CRM Customer Database: Relevance, Prerequisites, Functions & Creation

1. What is a customer database?
2. Why should companies use a comprehensive and up-to-date customer database?
3. How does a CRM help organise customer data?
4. What kind of data is collected in a customer database?
5. What forms of customer databases exist?
6. Personal information and data that cannot be directly assigned to a specific business interest should not be stored in principle.
7. It is also important to consider what types of customers you have - are they private customers (so-called B2C) or corporate customers (so-called B2B). Especially the relationship care of companies with different contact persons often poses challenges in the database or in the display on the user screen.
8. Practical tip
9. Also, as standard, CRM solutions bring functions to set sensitive access permissions or differentiate specific user groups in the system.
10. What the customer database does not deliver are the important and necessary customer data that are stored in it. This continues to be your responsibility so that the necessary data quality is available to perform reliable reports, analyses or even task automatisations.

What would it be worth to you to know how much revenue you lose each year from missed sales opportunities with your customers?

With a customer database and a consistently data-based CRM (Customer Relationship Management), that supports you in your sales, marketing, and customer service processes, you will know sooner how much specific sales potential is in your customers. At the same time, a CRM solution enables you to realise this sales potential. Basic functionality includes storing all customer information relevant to you, such as contact details and product interests.

Process-wise, the CRM supports you with everyday tasks, such as planning and executing campaigns, evaluating leads and existing customers, conducting analyses, creating reports, and creating offers.

In addition, you manage all customer-related documents with it.

Aside from a so-called ERP solution (Enterprise Resource Planning), the CRM system is the central system for your business success. It enables focus on the customers with whom the most revenue is currently and will be generated. It distinguishes itself from other IT systems with customer data such as a Customer Data Platform (CDP) or a Consent Management Platform (CMP) by supporting you in optimizing the concrete direct customer relationship with each individual customer.

A CDP, in turn, is specialised in the overarching consolidation of all customer data in the systems you use and can thus be used as a central data source for other systems alongside the CRM. Relatively new is a Preference Management Platform (PMP), which focuses on storing customer preferences reported by the customers themselves. Whether it makes sense for you to use these different customer data systems depends on the requirements you have for automation, personalization, and used communication channels.

The following overview shows the basic differences of possible solutions for storing and using customer data in your company:

Overview of possible systems with customer data and their differences (own representation)

Practical tip: The faster your customer base and the associated communication effort grows, the sooner it makes sense to deal with a CRM solution that supports you in this relationship maintenance. Depending on the complexity of your products and the multilevel nature of your communication processes, this can be worthwhile from as early as 5 - 10 leads or customers.

What is a customer database?

Your customer database is the central place in your company where you store all existing customer contacts and information and optimize the sale of your products and services based on this data, plan your marketing budgets, and accept your customer service requests. It is, therefore, primarily a valuable tool that optimally supports you in processes with direct customer contact.

The data in the CRM system primarily serves to keep an eye on each individual customer relationship you have.

A salesperson in the sales area, for example, uses it to manage the offers and thus the potential sales opportunities with the customers assigned to them. Without a CRM system, these tasks would, in most cases, be supported by a word processing program and a spreadsheet. However, with increasing numbers of customers and contact frequency, recurring tasks are repeated over and over, and one slowly loses track. By using a central customer database with all the data available on the customer, one can focus more intensively on the exchange with the customer and make them a suitable offer faster.

A comprehensive CRM customer database not only supports sales, but also marketing and customer service in their operational processes and tasks. Marketing plans, selects and manages cross-channel campaigns for the various customer contact points.

Customer service uses the existing data for customer inquiries to gain a comprehensive overview of the previous customer relationship, such as recent orders from the past and current offers.

The central database offers configurable views, reports, analyses and evaluations for all different user groups in your company, enabling you to make faster data-based decisions depending on the individual question. For sales control, for example, new target customers can be identified more quickly to catch unrealised sales opportunities.

Practical tip: You will quickly be tempted to store as many customer data as possible in the database. But always focus on the relevant and meaningful data. Less is more! Pay particular attention to current contact and communication data, a comprehensive history of contact, offers and orders, and current customer interests.

Why should companies use a comprehensive and up-to-date customer database?

The consistent use of a supportive customer database brings you many advantages, especially achieving the planned revenue development and exploiting the budgets used with the available resources. More on the CRM advantages, can be found in our article.

