“Customer data is key to understanding who you are and what they need,” says Norie Verwijst, Former Associate Category Manager-Frozen at Topco Associates LLC, in Clootrack's 102 CX Expert report.
In today's digital age, customer data has become an invaluable asset for modern businesses. Every time a customer interacts with a brand, they leave behind a digital footprint, providing valuable insights into their preferences, behaviors, and needs. This data can help you better understand your customers, deliver personalized experiences, and ultimately, drive growth.
However, with great data comes great responsibility, and brands that fail to govern customer data properly can suffer severe consequences, including loss of trust, reputation damage, and legal repercussions. Therefore, it is essential for you to prioritize customer data governance to ensure you are using customer data ethically, securely, and effectively.
In this article, you will gain in-depth knowledge about every critical aspect of customer data governance. So, let's get started!
What is Customer Data Governance?
Customer Data Governance is the process of managing and protecting customer data throughout its lifecycle within an organization. It involves establishing policies and procedures to ensure that customer data is collected, processed, stored, and used in a way that complies with relevant regulations and ethical standards.
Effective governance involves several key components, including data quality management, data security, privacy, and compliance. It requires collaboration across various departments and stakeholders within an organization to ensure that customer data is properly managed and used to enhance the customer experience while safeguarding customer privacy rights.
The ultimate goal of customer data governance is to establish trust with customers by demonstrating a commitment to ethical and responsible data handling practices. By prioritizing customer data governance, you can avoid potential data breaches, regulatory fines, reputational damage, and loss of customer trust while also leveraging data to deliver engaging and personalized experiences throughout the customer journey.
Why is Customer Data Governance Important?
Implementation of robust customer data governance ensures the responsible management of customer data and helps you gain a competitive edge in the marketplace by aiding you in customer experience management tasks.
Here are 5 most lucrative points that demonstrate the importance of customer data governance:-
1) Protecting Customer Data
In today's digital world, customer data is a valuable asset that organizations collect and analyze to understand consumer behavior and preferences. However, with the increasing number of data breaches and cyber-attacks, it has become imperative for organizations to ensure the safety and security of their customers' data.
Implementing robust customer data governance practices can help organizations in this regard. Customer data governance includes processes, policies, and procedures that ensure secure and ethical management of customer data throughout its lifecycle. This includes the collection, storage, use, and disposal of customer data. By implementing customer data governance practices, your organization can mitigate the risks associated with data breaches, protect customer privacy, and comply with regulatory requirements.
Additionally, organizations that have a reputation for protecting customer data are less likely to face legal and financial consequences associated with data breaches and non-compliance with data protection regulations. Therefore, implementing customer data governance practices can help you protect the customers' data and build a strong and trustworthy relationship with them.
2) Complying with Data Regulations
There are several data protection regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), which require organizations to implement specific data protection measures to safeguard customer data. Failure to comply with these regulations can result in severe financial penalties and damage to an organization's reputation. Therefore, it is crucial for organizations to implement potent customer data governance practices to ensure compliance with data regulations.
One of the key benefits of complying with data regulations through customer data governance is that it helps you to avoid legal and financial consequences. Data protection regulations have become increasingly stringent, and organizations that collect and process customer data must comply with a range of requirements. These include obtaining customers' consent for data processing, ensuring data accuracy and security, and providing customers with the right to access, correct, or delete their data.
With customer data governance practices, you can ensure compliance with these requirements and avoid the significant financial and legal penalties associated with non-compliance. Additionally, compliance with data regulations can help you build trust with your customers, as it demonstrates a commitment to data privacy and protection.
3) Increasing Customer Trust
Customers today are more aware of the value of their personal data and the risks associated with sharing it with organizations. As a result, they expect organizations to take measures to guard their data and use it in an ethical and responsible manner. By executing customer data governance practices, you can assure customers that their data is being managed securely and transparently, thereby increasing their faith in your organization. This increased faith can lead to a more positive customer experience, improved customer perception, and enhanced brand reputation.
