When your customers disclose their personal and financial information to you, they’re taking a leap of faith that you won’t lose, abuse or otherwise mess with it -- accidentally or not. Your customers don’t want you to spam them every two minutes, hawk their info to third parties or, worse, expose it to cyber attackers.
Collecting customer data has been notoriously loaded with a tangle of privacy pitfalls. But when done right, the benefit to your bottom line could outweigh the risks. Leveraging customer data can lead to happier customers, reduced client churn and bigger profits.
Gathering sensitive customer information isn’t something business owners should just jump into and make up as they go. Get up to speed with these 10 essential questions to consider before you ask your customers anything:
1. I don’t have time to get anything from my customers but their money. Do I really need to collect data from them, too?
Without customers, you wouldn’t be in business. Knowing who they are and what they want, particularly from you, can lead to more effective marketing, increased brand loyalty and the holy grail -- more sales.
“Collecting customer data helps you know each customer more individually and treat them that way,” says Jeff Tanner, professor of marketing at Baylor University and director of the school’s "Business Collaboratory." And the info you glean from them can empower you to “craft offers that increase purchase rates at higher margins while also delivering better value to the customers because they’re getting things they want," he says.
2. What types of personal data should I collect and why?
Start with the basics, such as customer names and mailing and email addresses. These allow you to personalize your communications with them, directly market to them and follow up with them if there’s a problem with their order. Other data points to collect for an overall demographic snapshot are age, profession and gender.
As you develop trust with your customers, Tanner suggests going deeper and asking them for certain psychographic data points, like details about their personalities, values and lifestyles. For example, if you own a furniture store and find out your customer has children via a customer questionnaire, you might consider marketing children’s furniture to them.
3. What types of transactional data should I collect and why?
Recording and analyzing each customer’s transaction history -- what they purchase from you, when and how often -- helps you know which products and services to offer them in the future. Companies like Amazon, and Zappos are some of the best at this powerful marketing practice, also known as “basket analysis,” automatically delivering sometimes impressively personalized product recommendations based on past purchases.
4. What are the best ways to collect customer data?
You can start by accumulating customer data every time they interact with your company -- on the phone or in online chat with customer service, in-store with a salesperson or via online survey or contest, Tanner says.
It’s important to note, though, that the CAN-SPAM Act of 2003 prohibits procuring email addresses from certain online sources, including blogs and internet chat rooms, without the permission of site users and owners. Read More
