How Well Do You Really Know Your Customer?

The basics of customer information and how to use it.

How well you know your customers can go a long way in determining the long-term success of your business. Regardless of your industry, knowing your customer comes down to how well you collect, manage, and use the right customer information.

Granted, each industry and individual business is different. The amount and level of detailed customer information will differ depending on the type of business and market approach. For example, a mass-market retailer such as a grocery store may not have access to individual customer identifiers such as name or address. As a result, they may rely more heavily on aggregated customer information that provides basic demographic data. On the other hand, highly personalized service businesses such as specialized health care providers or management consulting firms will typically have very detailed customer information.


Regardless of your business model or industry, being able utilize current and accurate customer information can help to focus marketing efforts, personalize the customer experience, and anticipate shifts in trends and tastes. When it comes to customer relationship management, customer information is king. It all comes down to how well you collect, manage, and use the right customer information.

CUSTOMER INFORMATION 101

Customer information can come from many sources and in many forms. Here are some customer information basics that any business should know and maintain:

1. Contact Information: Contact information is the basic information that identifies the customer. Examples include name, address, email address, telephone number, billing information, shipping information.
2. Demographics: Demographics represent data attributes that provide factual information about the customer. Examples include age, race, sex, marital status, age, number of children, income, education, employment status, location, etc.
3. Socio-Economic Data: Socio-economic data identifies the connection between social and economic factors. Examples include the correlation of demographic data or changes in economic factors - such as a recession - on individual buying behaviors.

TIPS:

• Collecting customer information should be an evolution. Don’t try to collect it all up front. For example, to get a customer lead you may only ask for a name and email address. Then when an order is placed, you can collect additional information such as address, telephone, and payment information.
• For mass-marketing companies, credit card providers can have a very rich source of customer spending information that can help you understand your share of wallet, key demographics, and spending trends.
• Privacy Rules: If you collect customer information, make certain that you take every possible precaution to properly secure it and maintain privacy. A customer information security lapse is a quick way to lose credibility and trust in the marketplace.

INTERACTION DATA 101

Customer interaction data can be just as powerful, if not more so, than customer information. Here are some basic customer interaction data categories that every business should know and maintain:

1. Contact History: Contact history provides the details of all outbound communication for each customer. Examples include emails, telephone calls, sales letters, newsletters, proposals, etc.
2. Transaction History: Transaction history includes the details of each transaction performed for each customer. Examples include purchases, refunds, returns, etc.
3. Interaction History: Interaction history provides the details of all inbound communications for each customer. Often combined with contact history, examples include service, support, information, quotation, and other requests initiated by the customer.

TIPS:

• Develop and follow a customer response policy. For example, be sure to respond to any incoming customer inquiry or request within 24-48 hours. Customers can quickly get turned off by any business that isn’t responsive to their requests.
• Know your transaction history. Make sure that you know what product or service your customers bought from you before you contact them. You don’t want to look foolish by trying to sell the same product that the customer just bought from you last month.
• Persistence matters. Don’t just assume that since you’ve contacted a customer once that your job is done. Often, a customer lead that is contacted multiple times is more likely to convert into a sale.

CUSTOMER INFORMATION: USE IT OR LOSE IT

Collecting customer information is obviously important. What you do with it is critical. If you don’t use it, you may lose it. Customers come and go and their contact information often changes. Therefore, you may only have a limited amount of time to make the most of your customer information:

1. Get Feedback. Customer feedback can be the single most important piece of information that you can attain. Leverage your customer information to establish a continuous product or service feedback loop. Then, incorporate what you learn into your next generation product or service.
2. Follow-up. Don’t just sell and forget. Make sure that you have an effective customer follow-up program to keep your customer contacts current. Often, selling follow-on products or services to existing customers is easier, and more profitable, than acquiring new customers.
3. Focus on Conversion. Collecting customer lead information is an important first step. But don’t just focus on volume; Make sure that everything you do is focused on converting people into leads, leads into customers, and customers into repeat buyers.

MANAGING CUSTOMER INFORMATION

Customer information is one of your most important business assets. The more you can collect, manage, and utilize – the better. But customer information can also be a fickle thing. Customers move. They change jobs. They change their mobile phone numbers and email addresses. Customer information can seem at times to be in a constant state of flux. To manage this properly, you need to get disciplined about customer information management. Consider establishing a process and assign responsibility for regularly collecting, cleaning, validating, and updating your customer information. Remember, when it comes to customer information – the rule of ‘garbage in. garbage out’ definitely applies.

There are obviously many ways you can store your customer information. Whether you utilize an electronic spreadsheet, or a robust customer relationship management (CRM) solution, make customer information the central focus of your customer strategies. Don’t just collect customer data for the sake of it. Make the most of it. After all, data is just data. But data with relevance is information. And customer information is power.

Go ahead and ask yourself, ‘How well do I really know my customer?’