No matter the industry, success in the business world comes down to a company’s ability to serve and deliver value to the consumer.

To deliver this value, the team needs to understand their customers as best as they possibly can.

From their “on-paper” demographic information and their personality traits, to their personal and professional goals, to their tendencies and behaviors as a consumer, truly knowing your customers is the key to attracting, engaging, and retaining a loyal audience (and, in turn, enabling your business to thrive).

This is why customer data has become all-important by today’s standards. According to a 2017 report from Osservatori:

  • 95% of companies collect personal data from their customers
  • 81% collect behavioral customer data (both on- and offline)
  • 76% keep records of customers’ purchase histories

So, it’s clear that most modern companies agree that collecting and segmenting customer data is key to surviving and thriving in the world of business.

The problem, though, is that many companies aren’t exactly sure of how to use the data they collect to improve their operations. In fact, 41% of organizations admit that taking effective action based on customer data is a main challenge for their team.

Obviously, this poses a huge obstacle for companies looking to spur future growth. Without a clear plan for how to collect and use the data you collect on your customers, you won’t be able to make meaningful improvements to your customer experience, improve your branded messaging, or expand your company’s reach.

If you can’t make that happen, growth just won’t be in the cards for your business.

Knowing just what to do with the information you glean from your customer data, though, will not only allow you to better serve your current customers — but to also uncover even more opportunities for your business moving forward.

 

Keeping Privacy Concerns in Mind

Before moving forward with this blog, it's vital to understand how privacy plays a large role in how we collect and use customer data. Any merchants looking to utilize customer data for their business efforts should be aware of and strictly comply with privacy regulations to protect yourself and your customers. 

As a merchant, you have the responsibility to comply with data privacy laws and obtain proper consent from your customers before collecting, using, or monetizing their data. This can be accomplished with a sound privacy policy, explaining to customers exactly what will happen to their data.

One prevalent data privacy law to be aware of is the GDPR, or the General Data Protection Regulation. This is an EU law that enforces data protection and privacy within the European Union. The GDPR protects citizens from personal data misuse and gives them power over how their data is used. Failing to comply with the GDPR can incur substantial financial penalties for businesses, making it crucial to follow for your online business.

You can comply with privacy laws like the GDPR in the following ways:

  • Require customers to accept cookies before they shop on your store by adding a Cookie Acceptance popup
  • Ask customers to accept your Privacy Policy whenever they provide personal information on your store
  • Give customers the ability to review their data or request saved data deletion

Many eCommerce platforms, like Shift4Shop, provide GDPR Toolkits to ensure that your store is taking the proper precautions for customer privacy. Learn exactly how to stay compliant with the GDPR on our blog, and generate your own GDPR Privacy Policy using our free generator. 

 

Three Categories of Customer Data

Now that we understand safety precautions to be taken before collecting customer data, let's talk about what kind of information you'll be looking to collect consensually.

Customer Profile/Persona Data

At the very least, you’ll want to collect basic information from all of your customers with regard to their personal profiles.

Some key data to collect here can include their:

  • Age
  • Gender
  • Marital status
  • Education level
  • Job/Career & Income

It’s also important to know where they’re located geographically — and to understand the implications their geographic location has on their needs as a consumer.

Collecting contact information is crucial here, as well. Not only does it enable you to engage further with your individual customers, but it also provides insight into your audience’s preferred methods of communication.

This basic, surface-level info helps you gain a baseline understanding of who your customers are, and what they’re likely looking for from your brand.

Still, this data certainly doesn’t tell the whole story.

Customer Psychographic Data

Psychographic data is information about your customers’ personalities as people.

Often, psychographic data is placed into one of three categories:

  • Activities: The customer’s routines, hobbies, recreational pastimes
  • Interests: The customer’s passions; domains they enjoy growing within
  • Opinions: The customer’s outlook on certain topics, trends, ideas and more

With a better idea of who your customers are as human beings, your team will be better able to deliver a branded experience that fits into their lives on their terms. The easier it is for your customers to integrate your brand into their lives, the higher your retention rate will grow.

Customer Behavioral Data

Here’s where we get into who your customers are as consumers.

The key question you’ll be looking to answer here is:

What is it that gets the customer to take action at a specific point in their experience?

(By “action”, we mean “any behavior that designates a step closer toward conversion” — or, of course, conversion itself.)

The data needed to answer this question includes:

  • Purchase history
  • Engagement and purchasing patterns
  • Lifespan with (and loyalty to) brand
  • Intensity of brand relationship

Again, collecting this data allows you to better understand what makes your customers “tick”, and what gets them closer to making a purchase. Needless to say, if you know what these triggers are, you’ll know exactly what to do to keep your customers coming back for more.

 

A Note on Quantitative and Qualitative Data

Whether looking at your individual customer or your audience-wide data, you’ll be collecting both quantitative and qualitative data.

Quantitative data is that which can be expressed in numbers, percentages, or other numerical figures.

