent requirements for their information.

As privacy regulations like GDPR and HIPAA continue to increase, brands must prioritize compliance to avoid hefty fines and maintain customer trust.

One location for data

Customer data management allows organizations to store all collected data in one centralized location. This offers numerous benefits, including:

• Quicker and more streamlined organization for acting on customer data
• Easier data maintenance and updates to individual profiles and audience personas
• Greater accuracy, rather than having multiple, inconsistent, or siloed data sources
• A clear view of customers’ entire journey from start to finish

What does my customer data management strategy program need to include?

1. Single source of truth

A single source of truth for all customer data is the foundation of a CDM program. Rather than storing this information across several platforms, all teams need to be able to access a one-stop shop that offers the most accurate and up-to-date information.

2. Data governance

A customer data management program must include clear, well-documented data governance in the form of policies that everyone must follow. These policies keep data organized, accurate, and secure. Data governance ensures that organizations know what data they have, where and how it is maintained, and how it is used and secured.

3. Data privacy

Strong customer data management includes strategies and practices for keeping customer data safe and secure from cybersecurity attacks or data breaches. Companies enforce data privacy as part of CDM through access and permissions control, password protections and encryption, software updates, tagging sensitive data like PII, and other security best practices.

4. Data accuracy

To manage customer data properly, companies need to keep data as accurate and up-to-date as possible. This includes keeping data cleaned and removing old data in keeping with regulations. But it also means matching customers’ information across touchpoints, called identity resolution. A CDM platform and strategy can help track individuals and analyze and cross-reflect their data to create a single customer, or 360-degree view. 

What type of team do I need to build a data strategy?

To build a customer data management strategy, you need the input of multiple teams, including those that will access the data most frequently. You also need the expertise of leaders from IT, business analytics, and security. Ideally, you should have a dedicated data management or data engineering team that can work with marketing, sales, and customer support to ensure the customer data management platform meets everyone’s needs.

What data types should I focus on with my customer data management strategy?

Identity

Identity data includes who a customer is, such as their name and contact information. This is sometimes known as personally identifiable information (PII). While all data is vulnerable to breaches or cyberattacks, companies must be especially vigilant to guard PII and manage access to this data carefully. 

Engagement

Customer engagement data tracks when, how, and where people interact with your brand across various channels. These channels can include your website, social media channels, email campaigns, and any other digital channels. Engagement data metrics include (but are not limited to):

• Traffic and impressions
• Clicks
• Session times
• Video views and watch times
• Follows
• Likes and comments

Behavioral

Behavioral data is similar to engagement data, but it goes deeper. Behavioral data isn’t just concerned with the fact that someone engaged, but also the quality of their interactions with your brand. Behavioral data answers questions like:

• How long did they spend on each section of a particular page or piece of content? 
• Have they bought from you before? If so, what and how often? 
• Did they fill and abandon a shopping cart?
• Were they a past customer who’s since canceled or lapsed? 

These questions seek a more complete picture of the customer’s journey.

Attitudinal

Like its name suggests, attitudinal data captures customers’ attitudes and feelings about your brand or product. It is qualitative and more descriptive than the other types of data. Customers must provide this data voluntarily through in-depth channels like customer satisfaction surveys or forms.

What tools do I need to manage customer data effectively?

Customer data platform (CDP)

A customer data platform (CDP) helps you integrate, organize, and label customer data from various sources. By centralizing and tagging customer data in one platform, marketing teams can create a unified view of each individual for better segmentation. A customer data platform plays a key role in not just storing and tagging customer data, but also in enabling data activation by making data accessible to teams while keeping it secure.

Data warehouse (storage)

A data warehouse is a first-party enterprise solution that exists to store your customer data — it should be your single source of truth. Its primary goal is data management and analytics to drive business intelligence.

Data warehouses — like BigQuery and Snowflake — on their own do not always provide the level of accessibility that marketers and other teams need for data activation. Tools like composable CDPs can help marketers activate the data in their warehouse across different audience channels, including CRMs and social platforms. 

Customer relationship management (CRM) platform

A customer relationship management (CRM) platform — such as Salesforce and HubSpot — is a tool that stores customer information to enable sales and marketing workflows. It’s also a hub for teams to track lead sources, meetings and communication with customers, and deal stages.