Increasing customer trust through customer data governance leads to increased customer engagement and revenue. Customers are more likely to engage with your organization and perceive it as being transparent and responsible with their data. You can encourage them to engage more frequently and deeply with your organization. This increased engagement can result in higher customer satisfaction, increased customer retention and acquisition, and ultimately, increased revenue.
Additionally, organizations that are known for their commitment to data privacy and protection are more likely to attract new customers who prioritize these values when selecting a service provider.
4) Enhancing Business Reputation
Customers are increasingly concerned about the privacy and security of their personal data. They expect organizations to take measures to protect their data assets and use them ethically and responsibly. By enforcing customer data governance practices, you can demonstrate their commitment to data privacy and protection, thereby enhancing their reputation as trustworthy and reliable service providers. The increased brand reputation leads to increased customer conversion rate, satisfaction level, and enhanced brand image.
Moreover, employees today value organizations that prioritize ethical and responsible data management practices. Enhancing business reputation through customer data governance can help you attract and retain top talent. You can draw top talent who share these values and are committed to data privacy and protection.
Additionally, employees who work for organizations known for their commitment to data privacy and protection are more likely to be motivated and engaged, resulting in higher job satisfaction and productivity. Therefore, customer data governance practices help you enhance your reputation as a trustworthy and responsible service provider, leading to increased customer loyalty, positive word-of-mouth recommendations, and attracting top talent.
5) Improving Decision-Making
By implementing customer data governance practices, you can ensure the accuracy, completeness, and security of this data, enabling better decision-making. With an appropriate customer data governance strategy in place, you can make informed and data-driven decisions based on reliable data, leading to better outcomes, increased business operations efficiency, and cost savings.
Furthermore, improving decision-making through customer data governance can help you stay ahead of the competition. In today's highly competitive business environment, you must make data-driven decisions to stay competitive and relevant.
By implementing customer data governance practices, organizations can gain a comprehensive understanding of their customers, their demands, and their choices, enabling them to develop more targeted and effective marketing strategies. This can help you stand out in your niche market, attract more customers, and increase ROI. Therefore, performing customer data governance practices is critical for organizations to make informed decisions, stay ahead of the competition, and achieve their desired business goals.
5 Steps to Implement Customer Data Governance
Here are 5 steps you need to follow to implement customer data governance:-
1) Define Customer Data Governance Policies
Defining customer data governance policies involves several steps, including identifying the data that needs to be governed, establishing data ownership and accountability, defining data quality standards, setting up data security protocols, and developing a data governance framework that outlines roles and responsibilities.
2) Develop a Customer Data Governance Framework
Developing a data governance framework involves several phases, including identifying the key stakeholders, defining the scope of the framework, establishing data governance objectives, designing data governance processes, and implementing data governance tools and technologies.
A well-designed customer data governance framework can establish a culture of data accountability, improve data quality, and enhance the data governance model.
3) Assign Customer Data Governance Roles and Responsibilities
Assigning customer data governance roles and responsibilities involve defining the duties of different stakeholders in the data governance process, such as data owners, data stewards, and data custodians. Data owners are responsible for the strategic direction and management of customer data, while data stewards manage the day-to-day activities related to customer data quality, accuracy, and completeness.
Data custodians are responsible for the technical implementation of data governance policies, such as data security and access controls. Assigning roles and responsibilities ensures that there is clarity and accountability for the management and protection of customer data.
4) Implement Customer Data Governance Processes and Procedures
Implementing data governance processes and procedures involves establishing data quality standards, data security protocols, and data access controls for managing customer data, including data collection, storage, analysis, and dissemination. It is important to regularly review and update these processes and procedures to ensure that they remain relevant and effective in managing customer data.
5) Monitor and Audit Customer Data Governance Practices
The monitoring and auditing process includes regular data quality assessments, security, access controls, and compliance with legal and regulatory requirements. It is necessary to identify and address any issues or gaps in the data governance techniques to ensure that customer data is being managed effectively. Regular monitoring and auditing can also help to identify opportunities for improvement in governance practices and ensure that they remain effective in protecting customer data.
