Everyone's talking about customer experience but the delivery is lacking. Customer Data Platforms (CDPs) are the essential tool in solving this issue.
It's worth considering what a CDP can deliver, then taking the time to review the different types available. Procurement is a clear issue here, and there are pitfalls to avoid.
What is a CDP?
CDPs are a technology solution aimed at solving today’s business problems of the CXO, CMO and CDO and their respective teams. Or, in other words, improving the end customer experience, helping you measure and achieve your most important business KPIs and ensuring that you have all your customer experience relevant data in a single place (in a clean and organised way) and within a unified customer view.
Your company probably has a data lake (or similar tech) that is performing some of the fundamental data management processes – storage, matching, aggregating and keying. It’s likely that this stores a lot of historic information and operational and financial data. There's no doubt that It does a great job for certain tasks ,and it serves specific functions in your organisation. But, fundamentally, data lakes are not built to cater specifically for your end customers’ experience management.
The clue's in the name. Data lake. Due to the large amount of data they are capable of storing, they can’t manage everything in real time. And this is where CDPs come in. A CDP solely hosts and manages data that is relevant to that customer experience. CDPs bundle the most important customer attributes with behavioural data to give a true real-time picture of how an individual is interacting with your brand, and then to respond at pace.
There are a substantial number of CDPs already available on the market - as many as 80 - and they come in different shapes and forms, with varied functionalities and purpose. From a customer experience perspective, we group these into two main categories. The first we call ‘traditional CDPs’ and the second, ‘all-in-one CDPs’. Traditional CDPs aim mainly to solve your data challenges, while all-in-one CDPs further cater for the overall customer experience.
Let's look more broadly at the impact both categories’ CDPs can make across the organisation.
What are the benefits?
There are many reasons for introducing a CDP into an organisation – ranging from meeting your KPIs against improved customer experience to generating revenue growth. These are further fuelled by:
- Operating efficiencies – once correctly in place, a CDP makes driving customer experiences smoother. This is especially true for ‘All in One CDPs’ where you can orchestrate the entire customer journey within a single platform, with a single UI (User Interface) … and often by a single consolidated team.
- Licence costs – Combining different solutions from a few different vendors into a CDP (especially when it comes to ‘All in One CDPs’ where you will fold in at least some of your marketing automation and reporting capabilities), will likely result in lower overall licence costs and a more streamlined software vendor management.
But what does all of this mean in practice? What does a CDP enable you to achieve for the customer’s experience on a day-to-day basis? There are four core elements to this:
- Speed – how quickly you collect, process, activate and measure customer data.
- Reach – being able to reach the right customer through the right channel.
- Consistency – by enabling you to control that you are not sending conflicting messages to the same customers across channels.
- Simplicity – by making it easier for your end customers to find, buy and use your products and services.
But what does a CDP actually do?
The so called ‘traditional CDPs’ would normally fulfil the following functions for your organisation:
- Collect Data - in both real-time and batch from multiple sources. For example, real-time from your website/mobile app via a tag manager and batch from your existing CRM system or data lake.
- Unify Data – taking all that data from various sources and creating a unified customer profile by defining and utilising an identity graph. This ensures that we don’t view John on the website as a separate person to John on your CRM (when in fact they are the same).
- Segment Data – allow you to create customer segments based on their profile attributes or behaviours. A key differentiator here for a CDP is the ability to have those segments be managed and updated in real time based on your customer’s behaviours. For example, you may want to have a segment that captures everyone that has abandoned a basket online in real-time so that you can within minutes send them an email with a reminder for them to complete their basket. A relatively simple use case, but often quite challenging to implement in the past without a CDP.
- Activate Data – enable you to send these segments to an activation engine – e.g. an ESP (Email Service Provider) to send an email or Google for paid media. What is important here is that the CDP has the right ‘segment destinations’ (places where you can easily send your segments to) for your business out of the box. And that it has the flexibility to allow you to build your own destinations if necessary.
This sounds great, but taking things a step further.... the “All in One CDP” would also provide:
- Customer Experience Activation – natively be able to orchestrate and deploy the required message across the right channel from within the CDP itself. Typical supported channels are Email, SMS, Mobile, Website personalisation. For example, it would provide the ability to build and deploy an email campaign on the back of the defined segment (without requiring a separate ESP).
- Customer Journey Reporting – ability to report on your end customers’ journeys (ideally in real time) and how this affects the KPIs that you have set for your business. All done within the CDP solution itself and without the need to export the data to your data lake.
The advantages are clear. Early on though you need to decide whether you need a ‘Standalone CDP’ (where you group it up with other technologies you may already have) or an ‘All in One CDP’.
CDP Considerations
If you plan to introduce a CDP into your organisation, there are a number of things to think about.
- Organisationally – how do you structure your teams around the end customer needs (and the CDP)
- How are your marketing campaigns being briefed and measured today? Are they per channel? What do you need to do to make them customer experience centric?
- Who is currently building marketing segments and activating them? Is this being done in silos in different departments for different channels? Who would do this in the new CDP world where it is all centralised?
- Who would pick up the ownership of the CDP? Is it IT ? Or is it Marketing? Or is it your Data team?
- Data-wise – how would you manage your overall data ecosphere?
- Do you have your offline data already properly matched and keyed to identify a customer correctly?
- Do you capture correctly on your website / mobile app the authenticated state of a customer? And can you easily match that to an offline customer profile?
- It's not all about CDPs. You will most likely still need a data lake and a common data layer sitting underneath (or a mixture of the two – as a data lakehouse). It's important to note that a CDP is not a silver bullet to all your data problems.
- Technology-wise – how does it fit within your overall tech stack?
- If you are going for a traditional CDP, does your current marketing automation integrate with it properly and in real time? Or do you need a new marketing automation solution as well? These need to be tightly integrated and coordinated if you are to achieve the full value.
- Similarly, how would you hook up your existing reporting capabilities to the CDP to measure your KPI results?
- Can you easily deploy the CDP’s Web SDK (Software Development Kit) on your website and mobile app? Does your Tag Manager support this out of the box?
The vital point here is to note that CDPs aren't a silver bullet. There's no way on earth that they will solve every customer experience issue that you'll face. But they could transform your organisation and your customers’ experiences with your brand.
Authored by:
