To build a successful business in today’s world, a strong customer understanding is essential, as is the ability to provide thoughtful customer experiences. But that’s not exactly easy.
For one thing, customers now interact with brands across hundreds of digital touchpoints, making it hard for companies to make sense of the big picture. The outcome is often that the record of any given customer relationship can be patchy, full of inaccurate or missing information. And when dodgy data fuels customer interactions, blunders are bound to arise.
Just think how damaging it could be to send a cheerful “how did we do?” email to someone that has just spent hours on the phone, engaged in a dispute with customer services...
Enter the CDP
As businesses wake up to the challenge posed by increasingly complex customer relationships, Customer Data Platforms (CDPs) have experienced a huge surge in interest.
The reason? They promise to provide a single view of the customer, make customer analytics more insightful, keep data well-organised, and make it easier to comply with data privacy laws.
In essence, CDPs promise to help businesses unify all the data arriving from different sources, so they can achieve a comprehensive view of the customer. That’s not just something your marketing team is desperate to get hold of - everyone from sales to product management, finance and engineering has a vested interest.
Four steps to success
Just like any tech solution, a CDP has to be set up for success. To get the most out of it, it’s essential to put the right ground rules in place ahead of time.
1. Focus only on critical data
A good place to start in preparing for a CDP is to establish what customer data is critical to your business and to focus only on this.
At best, unnecessary data collection leads to cluttered and stale information. At worst, it can land your company in hot water - just think of the furore Uber faced when it was found to be collecting location data from users after they had finished using the app.
Go through an audit for every first-party data point you’re gathering, asking yourself why your company needs it and whether you could operate in the same way without it. If it becomes clear that a piece of data is unnecessary, cut it immediately from your CDP.
2. Create a data governance strategy
Data governance helps to keep your whole company on the same page regarding data, and is key to ensuring it is accurate, usable and secure.
A good data governance strategy covers data tracking (what you’re tracking and why), validation (is your CDP tracking what you say you’re tracking?) and enforcement (if you want to change anything, what formal approvals are needed, and from whom?).
A data governance strategy gives you a good handle on the quality and consistency of the data you’re collecting, and makes sure that proper protocols are followed before any new information is added to your CDP.
3. Understand data silos
Data silos happen when data is collected by different departments within the same company and then stored separately. They put blind spots on your data, lead to inconsistencies in your customer records, and cause major discrepancies that can completely undermine your CDP.
As an example, imagine your payment processor records successful credit card payments in a finance silo that isn’t automatically updated within your company’s customer relationship management system (CRM). One of your salespeople then checks the CRM and doesn’t see that the payment has gone through successfully, so they reach out to the customer about collecting the money. Since the customer has already paid, the result is confusion, frustration, and a bad customer experience. Not ideal!
One solution is to work with all the departments in your company to understand what data is being collected and where. But that can still leave room for error - particularly in a large modern business.
A better option is to build your CDP on top of a customer data infrastructure that automatically ensures data is accurate and consistent across the whole organisation. With this single data backbone in place, every team in your company can access reliable first-party data, updated in real-time.
4. Prioritise security
One of the best things about CDPs is that they can make your data security stronger.
Many CDPs operate with strong data security practices, but it’s always a good idea to double-check. Make sure the platform you’re using operates with an ISO 27001-based security program, which means it is continuously evaluating, refining and augmenting its security standards.
So what next?
Armed with customer analytics, the questions you’ll be able to answer about your business are nearly endless. The following are just some of the examples of the powerful insights a well-integrated CDP can deliver:
- How can we personalise our marketing campaigns?
Customer analytics allow you to understand what different customers like about your product. Armed with this knowledge, you can personalise your marketing to reflect these preferences and improve customer engagement - just as Netflix does when promoting TV shows to different audiences.
- How can we improve inventory management?
Customer analytics can reveal surprising trends about what sells, when. Walmart, for example, found that people like to buy beer and pop-tarts when a storm’s about to hit - not just umbrellas! Using these insights, a retailer can fill their shelves with greater confidence.
- How can we get more sales from our customers?
Data can also be used to improve the chances of converting a single purchase to a multi-buy. Amazon, for example, uses customer insights to showcase ‘related items’ that complement the product in a shopper’s basket. Today, 35 per cent of their sales come from this kind of nudge.
- What features do our biggest spenders use?
If you can understand your highest-value customers and how they’re using your product, you can improve their experience and your chance of retaining their loyalty.
An investment for the future
As we’ve seen, a CDP’s value can be hugely limited if the conditions for success are not established.
Though that requires effort up front, it’s always a good investment. In a competitive market where consumers are hungry for better products and personalised experiences, a well-built CDP can make the difference between good and great.
For a modern business, that’s everything.
Tido Carriero, Chief Product Development Officer, Segment