Check out this guide on customer master data management process and best practices to see all the CMDM benefits and how organizations can maximize them.
Customer master data management (CMDM) is a complex process with many nuances and features that can help businesses increase sales, due to personalization, and cut operational costs with automation and unification.
But if CMDM is set up incorrectly, companies may face drastic reputational and financial risks. So, to help businesses avoid these risks, we’ve prepared a detailed guide on customer master data management that covers CMD basics and delves deeper into CMDM benefits, implementation process, and best practices.
Customer master data is a set of vital information about a company’s customers, including:
Due to its versatile nature, customer master data is used across many departments, such as accounting, sales, marketing, finance, and customer service, ensuring more efficient handling of customer data, which leads to better customer service.
Customer master data management (CMDM) is designed to ensure that customer master data is accurate, consistent, and accessible across an organization. It involves creating, maintaining, and governing a single, authoritative source of truth for all customer-related information so that all departments can access accurate and unified data when interacting with customers or making strategic decisions.
Customer master data management is undoubtedly crucial for any business, and its importance grows as the company expands and adds more clients.
Customer master data is typically retrieved from ERP, CRM, and marketing automation tools that store, collect, and automate customer information. This information is then used to personalize communication with customers.
Now that we’ve covered the CMD basics, let’s dig deeper into details and look at the key customer master data attributes.
CMD is divided into specific attributes to help businesses accurately classify client information and efficiently use it across the enterprise’s ecosystem. Altogether, these attributes create an informative portrait of each customer, which helps in personalization, marketing campaigns, and overall business strategy.
To make CMD easier to understand, we’ve collected all its attributes into a table:
| Customer Data Attribute | Description | Business Purpose |
| Unique user ID | A unique combination of numbers and letters assigned to a customer as soon as they appear in the system | Helps users quickly access customer data from different company systems or other sources |
| Customer name | Client’s full name and initials | Helps improve the personalization of the messages and offers |
| Contact information | Email, phone number, messengers, sometimes social media profiles | Helps identify the preferred channel for more efficient communication |
| Shipping information | Physical address, home, or any other provided, usually consists of country, city, street, house, apartment, zip code | Needed for accurate shipping to make sure that the goods are delivered to the right location |
| Age and gender | Actual age and gender of the client, if specified | Helps to create personalized communication and engagement campaigns |
| Date of birth | Day, month, and usually the year of birth | Improves personalization and customer loyalty by allowing the option to send birthday gifts and offers |
| Location and language | Country and language preferences | Helps streamline communication, personalize offers, and improve business processes, if the vendor is present in the client’s country |
| Social status | Marital status, PhD, military service status | Helps personalize messages by using correct indicators before the name |
| Order history | System records about all the orders and purchases completed or not completed by the customer | Helps set up retargeting and remarketing campaigns, and helps make personalized offers |
| Behavior and engagement | Stats and records of the client’s reactions and engagement with social media and emails (follows/unfollows, subscribes/unsubscribes, likes, comments, brand mentions, etc.) | Helps identify better communication channels, make improvements to branding strategy, work with negative feedback, and build reputation |
Additionally, businesses can choose whether to use attributes included in the table above, or they can create and set up unique CMD attributes that are relevant to their industry specifics. For example, this could include information about education and college/university, years of experience in the industry or product, records of refunds, credit history, and so on.
Customer master data is a considerable collection of information and a valuable source of insights. Therefore, to analyze and utilize this data correctly and efficiently, businesses need to manage CMD properly. Otherwise, these priceless pieces of information will be a collection of disorganized records, providing little value either to organization or for the customers.
Let’s take a closer look at the following benefits of customer master data management:
CMDM is undoubtedly beneficial for businesses. Yet, to make sure the customer master data management process will be set up correctly, organizations should take steps to ensure that every detail is taken into account.
Let’s break the CMDM process into steps and take a closer look at each of them.
Customer master data management is a complex, multistep process that involves careful data collection and analysis to make the data usable and insightful for decision-makers.
Customer master data management is a must for any business, because it enables them to become a trusted partner for its customers and succeed in highly competitive environments.
Here are some of the best practices that can help your businesses improve decision-making, build trust, streamline marketing and strategic efforts, and thus succeed in CMDM.
A single source of truth (SSoT) is a centralized repository that stores customer information. It becomes the only authoritative source for all customer data across all the departments of an organization.
Having an SSoT enables businesses to ensure that all customer master data is accurate, cleansed, consistent, and updated regularly. Besides, the SSoT minimizes risks related to data inaccuracies that may occur because of human factors. Because the single source of truth for CMD is used by many departments, it should be properly connected to other business processes and become the only source of customer information.
Data governance policies define a set of rules and practices aimed to ensure customer master data quality and security. Since CMD consists of vital sensitive data, defining proper data governance policies is extremely important.
Each enterprise should establish data quality standards and role-based authorization permissions, and assign data stewards to be responsible for security maintenance. Customer master data safety is crucial to protecting an organization’s reputation and building customer trust, so they should make every effort to address it properly.
Customer master data maintenance and updates are aimed at keeping the CMD central repository relevant and clean.
To maintain accurate and complete customer data, organizations can implement data quality control processes, automate data maintenance, and regularly review data for discrepancies. Additionally, organizations should track data changes and ensure consistent updates to customer information. Timely updates to customer master data help businesses adjust marketing strategies for more efficient and engaging customer communication.
Segmented customer data is much easier to process and analyze. Additionally, data segmentation is key to better personalization, offering unique experiences based on customer preferences.
Segmentation allows more efficient allocation of marketing efforts, like targeting and social media engagement, eventually leading to improved customer satisfaction, better revenues, and success of strategic decisions.
As customer master data is retrieved from various sources, the goal is to make sure that the CMDM solution has sufficient integration capabilities to get data from several sources and move it to the core system (central repository).
To address these challenges, DataLark provides built-in integration, validation, and data management features in a single solution. With a wide range of built-in connectors, it can extract customer data from multiple systems and transfer it — cleansed and validated — into the central ERP system, such as SAP S/4HANA, using configurable transfer rules.
To comply with privacy regulations like GDPR and CCPA, companies can implement data protection policies and collaborate with their organization's legal and compliance teams to update them periodically in response to the evolving regulatory landscape.
Customers value when their data is held and used ethically, so this will help businesses maintain a good reputation and avoid regional and global legal issues. Consequently, organizations will stay competitive and retain more loyal customers in the future.
A comprehensive data backup and disaster recovery plan is essential to ensure customer master data is always available and recoverable, in case of system failures.
Having CMD backed up will always help avoid business lags, allowing organizations to keep clients happy no matter what, minimize security risks related to data loss, and keep delivering tailored experiences and solutions to customers.
AI and machine learning can greatly help in customer master data management, saving businesses time and money that can be allocated to processes that require more human involvement, such as business intelligence or strategy planning.
Customer master data management is a complex process with lots of peculiarities to pay attention to, yet it’s one of the most important steps for organizations in managing clients, reputation, marketing, and business decisions.
By using this guide, following the best CMDM practices, and choosing the right software, businesses can keep customer master data properly organized, validated, and maintained.