Here are 5 more reasons why you should use a customer database

1. Better understand customers - in the end, it's about identifying customer needs or changing customer requirements so that you generate more revenue through suitable offers and closures. This can happen with known customers through adjusted content offers or with interested parties by converting current customer needs into suitable product offers using Marketing Automation and Lead Nurturing.
2. Reach personal goals - especially in sales, it is common that sales successes are agreed as an additional salary component of your contract. The CRM helps you with the implementation of the agreed goals and at the same time creates a transparent and trustworthy basis to talk about the current status of goal achievement.
3. Prevent knowledge loss – in the same way, as a company, you reduce the risks if an employee should leave your company. The customer relationship can be continued.
4. Optimise product development - with consistent use and maintenance of customer data, you enable yourself to continuously reassess possible assumptions that you have made in product development based on your own data and can make adjustments more quickly. Similarly, often new product ideas emerge, which you can try out directly with existing customers or current interested parties in a targeted way. The investments in new product development are thereby reduced.
5. Increase task productivity - Like any new software tool, the CRM introduction of a central customer database brings benefits in the optimisation of the supported tasks and processes. The fact that customer service can see any customer activity, for example, increases the speed of processing the customer request and optimises the utilisation in customer service. On the other hand, your customer service is enabled to solve the customer request qualitatively better and directly contributes to higher customer satisfaction, coupled with longer customer loyalty.

Practical tip: Your customer data and knowledge about the customers are your capital and future revenue! What's a relevant and goal-oriented customer profile worth to you? Set a concrete amount and budget for this investment, like €5 per year per customer. This budget can then be used in different recurring customer data measures - such as a marketing campaign purely for data updating, a direct query of their data when the customer calls customer service, or speaks with the sales colleague.

How does a CRM help organise customer data?

The processes in sales, marketing, and customer service are generally identical in all businesses. The resulting tasks and data are supported by a CRM database with corresponding functionalities such as uniform contact recording, offer creation, campaign setup, selection of target customers, and overview of all customer activities.

The following overview shows basic processes and areas of responsibility supported by a comprehensive CRM system:

Overview of processes and areas of responsibility supported by a CRM (own representation)

The customer data centrally organised in the CRM forms the basis for selling your own products, services and benefits and is thus a critical success factor for the success of your business. The CRM system supports access to these sensitive data with control, access or analysis functions. As a result, all customer data is collected in one place and it ensures that the data are complete, current and consistent.

The CRM system provides corresponding functions in the processes to help organise and manage this data. Some of the most important CRM functions are:

1. Contact management: A CRM system enables the storage and management of contact information such as names, addresses, phone numbers, and email addresses.
2. Company management: A CRM system allows the storage and management of company data such as industry, size, and location.
3. Sales management: A CRM system allows managing sales opportunities and processes, from capturing new customers to creating offers and invoices.
4. Marketing management: A CRM system allows planning marketing activity through
5. Analytics & Reporting: a CRM system supports you through detailed reporting and deeper analysis in controlling your goals.

Practical tip: Avoid storing customer data in different systems throughout the company, such as spreadsheet programs (e.g. Microsoft Excel, Google Sheets), email (e.g. Microsoft Outlook), collaboration tools (e.g. Microsoft Teams, Asana, Slack) distributed. The disadvantages are outdated contact data and no holistic overview of the target customers. The CRM as the central place turns these disadvantages into advantages.

What kind of data is collected in a customer database?

A customer database typically stores different types of data about customers and potential customers.

The following types of customer data can be distinguished:

1. Contact information: This includes name, address, phone number, email address, and other contact data.
2. Company data: Information about the customer's company such as industry, size, location, etc.
3. Sales data: Information about the customer's sales opportunities and sales transactions, e.g. offers, orders, invoices and payments.
4. Marketing data: Information about the customer's marketing activities, e.g. which campaigns they have seen via which channels, which products they have bought.
5. Interaction data: Records of all interactions with the customer, e.g. calls, emails, meetings and notes.

Practical tip: Please make sure to store CRM data for appropriate purposes according to current legislation such as General Data Protection Regulation (GDPR), Telecommunications Act (TTDSG) etc.! In addition to the concrete implementation of these requirements, apply these principles purposefully and keep asking yourself the following question: “What data do I really need to achieve the set objectives such as sales turnover in a certain region?”.

What forms of customer databases exist?

A comprehensive CRM customer database fundamentally supports you in these three areas of responsibility:

1. Operational Areas of Responsibility

Operational CRM includes all functionalities for the support and automation of the daily business processes of your company in sales, marketing and customer service.

It generally includes the management of contact and company data, recording of sales opportunities and transactions, controlling of marketing activities, and managing customer requests and issues.

CRM tools usually support in all these tasks.

Practical tip: Make sure to check which modules are included in the entire CRM solution. The names of the modules are usually clear and self-explanatory.

Using specific examples, find a possible selection of potential CRM tools.

One example would be the automation of management of sales opportunities and transactions, from recording new customers to creating offers and invoices.

CRM suites such as Salesforce Sales Cloud, Microsoft Dynamics 365 Business Central, Zoho CRM, HubSpot Sales Hub, SAP Sales Cloud or Bitrix24 support you in this. There are also tools like Pipedrive, which focus on sales support.

