Customer data platforms have emerged rapidly over the last few years as the latest tool in the arsenal of contemporary marketers to help exploit company data. In simple terms, CDPs create a persistent, unified customer database that is accessible to other systems. In turn, that makes it easier to personalise experiences and in theory better meet the customer’s need.
But because they draw on Personally Identifiable Information (PII) — which is the data which companies collect or create inside their own systems — and can link it with second and third-party data like cookies or device identifiers, CDPs also run the risk of butting up hard against the increasingly fraught consumer attitudes to data.
Vendors who argue this is mitigated by the focus on first-party data risk missing the point that the issue is not data ownership — it’s data utility.
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As we have reported before, consumers are less educated about how their data is used than the industry likes to pretend. And a recent report in the Washington Post and republished by the SMH reinforced that view.
The author, Geoffrey A. Fowler, wrote, “Just when you thought we had hit rock bottom on all the ways the Internet could snoop on us — no. We’ve sunk even lower. There’s a tactic spreading across the Web named after treatment usually reserved for criminals: fingerprinting.”
The behaviour Fowler finds so egregious can already be delivered by a DMP, but imagine what he and the audience he serves will make of software that creates a persistent, unified customer database linking anonymised data to PII.
Yet, as with the marketing technologies that have come before it, the growing popularity of CDPs suggests that for now at least marketers are more focused on building capability than stopping to pause and ponder the implications.
According to a report from industry group the Customer Data Platform Institute, the market grew 65 per cent in 2018 alone with an additional 29 new vendors, 2,600 employees, and $US173 million in funding.
Revenue was up more than 50 per cent, hitting $US740 million, and the Institute says revenues should hit the $US1 billion mark this year.
According to Benjamin Bloom, Senior Director Analyst at the Marketing Technology and Emerging Trends domain at Gartner, a CDP has four key functions helping marketers to get value from their customer data and orchestrate customer experiences using their CDP:
- The software provides data collection, pulling in data from all of a business’s customer data sources. This can be from offline, databases, POS, digital analytics or customer engagement solutions.
- It provides a data unification function, stitching together the data. “Instead of three different records, each of which has a piece of information that’s relevant to a particular individual customer, you can have one record, and you can then do the other relevant pieces of the other four pieces,” Bloom said.
- Segmentation and analytics help identify customers with the highest lifetime value or segment them by some of their characteristics.
- And finally, they help with activation, by providing the ability to send audience data, and campaign instructions to other marketing platforms.
Bloom explained that can be email marketing platforms, web site personalisation tools, or digital advertising like Facebook and Google.
Isn’t a CRM the same thing?
According to Catherine Ballantyne, Director of Solutions Consulting APAC at Tealium, despite the confusion, there is little in common with CRM systems. “A CDP will not replace a CRM, they are there for separate capabilities.”
A CDP should understand and recognise an individual long before a CRM. “It’s about understanding all of the transactions.”
She said a CDP is there to understand somebody and to manage their data, throughout the lifecycle, in an aggregated state.
Gartner’s Bloom agrees, noting he doesn’t see CDP as a substitute for a firm’s CRM solution. “Most of the time the kinds of CRM technologies that we see would not be especially well suited, for example, serving sales and service teams. CDPs are ideal for marketing, the customer service components maybe are better in a dedicated in a CRM solution.
“Many CRM technologies are not very well designed to handle the very granular high-volume low-latency data for things like web analytics solutions or current digital commerce transactions that are abandoned, and so it makes it not a great fit for our for some digital marketing and personalisation use cases.”
He said CDPs typically offer business users the ability to define new attributes for customers on the fly.
“That is not typically very well supported by a CRM solution which sends out a much more stringent data model. That doesn’t mean that it can’t ever be changed, but there are often many, many challenges with doing so and it’s not generally handled by business users.
Finding the right fit
Marketers who would thrive using a CDP are normally those who have martech experience, according to Ballantyne.
“It’s new technology, and generally we find that people who have either been in marketing automation, who’ve been campaign managers or who’ve come from a customer analytics background transfer most easily into owning the CDP piece of the puzzle.”
Tealium’s CDP, AudienceStream, was built in 2013. Ballantyne said it began as a capability around data collection but has grown into an important tool for wider transformation.
“It’s about solving the data issue that underpins digital transformation. Over the last ten years, it has become apparent that I can’t do digital transformation if I don’t do data transformation underneath it.”
Companies that tried to do digital transformation without getting their data story right typically ended up with a piecemeal, fragmented transformation, she said. “That is not what the consumer is looking for. The consumer wants a relevant timely consistent conversation and an electronic world.”
Ballantyne said the ability to collect data is key to a successful CDP implementation. However, having a CDP on its own will not solve the problem.
NIB has been using Tealium’s CDP AudienceStream for the past two years in its Australian health insurance business in the sales environment to test and learn from that before it rolls it out across the entire group.
Josh Griffiths, Digital Direct Sales Manager at NIB, said that with less than 50 per cent of customers coming through the direct web the organisation was not ecommerce-focused.
What NIB realised, though, was that nearly every sale at some point involved the web. “We struggled to connect, though that user journey across online and offline channels.
