How to Improve Retail Customer Data Collection

As governments adopt new privacy regulations, customers are more intentional about what types of data they share. With built-in cookie blockers that prevent companies from tracking online activities, now is the time to implement privacy-first strategies to acquire customer data in a changeable ecommerce environment.

Following Google’s decision to phase out third-party cookies in 2024, forward-thinking marketers and leaders are turning to first-party data as their primary source of customer intelligence. These personally identifiable, company-owned, and directly-collected data are immensely valuable for companies to understand customer pain points and their unmet needs to improve the customer experience.

However, beyond mirroring this shift, it is essential to understand the process that guides this new approach to ecommerce customer data collection. Customers have significant control, and you need extra effort to build trust.

We’ll dig into research-informed strategies to prepare you for a successful transition into the future of customer data collection.

The four relevant types of customer data in ecommerce

Accumulating vast amounts of data irrelevant to your business will only strain your resources and certainly won’t provide actionable insights.

The only way to avoid this trap is to become familiar with the kind of data that is required to serve customers. These cut across basic personal data, like gender and location, to behavioral data, such as spending patterns and on-site behavior. This type of data further helps attribute personas to customers and will improve your sales and lead generation strategies.

Less is more. So, while you improve your ecommerce customer data collection strategies, remain laser-focused on these four types of data:

Basic (Identity) data

This type of data gives you basic information about a customer's identity and serves as the basis for creating buyer personas or customer segmentation.

It includes personally identifiable information such as name, gender, age group, email address, social media profiles, profession, income, location, and race. The common ways of collecting this data are through online opt-in forms and surveys.

Engagement data

As customers interact with multiple touchpoints during the purchase journey, engagement data can be collected by tapping into web analytics, social shares, email sign-ups, customer service inquiries, and downloads.

Engagement data is beneficial for informing decisions on marketing and advertising campaigns.

Behavioral data

There’s a slight differentiation between behavioral data and engagement data. Engagement data pulls from the early stages of the buyer's journey, but behavioral data pulls from the decision and post-purchase stages.

Cart abandonment data, customer-buying histories, preferred shopping channels, time spent browsing, and product choices all make up behavioral data. Patterns identified can be used to minimize churn and personalize customer outreach or experience.

Psychographic data

Information linked to customer sentiments, likes, or dislikes falls under psychographic data. This type of data gives you insight into customers' opinions, particularly regarding your business and their lifestyle and interests. It’s collected from satisfaction surveys, online reviews, interviews, or focus groups.

Learn how Improvado can help you aggregate data across CRMs, CDPs, and other platforms

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Benefits of collecting customer data

Customer data is a valuable asset that essentially informs how businesses make decisions, design engagements, and deliver experiences. Ultimately, data governs strategy and serves as a compass for growth and innovation.

Implementing an improved data collection process transforms your business in many ways:

Gain insight into business performance

The current and future health of your ecommerce business predominantly rests on deeply knowing your customers. Understand them to the point that you can anticipate their needs, predict their behavior, and recognize what influences their buying/purchase decisions.

Accurate insights from customer data help you identify loopholes and areas of improvement, unearth new opportunities to gain competitive advantage, and get a clear direction on your next big move.

As you mine data to dissect customer behavior, you gain valuable insights into your business performance, your customers, and their goals. From there, it’s easy to see how the data ultimately contributes to meeting your core business objectives.

Execute hyper-targeted campaigns

Every time customers interact with your business online, they leave a trail of breadcrumbs behind. When properly collected, these breadcrumbs become valuable customer profiles that will help you understand the customer journey and make better marketing decisions.

Learn how to implement omnichannel marketing strategy and make the most out of each touchpoint of the customer journey

With customer data, retarget campaigns to optimal marketing channels and develop better-performing bottom-of-the-funnel content. At the same time, construct strong marketing solutions around their behavior, product preferences, and optimal shopping times.

Billions are spent on market research to understand what consumers want, eliminate guesswork, and create strategies based on accurate insights.

According to McKinsey, highly personalized experiences can reduce marketing and sales costs by up to 20% and boost sales conversion rates by up to 15%. Beyond reducing marketing costs, you can also identify and hyper-focus on loyal customers and engage them with the right offers and messaging.

Significantly improve customer experience

Delivering an unrivaled customer experience lies in using predictive analytics within tools like Customer Data Platforms (CDPs) to deeply understand customer preferences and offer personalized product recommendations to improve the shopping experience.

Customer data can predict product purchases and shape buying decisions. It’s the basis for customer segmentation, identifying customer attributes, and refining customer personas.

A great customer experience increases customer lifetime value, reduces churn, and leads to higher revenue.

