In the digital age, data has become a commodity that is essential for the growth of any business. It has become so important that it has given rise to data-driven businesses.
Grab and Uber is ride-hailing businesses, yet they do not own their own fleet of vehicles. AirBnB and Trivago provide clients with accommodation, yet they do not own properties.
The vast majority of food-delivery companies provide clients with food, yet they do not own any restaurants.
Data is what makes these businesses flourish, and this is a testament to the importance of handling your customer data properly. In the near future, learning how to handle your data properly will become more of a necessity, than an advantage. Given the direction where our technology is headed, it’s important for business owners to familiarize themselves with data management.
What Is Customer Data Management?
Data management refers to the process of collecting, organizing, interpreting, and using customer data to gain a better understanding of your target market. This insight enables businesses to improve customer retention and conversion. Customer data management also enables business owners to expedite certain processes and to also help suggest to customers products that they are most likely to buy.
Why Is Customer Data Management Essential?
Customer data management is an important aspect of running a business, as it’s bound to accumulate huge heaps of data over time. The failure to manage the data you collect not only complicates your business but also negates the advantage you would have gained from accurate data readings. Remember that every major business decision must be backed with reliable data. If the data upon which your decision was based is inaccurate, it’s unlikely that the decision will be beneficial.
Identify a Data Governance Strategy
A data governance strategy is what identifies which type of data you should collect and how you should collect it. A standard data governance plan is composed of three parts:
- Alignment – This refers to the standardization of data collection throughout your company
- Validation – This refers to the process of ensuring that the data is collected properly
- Enforcement – This refers to the checks and balances on data heaps that go through the proper channels to ensure that the collected data is useful
A data governance strategy is essentially a data tracking plan that clearly outlines the type of data that is collected, what it’s for, and who it’s for. This may sound like a simple measure, but this measure is necessary for the proper handling of data.
Prioritize Critical Customer Data
Just as it is important to identify a data governance strategy, it’s also important to determine which type of data is critical and what isn’t. Not all data is useful, and not all customers are comfortable with giving out data that isn’t related to your business.
Every heap of data collected must have a purpose. Collecting unnecessary data will only create trouble for your business, especially if you’re unable to properly justify why you need to collect the data.
Formulate a Data Orchestration Strategy
It’s not enough to standardize your data collection policy throughout your company. It’s also important that the different departments of your company are able to share data with each other. This ensures that the data you collect isn’t redundant. Departments that work with different tools, resources, and datasets are a potent recipe for confusion and miscommunication.
For example, if one department uses a tool such as this ID scanner app, it’s important to have all departments use the same tool for data collection. This further emphasizes on the importance of a company-wide standardization.
Put a Premium On Data Security
Data security is an integral part of any modern business, as it is what guards against unauthorized access, use change, and destruction of customer data. Data security should never be taken lightly as a data breach will have dire and sometimes, irreparable damage to your company. Not only will a data breach hurt the reputation of your company, but it will also cost your company dearly. The average data breach cost for U.S. based companies is about 8.64 million dollars.
Take Data Validation Seriously
Collecting data is only one aspect of handling data. Ensuring that the data you’re about to use is still relevant is just as important as ensuring that you’re collecting data from the right source.
Companies have to take data decay into consideration when interpreting data. Keep in mind that data can change over time. What was once accurate information may become irrelevant after a few years, or due to an event. Inaccurate data will lead to poor decisions, which, ultimately, is a waste of money.
The most efficient way to ensure that your data remains accurate is to set up an automatic data validation test that checks tracking codes. You may also want to consider cleaning your data once in a while. Dump data from prospective clients who haven’t interacted with your business for a set number of months or years.
Not only do you get rid of irrelevant data, but you also free up space for more relevant data.
Comply With Data Regulations
An increasing number of people are becoming aware of the value of their data. This means that you’re going to see governments enact laws that protect the data privacy rights of consumers. These laws have already made a significant impact on the way that companies are allowed to collect, keep, and use customer data.
As a business owner, it’s important to learn the data privacy laws that govern your business to avoid unnecessary trouble. It is now crucial that you have the consent of your website visitors to collect their data. This is also where it’s important that you use consent management tools on your website. This is also a good time to establish a habit of achieving legal compliance.
Learning how to properly manage your business data is an essential skill for any business owner. Many of tomorrow’s solutions are data-reliant, and it’s only fitting that business owners learn the trade, not just so they gain a significant advantage over their competitors, but also so they are able to ease the adoption of new technologies that make use of the data collected.
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