Amid the turmoil of 2020, business leaders found their pandemic response hindered by non-agile data processes. So, it’s no surprise that almost three-fifths of global CEOs are now focused on aggressively ramping up their operational agility and flexibility, with one particular data management technology seeing major growth: the customer data platform (CDP).
By consolidating information from multiple sources, CDPs bring data into order and uncover valuable insights for navigating COVID-19 chaos — abilities that are a large part of the reason their popularity is soaring. Already topping $2 billion worldwide, the total market value is expected to reach over $10 billion within the next five years.
Despite this enthusiasm, however, lack of understanding is preventing many businesses from realizing maximum CDP power, especially around their functionality and how they deliver benefits outside the marketing department. To harness the potential of CDPs as an agility and success driver, these misconceptions must be addressed and eliminated.
1. “CDPs are just for marketers”
Given the capacity of CDPs to translate data into an all-encompassing view of each customer, it’s not hard to see why they are closely associated with marketing. Unified knowledge is essential for marketers to serve targeted messages that cut through the cross-channel noise and build meaningful connections. Oversight of individual activity is also critical to accurately measure marketing impact, especially in today’s high-pressure climate. By tracking how many website visits, landing page sign-ups or purchases campaigns drive, marketers can precisely monitor performance and identify opportunities to improve resonance and results.
But CDP value isn’t exclusively limited to marketing advantages. Take, for example, customer experience. Recent studies show a core element of what sets high-performing firms apart is leveraging data to deliver seamless experiences that spark delight at each interaction. Achieving this depends on complete visibility into customer journeys, which in turn calls for organization-wide data integration. With a CDP, firms can bridge internal divides — including silos between digital analytics, finance, marketing and service teams — to obtain the holistic insight needed for creating engaging experiences throughout the customer lifecycle.
In practical terms, for instance, that may entail knowing that an existing mobile customer has received a discount offer and then browsed through available plans via the company app before contacting the call center. Access to this insight would enable the service operator to discuss the specific options they want and satisfy their unique requirements faster.
Moreover, streamlined data coordination can also enhance overall operations. By linking information and reconciling discrepancies, such as ID variations and duplications, CDPs enable better inter-department collaboration and decision-making. Feedback data can inform re-targeting campaigns and product development, as well as customer support and retention initiatives. Similarly, information about global purchases can help identify where companies should be increasing both supply and marketing focus.
2. “A panacea for data issues”
As advanced technology becomes ever more important for businesses to maintain their competitive edge, relevance, and revenue, faith in magic bullets is growing. Often, it’s assumed adopting the latest ‘must-have’ tool will instantly resolve every challenge — and just as frequently, frustration follows; see recent findings that 56% of CIOs are disappointed with data analytics and chatbots. Currently, the application of this theory to CDPs is fuelling misapprehension about the outcomes they drive and whether the investment is truly worthwhile.
CDPs have much to offer on multiple levels. They can efficiently gather information from numerous channels, systems, platforms and devices, while continuously looping in up-to-date behavioral data in real-time. The ability to join the dots between disparate data sets also generates comprehensive and accessible insight about specific customers. None of this, however, means they are a one-stop shop for all data challenges.
The main role of CDPs is establishing the right foundation of amalgamated and reliable data, but this doesn’t add up to a complete data infrastructure on its own. When it comes to exploring and using data, organizations require the other aspects of good orchestration. To be more specific, they need analytics tools that can dig below surface-level information to pinpoint granular trends and patterns, alongside the activation capabilities to put those insights into action; be that making in-flight adjustments to campaign spend or aligning product pricing with customer demand. In short, implementing CDPs is a vital step towards optimizing omnichannel, device and platform customer experiences and relationships, but not the whole story.
3. “CDPs require a total tech reboot”
Finally, there is the belief that re-configuring data systems will be a mass rip-and-replace exercise. Again, it’s not hard to understand where this attitude springs from; considering the transformative impact of CDPs, companies may well think changing their stack is part of the process. But this perception is also at odds with the purpose of CDPs. By definition, CDPs are “packaged software that creates a persistent, unified customer database that is accessible to other systems" and, most importantly, aims to capture and harness information.
Consequently, interoperability is fundamental to how they function and the reality of CDPs is more about plug-and-play. Installation is upheaval-free, with CDPs hooking into various sources to extract the data they contain. Once information is cleansed, sorted and refined, it’s then made available for other tools to use via flexible turnkey integration — including analytics, customer service and marketing platforms — meaning CDPs can both work with and allow businesses to make smarter use of their existing tech.
As more businesses are enticed by the possibilities of CDPs, it’s essential to determine exactly what they offer and overcome misconceptions about what they don’t. CDPs have a significant ability to fuel positive outcomes that extend far beyond the marketing department, with swift and simple implementation allowing for improved data organization and use across teams. But while these tools do generate the connected customer view that paves the way for enhanced experiences, a cohesive analytics and activation strategy will also be crucial to realize its full potential.
Steve Carrod, Co-Owner and Managing Director, DMPG