Maintain dynamic pricing strategies

An effective retention strategy such as dynamic discounts depends on insights from sufficient customer data.

Pricing products based on buying patterns and trends will help you identify price-sensitive customers and help you present upselling or cross-selling offers that nudge shoppers closer to checkout.

Optimize supply chain, inventories, and distribution

A McKinsey survey of over 700 organizations revealed a significant increase in operating profit when analytics gain competitive intelligence and optimize operations and supply chains.

Ecommerce customer data collection not only informs new product development with precision but can also anticipate a rise and fall in customer demand, reducing inefficiencies in operations and production.

Achieve better ROI

Shoppers abandon 88% of products added to online carts for reasons only customer data can reveal.

Harnessing customer data at scale personalizes your marketing, improves your customer service, creates a better customer experience, improves your product and pricing strategy, finds new opportunities for your business, identifies different customer groups, and segments your data.

In essence, knowing your customers will help you grow your revenue to ensure you reap the rewards of your data collection efforts.

How to improve your ecommerce customer data collection

#1. Know your data goals

To collect data effectively, it is vital to set up the end goals. Haphazardly collecting customer data without any real purpose just won't cut it.

For each data type, have a clear understanding of specific outcomes. Know what you want to learn from your customers and how you will use the data. Discuss your “why” with your team and come to an agreement that clearly states your intention for customer data collection.

But before you can set any goals, you must first understand what data you have access to and what it can do for you.

One of the most common types of data goals is market research. You can use your data to learn more about your target market and understand their needs and wants. This type of research can develop new products and services or improve your existing offerings.

Another common type of data goal is to enhance your marketing efforts. Use your data to track the effectiveness of your marketing campaigns and make changes accordingly. Your goal could also be related to understanding a particular problem, like why a product doesn’t meet sales targets in a specific region.

A clear goal keeps you on track and ensures you’re collecting useful data.

Once you have a clear understanding of your goals, you can start to plan your data project. This planning will involve deciding what type of data you need, how you will collect it, and how you will analyze it.

Research similar organizations and identify their data goals, then use your findings to supplement your planning efforts.

With the big picture in mind, you can determine if you want to harness data to accelerate revenue, optimize production processes, develop new product features or improve the customer experience.

#2. Pick the proper research techniques

Many different research techniques can be used for customer data collection. Some popular methods are:

Surveys
Interviews
Focus groups

Each method has advantages and disadvantages, so choosing the right technique for your specific goals is important.

Surveys are a great way to collect large amounts of data from a wide variety of people. However, if the questions are not well-designed, surveys can be biased.

Interviews are a more personal way to collect data from experts or key stakeholders, but they can be time-consuming and expensive.

Focus groups are a good option if you need to gather more in-depth data from a smaller group of people, but they can be biased if the group is not representative of the general population.

Alternatively, digging into your marketing automation software, social media stats, online forms, web analytics, or transaction data is an excellent place to start.

Ensure the research method you pick helps you collect the type of data you need, whether that is demographic, psychographic, behavioral, or engagement data.

#3. Categorize and segment customers

As an ecommerce business, it's essential to understand your customers and segment them accordingly. This helps you tailor your marketing and sales efforts to better match their needs and target people who are most likely to engage.

There are a few different ways to segment and categorize your customers. The most common method is to segment them based on demographics like age, gender, location, and income. However, you can segment them based on their behavior, like their spending and web browsing habits, or segment by purchase history, such as average order value, frequency of purchase, or time since last purchase.

Once you have your segments, start thinking about how to target each. What marketing messages will resonate with them? What kind of products are they looking for?

#4. Secure your customer data

Common data breaches have contributed to customers’ skepticism about sharing personal and sensitive data. Consumers are increasingly paying attention to how companies respond to hacks and how transparent they are when such incidents occur within their enterprise.

It has become non-negotiable for companies to take full responsibility for keeping customer data safe. Ensuring that only essential, meaningful data is collected without violating privacy should guide every data collection effort.

Some of the most effective methods include encrypting data, using secure hosting providers, and implementing access controls. When data is encrypted, it is converted into a code that authorized individuals can only decrypt. This ensures that if customer data is intercepted by unauthorized individuals, they will not be able to read it.

Secure hosting providers are another effective way to protect customer data. These providers offer high levels of security for their clients, including physical security, data encryption, and firewalls to ensure data is safe from hackers and other cyber threats.

Pseudonymization, replacing identifying data with fake data and tokenization, and replacing sensitive data with a unique identifier are all effective methods to secure customer data.

#5. Data mapping

As the amount of data that ecommerce businesses collect continues to grow, it is becoming increasingly important to have a system in place for data management. An effective way to do this is through data mapping.

