Customer data platform: shiny new object or soul mate?

DATA Customer data platform: shiny new object or soul mate?

Love for the customer may be blooming, but as in any good love story there are conflicts along the way to a happily-ever-after. How do you make good on the promise of marketing technology and actually improve customer experience? The answer, as it so often does, lies with your customer data—and a platform that gives you a more complete, holistic picture of who your customers are.

Until recently, simple personalization that relied on recent activity and IP location was revolutionary. Now, Pandora’s Box is open and people expect a much more sophisticated level of personalization, which requires both depth and breadth of customer information. 

First coined by David Raab in 2013, a customer data platform (CDP) acts as a hub that aggregates, normalizes and processes customer data. And if properly configured, it serves as an engine for the real-time customer database we all desire. 

The conflict: a cobweb of interconnected data

Many organizations have assembled marketing technology stacks composed of a complicated patchwork of interconnections. Too often, there’s no process for organizing and communicating between data sources and across organizational siloes, creating a customer data gap. For example, your CRM is syncing with your marketing automation platform, which may have an external email service sending parameters to your analytics platform, and so forth. In this paradigm, the CRM acts as the center of gravity.

This is fine if you just want to enable sales with high-level information about how prospects and customers are using digital properties. But what if you want to use aggregated customer data to drive real-time personalization? CRM platforms and their associated databases generally cannot be used in real time, and even if they could, you’d need to work within the confines of their content management solution and not in your existing CMS. Moreover, it would be complicated, weird and not at all fun for content managers.

The resolution: customer data platforms

The premise of a customer data platform is that instead of a cobweb of interconnected systems, the systems sync data into the CDP in more of a hub-and-spoke organization.

Customer data cobweb vs. hub and spoke
Instead of a cobweb of interconnected systems, a customer data platform syncs data in more of a hub-and-spoke model.

In this admittedly simplified example, common customer data generators (CRMs, marketing automation platforms, etc.) go from sending data only to each other to syncing data into the CDP. In reality, the individual platforms would still communicate with each other, but the micro benefits from these communications would no longer be confined to these systems. Rather, there’s an opportunity to create a more holistic set of insights, where all available aspects of customer data are available in one place.

What are the benefits of a CDP?

A CDP implemented with a proper governance plan to support it could enable you to create a more complete picture of who your customers are by combining data about them. This would enable you to do a few great things right off the bat, including:

  • Statistically-driven segmentation. Instead of letting pure strategy drive segment definitions, let your customer data show you how your customers break out organically using variations on cluster analysis.
  • Marketing placement strategy. By knowing more about your customers, you can customize outbound messaging based on observed behavior. This capability is a core function of most out-of-box CDPs.
  • Aggregation of performance data for visualization. Performance analytics can be pushed relatively easily from a CDP to a data visualization layer. This makes dashboarding using custom tools much more actionable.
  • Predictive modeling. This is something that everyone thinks they should be doing, but are very likely not yet able to do it in a way that generates more than interesting statistics. A CDP could enable predictive modeling that generates actionable insights, which can then be used to drive and refine all of the other functions noted here.
  • Personalization. The killer app of customer centricity, a CDP can be the central nexus of customer understanding and push all aspects of a customer-centric strategy. In short, the more data you have in one place, the more you know and can predict what experience will be most relevant to your customers.
Chart shows how a customer data platform aggregates customer experience data
This illustration shows a high-level concept for how a customer data platform can create a more complete picture of your customers.

The denouement: a cautionary ending

As with many happy endings, there are caveats. First, setting up a CDP is not going to solve all your problems. Even if the vendor says it can, the chances of it doing so—especially in the short term—are nil. As with any other piece of marketing tech, a CDP is only as good as the strategy driving its use.

This is why it’s essential to have a solid customer engagement plan and an accompanying customer data governance plan. Regardless of the strategy, you should not consider implementing a CDP as an instant fix. It’s something that will get better in time as you more clearly understand and refine its usage and parameters.

So, what’s a love-struck marketer to do?

  1. Develop a digital strategy. Any strategy built with customer data should originate from your overall digital strategy. Who is your audience? How are you going to reach them? What is their preferred journey experience? How do you know that? If you can’t answer these questions, data nirvana will not help anything.
  2. Develop a plan for your customer data. Do you simply want your existing tools to work better with each other? Maybe a better cobweb is all you need. Or, are you really trying to up-level your digital experience with intricate personalization? What is the plan and desired outcome for that? Again, starting with the data—without a plan for how to use it—will get you great data, but not much else. Then, how is the data going to be organized? Without a governance plan, you may just be building another cobweb.
  3. Finally, understand that not all CDPs are the same. There are three essential ways to build a CDP: off-the-shelf solutions like Lytics and BlueConic; homebrew “data lake” solutions; and walled gardens like the ones Oracle and SAP provide. Each of these options will give you different levels of access to your data and provide different levels of benefits. Do your research and talk to your experts.

So, what do you think? Is a CDP just one more platform to pay for and maintain, or do you see real value in it? Do you know you need something but are not sure what it is? Feel free to reach out to me or comment below!

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