Challenges of Customer Data Governance
Here are the top 3 challenges that you might face with customer data governance:-
1) Resistance to Change
Implementing data governance policies and procedures requires significant changes in how your organization manages and uses customer data. Resistance to change can come from employees who are used to working with data in a certain way and may be resistant to new processes and procedures. Resistance can also come from managers who may be reluctant to invest in the resources needed to implement and maintain effective data governance practices.
Solution:- Effectively communicate and train to help employees understand the need for change and the benefits that effective data governance can bring. Involve employees and stakeholders in the process of developing and implementing data governance policies and procedures to ensure that they are engaged and supportive of the changes.
2) Complexity of Data Governance
Implementing effectual data governance guidelines and systems requires coordination across different departments and stakeholders, and it involves managing large volumes of data from various sources. The complexity of data governance can be further compounded by the need to comply with different legal and regulatory requirements, which can vary by region and industry.
Solution:- Your organization needs to establish a data governance approach that clearly defines the roles and responsibilities of different stakeholders and outlines the policies and procedures for managing customer data. This approach should be designed to streamline data management processes and ensure compliance with legal and regulatory requirements. Additionally, you may need to invest in data governance tools and technologies that can automate data management tasks and help to manage the complexity of data governance.
3) Limited Resources and Budget
Implementing and maintaining effective data governance methodologies can require significant investments in resources that include staffing, technology, and training. However, many organizations may have limited resources and budgets allocated to data governance initiatives. This can result in a lack of assets required to develop and implement effective data governance practices, which increases the risk of data breaches and reputational damage.
Solution:- You need to prioritize the data governance initiatives and allocate resources based on the level of risk associated with different types of customer data. This can help you ensure that the most critical data is being protected effectively, even if resources are limited. Additionally, organizations may need to explore alternative solutions, such as outsourcing data management tasks or using open-source software to reduce the cost of data governance initiatives.
Best Practices for Customer Data Governance
Here are 7 best practices that you must follow for effective customer data governance:-
1) Conducting a Data Inventory
Conducting a data inventory involves identifying all of the customer data that your organization collects, stores, and uses, as well as, identifying the purpose and legal basis for collecting and using that data. This process helps you ensure that your organization has a clear understanding of its data assets and the risks associated with managing that data. Additionally, it assists in identifying areas where data governance processes may need to be strengthened.
Here are three best tips for conducting a data inventory:
Start with a clear understanding of the data elements that make up customer data, such as name, address, email, and transactional data. This will help to ensure that all relevant data is included in the inventory.
Identify all the systems and processes that are used to collect and store customer data, including third-party systems and platforms. This will help to confirm that all customer data sources are accounted for.
Map the legal basis for collecting and processing customer data, such as consent, legitimate interest, or legal obligation. This will help to ensure that your organization is complying with relevant legal and regulatory requirements.
2) Implementing Data Classification
Implementing data classification involves categorizing data based on its sensitivity level and assigning appropriate controls to ensure that it is managed and protected in accordance with its level of sensitivity. Data classification helps to ensure that data is being managed consistently and appropriately, and that appropriate security controls are in place to protect sensitive data from unauthorized access or disclosure.
Here are three tips for implementing data classification:
- Develop a data classification framework that defines the different levels of data sensitivity and the appropriate controls for each level. This will help to ensure that data is being classified consistently across the organization.
- Use automated tools and technologies to help classify data based on pre-defined criteria, such as data type, source, and sensitivity level. This can help to reduce the manual effort required to classify data.
- Regularly review and update the data classification framework to ensure that it remains relevant and effective. This can include conducting regular risk assessments to identify new or emerging risks and updating the classification framework accordingly. This step can help to ensure that data classification practices remain effective over time.
3) Establishing Data Access Controls
Access controls are put in place to ensure that only authorized personnel can access sensitive customer data. This helps to minimize the risk of data breaches and protect customer privacy.
Here are three tips for establishing effective data access controls:
- Identify and define different levels of data access based on an employee's job role and responsibilities. For instance, only specific employees may require access to sensitive customer data such as social security numbers, while others may only need access to general customer information.