Another example would be the automation of marketing activities such as the creation of personalised email campaigns or the management of ads on social media.

Here, too, the CRM suites already mentioned support you. But there are also tools like DYMATRIX Customer Experience Platform, Evalanche, GetResponse

(Kostenlos ausprobieren)

In customer service, for example, incoming customer enquiries can be pre-sorted according to your own customer categories and thus processed with priority.

Here, too, the CRM suites already mentioned support you. But there are also tools like Freshdesk, specialising in customer service support.

2. Collaborative Functionality

Collaborative CRM refers to the use of technologies and processes to enable collaboration and information exchange between different departments and colleagues within a company.

All colleagues can access the same customer data and information and speak the same language because of the same basis of customer data in the system.

The efficiency of internal collaboration is increased by providing automated workflows and processes for collaboration, e.g. the automatic forwarding of enquiries to the right colleague or the right department.

Practical tip: Make sure that your internal communication with and about the customer happens directly in the CRM tool or that other communication tools like Outlook or Email sending systems like Inxmail, ELAINE or are centrally harmonised through the inclusion of interfaces.

3. Analytical Support

Analytical CRM refers to the use of data analysis tools and methods to understand and use the customer data collected by a CRM system. It allows companies to analyse the data in order to gain deeper insights into the needs, behaviours, and preferences of customers and to improve the effectiveness of your marketing and sales activities.It includes the use of methods such as data mining, data warehousing, business intelligence, and predictive analytics to gather, cleanse, and analyse data collected by a CRM system. It enables companies to identify trends and patterns in their customer data in order to make better decisions and adjust their marketing and sales strategies.An example of analytical CRM would be identifying customers with high purchasing potential by analysing their purchasing history and other relevant data. Another example would be identifying products or services that are particularly popular with certain customer groups by analysing data on their purchasing behaviour.

Here, too, the CRM suites already mentioned support you. There are also tools like

,

or QlikView, that support you in data analysis.Vertex AI Workbench (vorher Google Cloud Datalab)What role does GDPR play in managing customer data?Looker StudioThe General Data Protection Regulation (GDPR) sets out how businesses and organisations can process their customers' personal data. This includes, among other things, that they must have a legal basis for processing the data, that the data must be minimised, and that the customer has the right to access and delete their data. Companies also need to ensure that the data is protected and that any data breaches are reported immediately.

Personal information and data that cannot be directly assigned to a specific business interest should not be stored in principle.

B2B target customers (companies/organisations) are generally less restrictive in the application of the GDPR, but even here personal customer data quickly accumulates, where careful consideration must be made according to the GDPR whether these can be stored in the CRM without prior consent. If uncertain, it is advisable to seek the advice of your data protection officer. They can either be internal or external to your company depending on the size of the company. Also being a member of an association like BVDW, DDV, or an industry association, which employs respective experts on the topic of data protection, can be helpful at this point.

In addition to the requirements of the GDPR, there are other laws that need to be considered when storing customer data. The Telemedia Act (now: TTDSG, formerly: TMG), a German law regulating telemedia (internet, mobile telephony etc.), is particularly worth mentioning. It contains provisions on topics such as liability, data protection, and youth protection in connection with used telemedia. It is intended to meet the requirements of data protection and freedom of information as well as the protection needs of consumers and children online.

It applies, among other things, in marketing when using different advertising channels and the associated advertising permissions.

Here are some examples:

Opt-in

: This means that the person has expressly agreed to receive advertising.

Opt-out: The person has provided their contact data but has the option to unsubscribe from further advertising messages at any time.

Soft opt-in: This is a type of opt-in where the person is already a customer and the company assumes that they agree to continue receiving advertising unless they object.

Legitimate interest: Companies can also send advertising to people if they have a legitimate interest in doing so. For example, a company that has sold a product to a customer can offer them similar products.

Public interest: Advertising that contributes to a general interest (e.g. political advertising).It is important to note that each type of advertising is subject to certain legal regulations, such as the GDPR and other laws, and that the regulations vary from country to country.Practical tip

: Always focus on secured and provable consents for general contact and certain communication channels. The regulations and legislation will continue to change so that mutually agreed customer communication must be transparently and reliably carried out in your customer systems according to currently applicable laws. You should use CRM systems that support these tasks and processes continuously, easily, and automated.

What should be considered with customer databases?Basically, it should be noted what requirements and support you currently need in which area! If you are a start-up that doesn't yet have customers, the focus should be on modularly usable CRM systems, where you prefer to use the sales or marketing module. Pay attention here to the possibility that other modules such as for customer service, which will become more important for you later, can then easily be added.