“The CDP really helped enable us to connect the journey, the private health insurance path to purchase, which is probably [takes] about three to four weeks.”
He explained the CDP was able to connect the online and offline journeys and provide insight into what stages the user was at in their journey and what channel they were in so they could be better supported and provided with a superior customer experience.
The rise of CDPs
More marketers are turning to CDP to better manage their data and to address the complexity of customer journeys. “The challenge is that customer journeys are complex — they take place over multiple channels,” said Gartner’s Bloom.
To add to the complexity, many brands also deploy solutions from multiple vendors like Salesforce, Adobe or Oracle.
He said the problem marketers want to solve is to bring together disparate sources of customer data to create a singular profile on that customer.
But the rapid growth of the CDP market is creating a new problem. Bloom said the CDP market is already cluttered, with many vendors offering a mixed bag of capabilities and making it hard for buyers to determine what’s real and what’s not.
On the famous Gartner Hype Cycle, CDPs have passed the peak of inflated expectations and are now descending into the trough of disillusionment.
He said during this stage the market is crowded with similar vendors who are trying to attract and retain customers, not just playing into customer expectations.
BCDP — Before CDP
Unifying data, creating audiences across channels and deploying at scale is not a new concept. The “single view of the customer” has been a goal since the rise of the relational database market 40 years ago. Bu now, as then, the much-vaunted single view is more of an aspiration — like the pursuit of happiness — than an achievable goal.
Some people, however, believe CDPs might finally deliver.
Robert Rizman, Senior Tag Specialist at The Lumery, said “We’ve gone from campaign management platforms, to CRM, to marketing automation and then to data management platforms (DMP).
“We know those solutions are great at their specific channels but don’t solve the fundamental challenges of creating a single, centralised data platform that can be used by everyone in an organisation, in real-time, to drive better data-driven decisioning. The promise of a CDP is that the technology has now caught up to what we’ve been striving for.”
Gabbi Stubbs, Product Marketing Audience Manager and RT-CDP APAC at Adobe, said before CDPs there was nothing comparable. She argued that many of the new platforms claiming new ground as replacements for existing solutions offer little more than what can be achieved through top-tier DMPs.
She said the step-change will be recognised in the real-time streaming collection of data across an enterprise. This real-time activation makes AI and machine learning accessible for marketing.
While the concept of a “single customer view” or “customer 360” is well established, it has proven to be extremely difficult to achieve, said Cameron Strachan, Technical Consulting and Services, CLV group.
“We advise a more pragmatic approach by focussing on attaining a more complete picture of what customers are doing when they engage with a brand.
“The explosion of data and the myriad devices that people can interact with means that a single structured database does not cope. In the past, brands might have tried to build a marketing data warehouse but quickly found that web data didn’t fit, or they may have outsourced the CRM or customer component to an agency or a specialised software solution like ‘master data management’.
“Mostly, these were projects or solutions that couldn’t quite integrate all the components that a CDP should be able to.”
Pros and cons
Like anything in the world, adapting a CDP has its benefits and impediments. Bloom noted a number of positives for marketers who adapt this platform.
“You are able to integrate your first-party customer data, and then you’re able to activate it to make use of it in your marketing technology stack. And that might be improving the relevance of messages.”
He said it also might help you better predict customer churn and prevent it; or be more agnostic about what marketing execution systems you use so it can give flexibility and agility to marketing teams.
“It can often enable advanced analytics and data science initiatives that will rely on having a lot of the data you have by your customers, cleaned up and be ready for analysis.”
Griffiths at NIB said he has seen two big benefits from using a CDP.
First, he said, it is making real-time decisions as things happen and automating processes. But the second and underestimated one was business enablement.
“The ability for myself as the salesperson but also our marketing teams to make decisions quickly, and move on opportunities and things as they arise.
“Previously, if we wanted to engage or access our data we would be spending time briefing in business intelligence teams who are mining through data warehouses to give us what we need.
“Then to orchestrate that you’re putting briefs into IT teams that are you know busier on other things.
“The CDP and AudienceStream has really enabled us to move quickly on tactics and initiatives and to get things out a lot quicker with better insight to our data,” he said.
On the other side, Ballantyne said because CDP is a new technology, people are still learning how to use it.
“Including in your purchase process consideration of who will own it, and how you will manage the change in business process is an important part. I think all of our customers that we work closely with would agree with us.”
Another drawback is the risk of overlap with other martech solutions including additional marketing hubs, personalisation engines and loyalty management platforms.
Bloom said, “We’re also seeing the rise of consent and preference management as managing privacy and other data as it relates to what customers will contribute and share about themselves, what you might collect about them or what they might get as a part of a transaction become more of a regulatory burden as well as simply good data governance.
“Those overlaps have yet to be resolved in terms of whether it makes sense to have all of those solutions or it might make sense to have, you know, some subset.
“That’s something because of the early nature of this market, marketers are wrestling with how to deal with that overlap. Especially when for example, you know when an existing vendor like comes to them and says, ‘Oh, we are a CDP also’. And that’s a major concern for marketers looking to maintain an efficient and effective marketing technology stack.”