Data mapping is a process of creating a visual representation of data sets to understand them better. It is often used to understand customers' buying habits and preferences. By mapping out data sets, you can quickly identify patterns and trends, which lead to better decisions about marketing and sales strategies.

We’ve gathered the 11 best data mapping tools on the market to help you find the one that suits your business goals.

Data mapping can also categorize data into types to be stored and used differently depending on sensitivity.

#6. Improve trust and provide better service

In a report detailing consumers' thoughts on privacy and data collection, about 50% of the respondents said they are more likely to trust a company that asks only for information relevant to its products. 71% said they would stop doing business with a company that would give away sensitive data without permission.

These statistics signal that customers respect companies that take a more thoughtful approach to data management.

When collecting customer data, asking for permission and being clear and transparent about what data you're collecting and why is mandatory. Get explicit consent from customers before collecting or using their data, and always respect privacy preferences by telling customers if you intend to share their data with a third party. Give customers the ability to access and easily opt out of sharing or deleting their data.

If you want customers to trust you with their data long-term, you will need to build confidence in your ability to maintain responsible data collection practices.

#7. Use the right customer data & analytics tools

When you’re ready to make sense of your customer data, you’ll need to choose tools to invest in that help you collect, assess and analyze your data.

Depending on the data you collect, you may need to consider social listening or customer survey tools such as Sprout Social or Typeform. Alternatively, you can focus on behavioral analytics software such as Google Analytics.

Google Analytics, for example, is an excellent all-around tool that can be used for everything from website traffic analysis to sales data tracking.

With Hotjar, you see how your users interact with your site using heatmaps.

Improvado stores all your marketing and sales data in a unified data warehouse and merges it in any visualization tool to give you a holistic picture of your omnichannel efforts.

Choose a tool that does most of the grunt work for you while also helping you organize and centralize all your customer data.

With the right analytics tools in place, you'll be able to collect and analyze customer data more effectively, leading to better decision-making and improved customer satisfaction.

Use Improvado to connect all your customer data

Data collection can get overwhelming. To streamline data from marketing and sales sources, efficiently and accurately collect quality data and fully understand the required strategies to implement based on data, you need a unified platform for data management.

Simplify the process of pulling up-to-date insights from multiple data sources and avoid confusion in the customer data management process by embarking on your data collection journey with Improvado.

FAQs on improving customer data collection in ecommerce

What is the importance of a customer database in ecommerce?

A customer database keeps track of your customer's information, purchase history, and preferences. This information improves your customer's experience, targets your marketing efforts, and increases sales.

A customer database also tracks your inventory and efficiently fulfill orders. By keeping track of what your customers have purchased, you can more easily determine what they might be interested in buying in the future. This information helps you stock your inventory and ensures you have the products your customers want.

Keeping track of your customer's information can improve your customer's experience, target your marketing efforts, and increase sales.

How can the ecommerce customer experience be improved?

One way is to ensure your website is easy to navigate and use. Another is to offer various payment options so that customers can choose the one that is most convenient for them.

Additionally, ecommerce businesses can improve customer experience by providing customer support (such as with a call center software) and making it easy for customers to get in touch with a representative if they have any questions or problems.

Finally, ecommerce businesses can improve customer experience by ensuring orders are processed and shipped quickly and efficiently.

By taking these steps, ecommerce businesses can provide a positive customer experience that will keep customers coming back.

How can ecommerce protect customer data?

There are a few key ways that ecommerce businesses can protect customer data. First, they can encrypt data, making it difficult to access without proper authorization.

Second, they can use secure data storage methods, such as storing data in a secure server or using a security token.

Finally, they can put in place a security policy that requires employees to only access data necessary for their job and keep confidential information secure.

By taking these steps, ecommerce businesses can help to protect their customers' data and keep it safe from cyber criminals.

What are the challenges of data collection?

The first challenge is acquiring accurate and reliable data. This can be difficult to do, especially if the data comes from various sources.

The second challenge is organizing the data in a way that makes it easy to analyze. This can be a time-consuming process, and it is often difficult to know which data is relevant and which data is not.

The third challenge is making sure the data is appropriately protected. This is important because data can be sensitive and used for nefarious purposes if it falls into the wrong hands.

What are the best ways to collect customer data?

One way is to use customer surveys. This can be done either online or in person, and it gives you a way to collect data directly from your customers.

Another way to collect customer data is to use data analytics. This involves tracking customer behavior on your website or app and can give you insights into how customers interact with your business.

Finally, use social media to collect customer data. This can be done by monitoring customer activity on social media platforms like Twitter or Facebook.