It is also important to consider what types of customers you have - are they private customers (so-called B2C) or corporate customers (so-called B2B). Especially the relationship care of companies with different contact persons often poses challenges in the database or in the display on the user screen.

Connected with this is that you evaluate for yourself how adaptable the UX (so-called user experience) and user screens are for the best possible work style. The CRM system will quickly store a lot of information, making it easy to lose track. The ability to configure your user screens is necessary here.

Especially with the start of using a CRM system, it is very helpful if there is extensive documentation of the functions. Your onboarding should also be further supported with selected training and tutorials.

Finally, special attention should be paid to ensuring that your CRM can easily connect to other IT systems you use. Be it the web shop, the ERP system or other systems such as a CDP - your customer database will quickly become the focal point and pass data on to further systems.

Practical tip

: Important here are standard interface technologies (keyword: API, so-called Application Programming Interfaces for data exchange) and good documentation of these interfaces that not only the tech colleagues can read and understand, but also you as a user of the system.

How is a CRM customer database created?There are now a plethora of CRM solutions that already bring all the basic functionalities. So you don't have to create a new CRM database. The use and provision is usually as a web application in the form of a so-called 'Software as a Service' solution (short: SaaS). Less often and under special conditions in your company is the CRM software still installed in your own data centre.

Practical tip

: Even if you don't need to develop your own CRM, definitely plan before the introduction and use together with all departments, what data with what goal should be stored and maintained in the customer database. Update and discuss changes regularly.

Construction of a planning file of your most important customer data (own production)This has the advantage that you focus the relevant data and information and these can be easier to control during the initial filling and lasting maintenance of your CRM database. You will notice and quickly desire to store more and more new data. Don't underestimate the effort of maintaining every piece of this information with all customers and contacts.

Therefore, weigh carefully which data should be maintained to 100 %. If you mainly contact your customers with email marketing, the goal should be that every contact has stored an email address. This way, you have better possibilities to carry out automated email campaigns - keyword 'automation' and increase the efficiency of your marketing campaigns.

This documentation and planning of the data and database fields helps you to always maintain and use the data that may be stored from a legal point of view and to focus on achieving your business goals.

Determine at the beginning for which area - sales/sales, marketing or customer service - the CRM system should be primarily used.

There are solutions that support all areas basically like Salesforce, Microsoft Dynamics CRM, Zoho, SAP, Hubspot or Bitrix24. But there are also solutions that focus on certain areas. Pipedrive would be a solution focusing on support in sales areas. Marketing automation, campaign management and email solutions such as evalanche, emarsys, Brevo (formerly Sendinblue), GetResponse, etc. support you focus on digital marketing. In customer service, there are solutions like freshworks that support specific aspects in customer service.

Once you have decided on a CRM solution, you start with the initial filling of the database with your contact and customer data. Use this moment to leave out data that you don't need anymore and concentrate on the data that are used and needed 100 %.

How well can the customer database be adapted to your own processes and structures?

(Kostenlos ausprobieren)

It is less advisable to develop new processes and functions. This causes additional costs, which often do not achieve the desired effect. Current CRM solutions provide tried and tested processes and functions that you should use and apply consistently.

Also, as standard, CRM solutions bring functions to set sensitive access permissions or differentiate specific user groups in the system.

As already mentioned, a powerful CRM system brings good integration functionality in the integration of incoming and outgoing further systems. Corresponding interface functions for a skilled user in this area can be implemented and monitored well through extensive documentation.

Practical tip

: You should definitely test a demo or test system of the preferred CRM solution as long as possible using a small selection of specific use cases.

This is how you find out how the adaptability and functions of the system fit your requirements.

ConclusionA CRM customer database is next to an ERP software one of the software solutions that you should introduce quite quickly and use intensively.

Encouraging new or existing customers to buy your products/services, becomes more efficient with a customer database and the support functions provided and with consistent application, will help you to increase revenue.

What the customer database does not deliver are the important and necessary customer data that are stored in it. This continues to be your responsibility so that the necessary data quality is available to perform reliable reports, analyses or even task automatisations.

Eine CRM-Kundendatenbank ist neben einer ERP-Software eine der Software-Lösungen, die Ihr recht schnell einführen und intensiv nutzen solltet.

Neue oder bestehende Kund*innen für den Kauf deiner Produkte/Services zu begeistern, wird mit einer Kundendatenbank und den bereitgestellten Unterstützungsfunktionen effizienter und wird dich bei konsequenter Anwendung, zu steigendem Umsatz verhelfen.

Was die Kundendatenbank nicht liefert, ist die wichtigen und notwendigen Kundendaten, die in Ihr gespeichert werden. Dies liegt nach wie vor in eurer Verantwortung, damit die notwendige Datenqualität vorhanden ist, um verlässliche Reports, Analysen oder gar Aufgaben-Automatisierungen durchführen zu können.