Nowadays, knowing the customer is one of companies' major concerns. However, many corporations make the mistake of thinking that they need a lot of data to know their customers a lot, which is usually not true.
Today, a company's success has a lot to do with the level of knowledge about its customers. Increasingly, companies are moving away from old business-centric processes and towards a customer-centric perspective. That is, putting the customer at the center of business decisions and adapting business routines to customer needs. In addition, the personalization of the customer experience, content and campaigns is already one of the most important marketing strategies of the recent years.
Leading companies have some things in common: they have a great understanding of who their customers are, what they need and how best to deliver it to them.
Clearly, to understand consumers, we need data about them. However, many companies make the mistake of thinking that what makes the difference is the quantity of customer data, when in fact it is the quality of that data and how it is used.
It's not about quantity, it's about quality
Organizations have more customer data today than ever before. In fact, enterprise data assets are growing a 40% every year. Therefore, for most corporations —especially medium and large enterprises— the amount of consumer data is not the issue.
The surprise comes when we look at recent studies on the relationship between customers and companies:
- 62% of consumers believe that companies do not understand their needs.
- Only 15% of CMOs think their company is on the right track when it comes to personalization.
- According to the latest 2022 data, 86% of organizations have not achieved a 360° view of their customers.
The dichotomy is crystal clear: despite companies now having more data about their customers, most are still unable to transform it into better decisions, customer intelligence and customer strategies as well as better digital marketing results.
This, which could be seen as a contradiction, is actually not strange. Companies have long been caring too much about the amount of data they have about their customers. Some corporations even believe that they are unable to connect with the customer because they don't have enough customer data when, in fact, they have more information than they end up using. What's more, even in the case of those companies that really face a shortage of information —usually due to a lack of digitization and data-driven transformation— techniques such as market research, which do not require complex data transformation and computing technologies, are an effective way to solve the problem without the need for large investments.
As we have already discussed in our article about Big Data vs Smart Data, the reason why companies are not taking advantage of customer data is not the quantity of data, but the quality of their data. Big Data is the massive collection of data. Smart Data, on the other hand, is the collection of useful data. That is, data that brings value to the company and supports better customer-related decisions and that can be transformed into marketing, sales or other customer-related actions.
The big problem with leveraging customer data is not quantity. The more customer data we have, the more complex it is to manage. Instead, the real difficulty for companies in transforming data into marketing insights lies in data management and the difficulties involved in validating its quality, getting rid of unnecessary or erroneous data, and processing it to make it actionable.
Having more data than we are able to manage is a problem in itself. Too much information leads to misinformation, and too much data leads to wasting useful data.
The problem goes beyond quantity. Most companies do not know what to do with the customer data they have. 33% of executives believe that their company does not have the necessary technologies to manage customer data.
The proper management of customer data is an issue that has been of concern to companies for a long time, especially in a context where customer data protection regulations are becoming more and more strict.
While most customer-centric companies already have customer data management technologies such as CRM, many of their needs remain unmet. In recent years, however, technology vendors have attempted to address those needs with a new technology —the Customer Data Platform (CDP)— that provides companies with a holistic view of the customer and encourages the transformation of customer data into strategies for personalization, marketing intelligence and customer experience optimization.
- Learn everything you need to know about this technology, how it works and its advantages in the e-book: Customer Data Platform (CDP): Towards a centralized view of the customer.
How much data do I need to know my customers?
In a nutshell, to know your customers, you need the data you already have.
It is very likely that to start building a customer-centric business environment and developing better customer strategies, your company does not need to collect a lot more data. It is also very likely that what your company does need is to know what to do with their customer data and how to leverage it.
Carrying out processes such as defining your Buyer Personas, segmenting customers and building and mapping their customer journey are the first step to transform customer data into value. However, most companies do not have the right professional profiles to handle this type of processes. Leveraging customer data requires professionals who have both the technical knowledge of data management and analysis and a deep understanding of customer strategies and actions related to transforming data into customer insights.
So, if you ever think your company is struggling to understand or connect with customers, stop focusing on how much customer data you have and focus on how to transform it into value.