This article is part of our Essential Guide: CRM leadership: Buying, managing and running a system

Don’t take managing customer data lightly

Businesses today collect and store lots of contact data. But maintaining that information can mean the difference of knowing customers -- and no customers at all.

This article can also be found in the Premium Editorial Download: Business Information: Ignore customer data quality at your peril

As recently as two years ago, when checking in at my favorite business hotel, I still would be asked the question, "Have you stayed with us before?" Of course I have -- I even participate in the rewards program there. Now when I check in, the front-desk clerk knows where and when I last stayed, and what I ordered for room service. An improvement? Yes and no, but at least the hotel knows I'm a repeat customer.

The problems confronting businesses trying to make sense of customer data are myriad, as you will read in this issue of Business Information. Knowing what data to collect, how to collect it and what to do with it is vitally important. So is managing customer data: making sure that the data you have on customers is correct, up-to-date and readily available. The cost of insufficient or bad-quality data can be as high as not collecting the information at all.

Take WBGH. The public media organization had accumulated masses of dirty data over 60 years, and it was affecting interactions with donors.

"If the systems aren't smart enough to know that a record coming in is from a donor we've known for many, many years, we felt we were risking our ability to have solid relationships with our donors," says Cate Twohill, senior director of customer relationship management at WGBH.

With an influx of customer data coming in from a variety of sources, businesses now have data about their data, and they’re finding that poor data quality has a real impact, with studies by Experian and Gartner showing that bad or erroneous data can cut deeply into potential revenue.

The cry is also going out for good, old-fashioned best practices—and some common sense. Businesses must ask this: Is the data I’m collecting necessary to my goals of increasing revenue and retaining customers? And will using it aid those efforts? If not, don't collect it. A case in point comes from Andy McNalis, senior manager of big data and enterprise data warehouse administration, operations and development at Sears Holdings. The retailer considered collecting and analyzing browsing data from customers using in-store Wi-Fi, but that was “bordering on the creepy factor,” McNalis said.

A carefully thought-out plan has to be in place before customer data is collected, analyzed and acted on. Otherwise, you might as well treat that repeat customer like someone you've never met before -- and that's not good for business.

This was last published in December 2014

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How well are you treating your customer data?
I store customer data in a safe place so as to maintain the good faith that customers have in the organization. It is evident that in order to improve good faith between customers and our organization, their data has to be handled in an appropriate manner. Confidentiality is an important aspect when it comes to customer data security since leaking the data will lead to legal suits and consequent tainting of the organization data.