Customer Data Platforms Emerge as Marketing’s Latest Holy Grail
Before CDPs can really take off, though, the emerging market faces a number of obstacles. “We are in a very early stage—under 5 percent of enterprises—of CDP adoption,” says Forrester’s Casey.
Compounding matters, the CDP market is cluttered. In the past, vendors developed many potential Holy Grails, and some suppliers simply rebranded their legacy systems with the hope of riding the CDP wave. As a result, vendors today offer a mixed bag of product capabilities, making it harder for potential buyers to make true apples-to-apples comparisons. As they look to add CDPs to their technology stacks, potential buyers can easily become confused by the broad offerings that claim to be catch-all solutions.
And then there is the issue of perception. On the most recent Gartner Hype Cycle, CDPs have already passed the “peak of inflated expectations” and are now descending into the “trough of disillusionment,” a phase where interest wanes as early implementations fail to deliver on their promise.
Though different in approach, CDPs still bump against the long-standing problem of data integration, cleansing, and integrity. “A CDP is not a panacea for poor enterprise information processes,” says Benjamin Bloom, a senior director analyst at Gartner. “If a company now has dirty customer data, it will still be dirty once it is loaded into the CDP.”
In theory, CDPs clean up information so it is consistent. In reality, however, the nuances in how departments identify key data elements continue to make creating a single view of the customer a vexing challenge. In fact, only 12 percent of companies feel they have high-quality customer data now, and 84 percent view it as a top five weakness in their organizations, according to Forrester.
Another drawback is the risk of overlap with other solutions. “No one wants to pay twice for the same functionality,” notes Steve Zisk, senior product marketing manager at RedPoint Global, a customer data platform and customer engagement solutions provider.
Modern solutions, like marketing hubs, personalization engines, and loyalty management platforms, add to the plethora of solutions claiming to deliver a cohesive view of the customer. Ironically, companies end up using more than one central customer repository.
Regulatory changes—such as the adoption of the European Union’s General Data Protection Regulation (GDPR) in May 2018 and the California Consumer Privacy Act (CCPA), which just went into effect this month—also have negatively impacted CDP market developments. “All of the recent regulations amplified the need for corporations to put policies and procedures in place to protect consumer privacy,” says Michele Szabocsik, vice president of marketing at BlueConic, another CDP provider.
This work is a tall order. “Corporations underestimate and undermanage the difficulty in mitigating privacy risks,” Gartner’s Bloom explains. “Consumers want transparency, and corporations need to enable it.”
That need stretches CDP feature sets into new areas. They must support and track privacy solutions, like opt-in/opt-out consent systems, and do so in real time and across channels. CDPs also need mechanisms to capture consent data and feed it into compliance solutions. Few CDPs have all of the needed functionality, so companies still have to compromise and mix and match solutions.
Organizational issues have also arisen. Because CDPs cut across channels, they involve many different departments and rungs on the corporate ladder. “The idea of consolidating customer information in one place can be disruptive to the organization,” Forrester’s Casey says. “Multiple constituencies are impacted, and each has its own outlook on how the data should be used. Corporations can have trouble creating a consensus about what steps to take once the data has been collected.”
Traditionally, departments operated autonomously, so barriers arose even as tasks passed from one group to a second. To leverage a CDP, such lines need to be eradicated and collaboration needs to be fostered.
Such clarity is often missing, even right at the start of the buying process. “When we engage with customers, we encounter a lot of confusion,” Szabocsik says. “Where does a CDP fit into the MarTech stack? That responsibility sits in different places depending on what problem the business is trying to solve.”