Customer Data Platforms Emerge as Marketing’s Latest Holy Grail
The single view of the customer has been marketing’s Holy Grail for decades. A variety of solutions, such as data warehouses, business intelligence applications, master data management systems, and customer relationship management solutions, have all emerged to deliver that treasure, but they’ve all fallen short of the task. Customer data platforms (CDPs) are the latest shiny arrow in the archer’s quiver. These tools are gaining traction because they rely on modern computing foundations, but they also have not yet fulfilled marketers’ dreams.
Interest in a central customer information repository is pervasive. “Marketers know they have trouble getting control of the information needed to connect with customers in meaningful ways,” says Steven Casey, a principal analyst at Forrester Research.
Shortcomings arise because companies collaborate with customers in many ways. Autonomous applications support each interaction, and they store information in different formats. Tying all of the information in those systems into a cohesive whole has been challenging because the applications were not built to support that capability.
In fact, legacy systems were designed for yesterday’s technology. Consequently, they do a poor job supporting the high-volume, granular, low-latency information generated by today’s applications, like web analytics and digital commerce.
Also, application requirements constantly evolve, and new variations on familiar themes emerged, like customer analytics, marketing segmentation, and personalization. In addition, orchestration (the replacement of routine manual tasks with automated solutions) is becoming more commonplace in business applications as artificial intelligence and machine learning have moved out of the test labs and into production systems. Finally, the need for real-time information has become almost ubiquitous.
Theoretically, a CDP meets those needs. At a high level, it creates a central, unified customer database that collects information from and is accessible to other systems. Ideally, the software should be able to pull data from all business sources, including databases, surveys, point-of-sale systems, web analytics, marketing systems, and customer contact solutions. Its main purpose is creating customer information consistency among the various sources.
In the past, inconsistencies were common, with one application possibly including an apartment number with a customer’s address while another did not.
Organizations desire a single central repository for many reasons. “Companies need complete customer data to deliver personalized experiences as well as the convenience that customers expect,” explains David Raab, principal of Raab Associates and founder of the CDP Institute (see sidebar on page 27). With this record, companies glean each consumer’s personal buying journey, determine his lifetime value to the business, and segment him from other customers by distinct characteristics.
THE OLD VERSUS THE NEW
One difference between these systems and past Holy Grails is their ability to deliver customer information in real time. For instance, when a call comes in to the contact center for a wireless carrier, the agent can see that the customer signed up for service yesterday and is ready today to help her with the typical new customer challenges, such finding the right icon on her smartphone.
This information immediacy also enables marketing, sales, and support teams to make decisions and respond to new opportunities and challenges quicker and more effectively than in the past. If a negative tweet starts to trend, they take action to mitigate its potential impact.
Another differentiator is that CDPs rely on AI and machine learning. As companies collect more customer information, employees have difficulty piecing it all together to identify trends. AI and machine learning correlate information automatically and present users with opportunities and anomalies that require further action.
In addition, AI and machine learning enable high degrees of orchestration, scenarios where manual processes are replaced by automation. Current examples of such capabilities include natural language processing, robotic process automation, chatbots, and intelligent virtual assistants.
Because of the potential business benefits, interest in CDPs is rising. “We see the market growing at more than 50 percent per year as CDPs become better known and accepted,” Raab says. The CPD Institute pegged CDP revenue for the specialist vendors at $1 billion in 2019.
CRM vendors that have recently launched their own CDPs include Oracle, Salesforce.com, Adobe, SAP, Teradata, and Optimove, but there are many more vendors either already in the market or planning to be. In the past two years, CDPs have grown from a curiosity to a main topic of discussion, and new vendors are racing to the market to offer their own CDP solutions.