Some examples of individual quantitative customer data include:

On an audience-wide level, examples of quantitative data include:

Quantitative data typically gives you the straight-up facts regarding your business’ performance: Your AOV is x, your Conversion Rate is y...and so on.

Qualitative data is more descriptive in nature. It helps you understand what this more concrete information means to your business, as it focuses on contextualizing the data in question.

As a simple example, say you notice that a certain audience segment’s AOV is much lower than the rest of your customer base. This quantitative data makes clear that there’s a problem — but it’s the qualitative data you have on this segment (e.g., their interests, opinions, and behaviors) that helps you determine what the problem actually is, and how to fix it.

 

The 5-Step Process to Collecting & Using Customer Data

As we said earlier, though most companies understand the importance of collecting and using customer data for various purposes, the challenge comes in actually making it all happen.

And, really, that just makes sense.

For one thing, the abundant supply of data available to companies today can easily overwhelm teams of any size. And, even with the right data in hand, there will likely be a million possible options as to how your team should proceed — which can be equally as overwhelming to your team.

The solution: Systematize each step of the process.

As we’ll discuss, your goal isn’t just “to collect and use customer data”; it’s to become data-driven. Rather than merely consulting your customer data to confirm already-made decisions, the idea is to start with the data — and allow it to point you in the best possible direction.

With that said, let’s now dig into how to revolutionize the way your team collects and uses your customer data.

 

1. Identify Your Goals and the Data You’ll Be Looking For

Though there’s value in any and all customer data you’ll collect over time, being intentional with data collection is vital.

This will save your team from getting overwhelmed by too much data — much of which will likely be irrelevant to their immediate purposes.

Of course, if your team is unsure of what these immediate purposes are, they won’t be able to focus on collecting the right data in the first place. In turn, their research will likely fail to produce any sort of actionable results for your business.

So, your first order of business should be to determine exactly what you hope to accomplish through your research and subsequent action.

Thinking of your customer experience, you may be aiming to:

  • Deliver more relevant, valuable content
  • Streamline your point-of-sale processes
  • Improve the quality of your actual products or services

...and so on.

Nailing this purpose down from the get-go is essential, as it allows you to home in on the metrics that truly matter to the initiative at hand. These key performance indicators (and the customer data surrounding them) are the data points you’ll focus on as you begin making actionable improvements to your customer experience.

(What’s more, this data allows you to tie the improvements to be made to your business’ bottom line — legitimizing the suggested initiative in the eyes of your executive team.)

From there, you’ll be looking to identify the specific customer data needed to a) make sense of where things currently stand, and b) determine the best course of action moving forward.

Think of the different types of data we mentioned earlier: What combination of this information is needed to form a complete picture of your customers’ actual experiences with your brand? And which of these pieces of information are most important for the specific initiative at hand?

The more focused and intentional you are with the customer data you collect, the easier it will be to put this data to good use.

 

2. Determine Your Data Sources and Collection Methods

Knowing where to look for your customer data is key to creating a complete picture of their experiences with your company.

(Conversely, overlooking certain data sources can skew your understanding of this information — decreasing the overall value of the data you have collected.)

So, it’s essential that you nail down the specific sources you’ll be using to collect specific types of data on your customers.

There are four overarching categories of data sources to consider:

  • Zero-Party Data is information your customers provide to you without having to ask for it. This unsolicited data is typically provided during real-time exchanges with customers, as well as via user-generated content and brand mentions on social media.
  • First-Party Data is data your team collects directly from your customers. This can range from the personal information they’ve provided via contact forms, to their on-site behavioral data, to survey responses and feedback.
  • Second-Party Data is another company’s first-party data that has been made public. This type of data can give you insight into your competitors’ CX, as well as your target audience’s overall expectations.
  • Third-Party Data is data that has been curated and published by an organization that specializes in doing just that. Statista is one of the most well-known examples of a third-party data aggregator.

Because of its candid nature, zero-party data is arguably the most valuable information to collect on your customers. That said, it’s important to create as many opportunities as possible for your customers to voluntarily provide information and engage with your brand.

User-generated content on social media provides plenty of insight into what your customers think of your brand.

Source

First-party data can either be actively solicited from your customers, or actively collected as your customers engage with your brand.

Surveys, registration forms, and prompts via social media are examples of effective ways to gather first-party data.

Old Spice tweet

You should also be collecting behavioral data on your customers whenever they interact with your brand in any way. The conversations you have with your customers — digitally or in-person — are chock-full of valuable qualitative information. On the quantitative side, behavioral analytics data can give you a “by the numbers” rundown of your customers’ engagements with your company.

(We’ll come back to this notion of automated data collection in the next section.)

Though zero- and first-party customer data are most valuable for your purposes, second- and third-party data can provide insight into how your competition is faring, and into the state of your industry as a whole.

Kantar cayalist the state of eCommerce 2021

Source

Defining the specific ways in which you’ll collect data on your customers — and where, exactly, you’ll find it all — is essential to ensure you collect the exact information you need to make informed, strategic improvements to the experience you provide your customers.