- Regular audits help identify any security gaps in the access control system. Audits should be performed at least once a year or more frequently, depending on the size of the organization. Audits help ensure that access controls are effective and that data is accessed only by those who are authorized to do so.
4) Maintaining Data Quality
Maintaining data quality involves ensuring that customer data is accurate, complete, and up-to-date. Data quality affects decision-making, customer service, and overall business performance.
Here are three tips for maintaining data quality:
- Establish data quality standards that define what constitutes accurate, complete, and up-to-date data. These standards should be communicated to all employees and enforced through regular data quality checks.
- Regularly monitor data quality to identify any data errors or inconsistencies. This allows for prompt action to be taken to correct any inaccuracies or update outdated information. Data quality monitoring can be done manually or through automated tools.
- Implement data cleansing processes that involve identifying and correcting any errors or inconsistencies in the data. This includes removing duplicate records, correcting spelling errors, and updating outdated information.
5) Ensuring Data Security
Ensuring data security involves protecting customer data from unauthorized access, use, or disclosure. Data breaches can have severe consequences for businesses, including financial loss and reputational damage.
Here are three tips for ensuring data security:
- Implement data encryption. Data encryption involves converting data into a code that can only be deciphered with a key. This ensures that even if the data is intercepted, it cannot be read without the key. Implementing data encryption for sensitive customer data such as credit card information, social security numbers, and personal identification numbers (PINs) is an essential security measure.
- Regularly perform security assessments to identify any vulnerabilities in the data security system. This includes assessing physical security, network security, and application security.
- Employees are a significant factor in ensuring data security. Provide regular training on data security to reduce the risk of data breaches caused by human error. This includes training on password management, phishing scams, and secure data handling procedures.
6) Conducting Regular Audits and Assessments
Conducting regular audits and assessments helps identify any security gaps, data quality issues, or compliance violations. It also helps ensure that data access controls and security practices are effective and up-to-date.
Here are three tips for conducting regular audits and assessments:
- Establish a regular audit schedule to ensure that audits are conducted at consistent intervals. This includes audits of data quality, security, and compliance. The frequency of audits should be based on the size of the organization and the type of data being managed.
- Conduct data mapping to identify where customer data is stored, who has access to it, and how it is used. Data mapping should be done regularly to check that any changes in data storage or access are identified and addressed.
- Utilize automated assessment tools to streamline the audit and assessment process. This includes tools that identify potential security risks, scan for data quality issues, and monitor compliance. Automated tools can help reduce the time and resources required for audits and assessments.
7) Refining Customer Data Governance Strategy
Refining the customer data governance strategy is essential to guarantee that it remains relevant over time. As businesses evolve and customer data regulations change, it's crucial to assess and refine the governance strategy continually.
Here are three tips for refining customer data governance strategy:
- Regularly reviewing and updating data governance policies assures that they remain relevant and effective. This includes policies related to data access controls, data quality, and data security.
- Utilize feedback and data analytics to identify any areas for improvement in the customer data governance strategy.
- Establish a data governance committee composed of individuals from different departments, including IT, legal, and marketing. This makes sure that different perspectives and expertise are represented in the data governance strategy.
Future of Customer Data Governance
Customer data governance is critical for effective data management, compliance with regulations, and customer privacy protection. Best practices for customer data governance include establishing data access controls, maintaining data quality, ensuring data security, conducting regular audits and assessments, and refining the data governance strategy. By implementing these best practices, your business can effectively manage customer data while minimizing risks of data breaches, legal violations, and reputational damage.
Looking to the future, customer data governance is likely to become even more crucial as businesses continue to rely on data to drive their operations. With the increasing amount of customer data being generated, regulations related to data privacy and security are also expected to become more strict. Businesses will need to stay up-to-date with changing regulations and invest in robust data governance tools and systems to manage and protect customer data effectively.
Additionally, the rise of new technologies such as artificial intelligence and the internet of things is expected to generate even more data, making effective customer data governance even more critical. By enforcing potent customer data governance practices, you can position yourself for success in the ever-evolving digital landscape.
Read More:- 4 Steps to Implement Unbiased Customer Data For a Better Customer Experience.