These days marketing and customer experience are all about data. Having sufficient, accurate data to draw insights from and support critical decisions that help grow the business. Most organisations, however, have struggled to integrate and leverage their data in a way that’s easy for marketing to use. Are Customer Data Platforms (CDPs) the answer?
Similar technologies and software has existed in the past, but the term customer data platform was first used in 2013. CDP grew into an industry by 2017 and by 2020 has reached mainstream popularity across businesses of all shapes and sizes[i]. Gartner defines a CDP as:
… a marketing system that unifies a company’s customer data from marketing and other channels to enable customer modeling and optimise the timing and targeting of messages and offers.
Scott Treller, executive general manager – customer experience (ANZ) at SAP
Scott Treller, executive general manager – customer experience (ANZ) at SAP, describes a CDP as “A living, breathing, holistic view of the customer that connects the various fragmented views of a customer from across the enterprise ecosystem. In doing so, it provides businesses with valuable insights at the point the customer chooses to engage. This allows organisations to redefine the customer experience across every touchpoint, from commerce and marketing to sales and service”.
Essentially, the software automatically extracts customer data from a variety of sources, cleans it, and combines it to create a unified profile of a customer. This profile is then available to every other system within the business. Treller comments, “A CDP also provides a unified customer profile which means it can be used across any marketing system in real time, connecting all kinds of data along with the behaviours, activities and events of a customer. This helps to create a contextual view of the customer, enabling businesses to better anticipate their wants and needs in real time”.
According to Gartner, customer data platforms have evolved from a variety of mature markets, “including multichannel campaign management, tag management and data integration.”[ii] At the same time, pure-play, purpose-built CDPs have launched to capitalise on the growth in the market. Rather than being viewed as a new technology, Gartner recommends viewing CDPs as a repackaging of already existing features and functionality that are inconveniently distributed and thus untapped across various alternatives.
The benefits of a CDP
Overcoming data silos: One of the most persistent bugbears for marketers and CX professionals when it comes to customer data is silos, where data sits in multiple and isolated locations across the enterprise. It hampers the accuracy and completeness of insights and the decisions based on those insights. It can be almost impossible to build an accurate profile of the customer. They also impact the productivity of employees who lack access to pertinent data or have a fragmented view of the customer.
A CDP promises to help you minimise and avoid the impact of data silos by unifying customer data and providing it to everyone who needs it.
Personalised marketing and messaging: Having access to accurate to customer data and profiles allows businesses to tailor products and provide more personalised service. A CDP collects data directly from customers, site visitors, social media followers, and subscribers. This data comes straight from your audience and the interactions it has with your brand.
Treller elaborates, “By connecting all the fragments of customer information gathered across a multitude of channels, businesses can offer more relevant products and marketing messages that are better tailored to customers’ interests – a key differentiator that can set a business apart from its competitors.”
Increased revenue and reduced costs: An effective CDP solution aims to deliver highly targeted campaigns to the right people with the right message at the right time. In turn this increases brand recognition and customer engagement, thereby increasing conversion rates, sales and revenue.
As well as providing opportunities to increase revenue they are also important when it comes to eliminating inefficiencies and reducing costs. The deployment of highly targeted and personalised marketing campaigns can improve the ROI delivered by those campaigns, reduce wasted spend on marketing and advertising, and improve efficiencies in lead generation and sales processes.
Improved data management and customer consent
One of the biggest benefits associated with having a CDP is in terms of data and consumer privacy. According to Jake Bennett, writing for Martech Advisor, by collecting and unifying customer data from across disparate sources, CDPs help ensure that customers’ privacy preferences are enforced across all marketing channels, and that privacy officers are able respond to customer privacy inquiries swiftly by giving them one system of record to work with.
Prior to implementing a CDP solution, Treller from SAP recommends having a policy and process in place to address data privacy and obtaining customer preferences on how their data can be used. Treller advises, “The first step before any business can begin their CDP journey is to address privacy requirements and understand when and where customer data can be used, it’s important that an organisation has a platform in place to address customer consent”.
He adds, “A CDP improves an organisations’ ability to understand where and when to use customer data – an issue which is often-overlooked by businesses. When a business understands how and when a customer is comfortable to let them store and use their data, it instantly becomes a more trusted partner as their customers feel more comfortable about sharing their information”.
Evaluating solutions
There are a number of CDP software vendors in the marketplace. The list is likely to keep growing as this software category evolves and increases in popularity. There are many factors to consider when evaluating a CDP. The first step is to understand what the business challenge is and how a CDP will help with that.
Treller advises that there are number of questions to keep in mind throughout an evaluation. Which include:
- Do you have a cohesive data strategy at the moment?
- Where do you collect the data from?
- Do you give your customers the opportunity to consent on what you do with their data?
- What other systems do you need to collect and share the data?
- Do you have an organisation-wide roadmap or siloes?
Undertaking a proof of concept (POC) project, incorporating an hands-on evaluation of the various products, may be extremely useful. Many of the cloud-based CDP vendors provide a 1-month free trial of their products, allowing you to test their capabilities. The biggest challenge in implementing a CDP, however, according to Treller is the fact that most organisations use multiple systems and platforms to collect customer data.
He advises, “It’s important that the platform you select provides the tools to seamlessly onboard and integrate all of these many sources of data, including those that have no code interfaces, flexible domain models, dynamic segmentation, audience management or key performance indicators”.
Customer data platforms (CDPs) are gaining in popularity
because of the value that they can bring to an organisation. A CDP assists organisations
to understand their customers since it creates a truthful and unified view on
customer behaviour and their transactions. It achieves this because the data is
being cleansed, deduped, modelled and stored in one place and not fragmented
across silos and different departments.
[i] https://lp.cdpinstitute.venntive.com/DL2079-CDPI-Industry-Update-July-2019
[ii] https://www.gartner.com/smarterwithgartner/marketers-to-guide-customer-data-platforms/