 

3. Invest in Technology for Data Collection, Organization, & Analysis

At this point, you’ll be ready to actually begin collecting and making sense of your customer data. Thankfully, there’s no shortage of technology to help you through each stage of this process. Your goal, then, is to determine which of these tools you’ll need to use when collecting, organizing, and assessing specific pieces of customer data.

Again, there’s a wide spectrum of tools to choose from, here.

For customer data collection purposes, you’ll want to invest in:

  • Customer survey software, such as Typeform or Qualaroo, to create and deliver timely surveys, questionnaires, and feedback forms via multiple channels.
  • Behavioral analytics software, such as Google Analytics, for automatic, real-time collection of data regarding customer interactions.
  • Social listening tools, such as Mention and Sprout Social, that monitor the web for new content or comments relating to your brand, your competitors, and/or your industry.

Awario’s social listening tool keeps teams apprised anytime their brand is mentioned on the web.

Source

It’s likely that these and similar tools offer features to help you organize the customer data you’ve collected.

Still, you’ll also want to invest in tools that allow you to centralize all of the customer data you collect from your various sources. Depending on your company’s needs and circumstances, this may mean investing in CRM software, or some of the more advanced options that have recently become available.

scope and scale vs flexiblilty chart

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Many of these tools may provide AI-powered suggestions to help you make sense of your customer data. Still, you don’t want to become completely reliant on technology, here. Combining these resources with your team’s skills, abilities, and know-how will allow you to truly understand what your customer data is telling you ― and to make laser-focused improvements to your CX in due time.

Finally, knowledge base software can also help you further centralize this data (and the knowledge you glean from it) within your organization. This allows the entirety of your customer data to be accessible to your team whenever they may need it — meaning said data will continue to provide value to your business well into the future.

By today’s standards, the use of technology is a must in order to supercharge your data-related processes.

For one thing, it takes the “grunt work” out of continuously collecting and organizing customer data — allowing your team to focus on the more in-depth tasks that do require their full attention.

What’s more, these automated tools will allow your team to identify trends and anomalies within your customer data that they may have otherwise missed. And, with intelligent predictive analytics technology on hand, your team will always have a pretty clear idea of what they should actually do with the data they’ve collected.

Speaking of that...

 

4. Take Strategic, Data-Driven Action

As we discussed at the beginning of this article, while most organizations understand the importance of collecting customer data, it’s not uncommon for them to falter when actually taking action based on their findings.

Of course, the specific action you’ll need to take at any given moment will depend on what the data tells you. Maybe the focus will be on improving your product; maybe you need to further streamline your checkout processes; or, perhaps you need to fine-tune your personalization efforts.

Regardless of the specifics, the key to consistently taking action on the data you collect is to develop standard operating procedures regarding the improvements to be made. This ensures your team always has a plan of attack for using the data they’ve collected — and that no collected data ever ends up going to waste.

Again, the process will look different from team to team, and from instance to instance.

Generally speaking, though, you’ll develop an iterative process that will involve:

  • Creating a hypothesis based on the data you’ve collected
  • Implementing a specific improvement on a test-run basis
  • Verifying the results of the test, and ideally confirming the correct improvement to be made
  • Integrating the necessary changes to your products, services, or customer experience in a seamless, customer-centric manner

The nature of being data-driven is that, while you’ll never be entirely sure of what you’ll need to do next, you’ll always have a plan in place for making the most of the data on hand. Failure to standardize your response to incoming customer data will inevitably cause your data-driven processes to become disjointed — rendering said data all but useless.

 

5. Review and Improve Your Customer Data Processes

As time goes on, you’ll want to assess your team’s ability to become more data-driven and, in turn, improve how you use your customer data, overall.

Basically, you want to be sure that you’re squeezing as much value as you possibly can out of all the data you collect.

Specifically, you’ll be looking for ways to:

  • Identify and collect higher quantities of data, as well as more comprehensive and meaningful data
  • Better organize and make sense of the data you collect
  • Determine the right course of action to take based on what the data tells you

By continuing to sharpen your data-driven processes, you’ll not only make the most out of the data you currently possess — but will also continue to uncover new sources of data along the way.

But this isn’t something that will just “happen”; you need to be intentional, here. As mentioned above, this means systematizing your processes for improving operations related to customer data.

 

Wrapping Up

If you aren’t paying attention to your customer data, you’re most likely missing out on a ton of opportunities to grow your business.

More than just “paying attention” to this data, though, the information you collect on your customers should always be front-and-center. With this data driving every customer-facing and internal decision you make, you’ll always know how to better serve your audience — and how to do so in a way that leads to massive growth for your company.

It’s also crucial to build on what you learn about your customers as you dig deeper into this data over time. The more you learn from the data you collect, the more you stand to learn from the data you’ll collect in the future — and the more value this data will bring to your business.

Creating a comprehensive knowledge management system is key to getting the absolute most value out of every piece of customer data your team collects. With this valuable data in hand, your team will always know the right direction to turn and what you need to do to deliver value to your customers.