Why is Customer Data Management Important?
During the past few years, the requirements for compliance has been tightened considerably with new rules, laws and regulations. Both through the Anti-Money Laundering Act (AML) and through the GDPR. The Swedish Financial Supervisory Authority and the Data Protection Authority have an increasingly tight grip on these issues and fines are distributed more frequently for deficiencies in compliance regarding these issues, being issued to both smaller companies and large enterprises.
Customer Insight & Business Value
Quality data ensures that the transaction is legitimate and compliant, but can also be used to create business value and provide customer insight. By automating manual processes and ensuring continuous data quality, companies can reduce drop-off or churn in onboarding processes, reduce their costs of manual assessment and handling, as well as actually improving their customer experience.
3 BIG challenges of customer data management
1. Updated Information & Data Quality
It is estimated that Swedish companies' customer records suffer from an error margin of up to 40% when it comes to relevant customer data. In addition, about 20-25% of relevant information changes each year, which leads to the consequences eventually becoming devastating from many different perspectives. Failure to comply with AML and GDPR regulations which may lead to fines etc., cost-inefficient and less accurate marketing and sales campaigns and an increased risk of revenue loss due to lack of knowledge of customers' financial situations, are just some of the results that may come from not having updated customer information and poor data quality.
"About 20-25% of relevant customer data changes every year"
2. Integrations & Change Management
Integrations with for example data management API's can be perceived as complicated. Existing systems (often more than one) must be "linked" to the new one, data may need to be retrieved from multiple sources, change management must be carried out internally, and working methods and routines need to be revised. This is often perceived as difficult and the starting distance feels long, especially in large enterprises or companies with a traditional, analog business model. Resistance may appear among co-workers or team members which makes the end goal a lot more difficult to reach. True digital transformation starts in the core of the company, its culture.
3. Combining compliance & excellent customer experience
Research shows that increased legal compliance requirements more often than not leads to a deteriorating customer experience. In turn this leads to increased churn and less conversion from your onboarding flows. Far too often we find onboarding-processes that include filling out dozens of documents, identifying yourself multiple times and awaiting manual assessment for weeks before being approved or declined as a new customer. Needless to say, this affects your business massively, and in this example not in a good way.
Maintaining or improving your customer experience - especially in terms of your customer onboarding process - while ensuring compliance is not impossible in any way, and could give your business a huge advantage in relation to your competitors.
"Simplified example of the customer journey from customer data management perspective"
Like most challenges in business and life, these three all have solutions. An onboarding flow where manual labour and management are minimized, while compliance is ensured and customer experience is excellent will bring great value to any organization. Here's a good place to start doing just that:
- To assure quality customer data throughout the customer journey, a standard should be set for what data and information is required.
- A digitization and automation of the data collecting, verifying and checking to the extent possible is a great next step. This provides a smooth and trouble free experience for both you and your customer.
- Monitoring should preferably also be set up, which ensures that the information is kept up to date and accurate over time.
- More business
- Better conversion rate
- Less churn
- Reduced costs
- Reduced risks
- Increased customer insight
- More accurate customer prospecting and exploration
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