With the volume of customer data doubling every three years, and the explosive growth in digital channels, it can be difficult for marketers to determine which data is the most important, how best to capture it, and - most critically - how best to use that data, according to a white paper by Richard Dixon, director of customer marketing for Black Sun Plc. This article is copyright 2013 The Best Customer Guide.

Many companies, regardless of size, find themselves in possession of a fragmented customer and prospect database. This is usually caused by data coming in from a number of different sources all with their own fields and formats. The result is that the data is often riddled with duplicate records, inconsistencies, incomplete details, unclear permissions to market and so on.

The first step is to identify the data you have, and to then bring it all into a single location, identifying duplicates, merging these to create a single customer record with all the known attributes and transactions. This can be done at both a household and an individual level, and surprisingly can usually be completed in a matter of weeks. It is a critical first step as it is the foundation from which all customer level reporting, analysis and personalisation should be built from.

Next, analysing the 'single customer view' should give you a richer picture of your customers. You can determine their purchase behaviours; understand their tenure, recency, frequency and value of purchases; identify their preferred channels; and their engagement with the brand through communications readership and responses, logins to the website and sharing activities. By doing this you will not only understand your customers better, but you will also be able to identify and profile your most valuable customers so you can better meet their needs and acquire more of them.

When it comes to segmenting your customers into similar groups, there are many options. The truth is there is no single best way of achieving this: the method you should use depends on your objectives and the depth and breadth of data you hold. Whichever technique you use, your segmentation strategy should help you understand and better meet the needs of specific groups of customers, and to drive more value from the relationship. (For example you may create differentiated propositions for different groups of customers, deliver benefits that match their profile, or target your communications and offers accordingly.)

Once you have built the profile of your customers and identified the key segments, you can switch from a mass marketing strategy to a more targeted approach. Unlock the intelligence within your database and use it in a smart, sophisticated way to deliver more effective communications. For example, you can:

  • Proactively manage them through the lifecycle - from their very first interaction through to being a loyal customer you can deliver targeted communications that uses their recent activity to nurture them to the next stage.
  • Reactivate lapsed customers - if they have not engaged or transacted with you for a while then you can use the data to deliver a more relevant communication that stimulate re-purchase.
  • Convert prospects to customers - by identifying those who are on your database but never bought and targeting them accordingly. You can do this by using the data on similar profile of customers to identify the best offer for them.
  • Recognise high value customers - through the messaging in your communications and the surprise and delight treats to retain them as loyal advocates.
  • Recognise recent behaviours - for example by sending thank you emails for purchases, or presenting recommendations based on purchase history.
  • Build more complete customer profiles - by asking them for additional information that may help you deliver more targeted communications.

The white paper, which has been made available for free download - click here - goes on to explore how this strategy can be used to personalise the customer experience, build engagement, acquire new customers, and measure and analyse marketing performance.

"If your customers are your most valuable asset, then the data you hold on them is one of your most valuable resources. Orchestrating your data to drive the customer experience will deliver a substantial increase in customer value through greater engagement, response rates and brand advocacy," concluded Dixon.