The Gist

  • Companies must be as nimble as their customers. The erratic nature of customer behavior means companies must act like complex systems to satisfy them.
  • Martech buyers are accruing technical debt. Many martech buyers fail to invest the time and resources required to configure new technology, resulting in unrealized technology value. 
  • CDPs are helpful, but not perfect. Although CDP integration solves many marketing solutions, this type of technology still comes with a myriad of problems.

Three systems walk into a bar. The Simple System asks for a beer and immediately gets one. The Complex System asks for a commonwealth cocktail and the bartender spends 15 minutes mixing the drink’s 71 ingredients. And the Complex Adaptive System (CAS) asks for something that will make her happy. The bartender smiles and escorts the customer to the back of the bar. He says, “Here, you have everything you need. The bar is fully stocked. The embedded AI is optimized for mixology and beverage preference. Have fun!”

Which is exactly what she did — the CAS ran up one helluva bar tab! Although a bit silly, the moral of this story is that it’s better to engage a customer than guess what they will want, need and like.

Editor's note: This is the first of a two-part series.

Can a Business Be as Responsive as a Person?

Businesses today act like complex systems. Like an ecosystem, a complex system is composed of many distinct elements that interact with each other in a nonlinear way, making it difficult to predict the behavior of the system as a whole. Complex systems often have multiple feedback loops and are capable of self-organization over time, but in the case of a catastrophe, change comes very slowly.

Continuing this analogy, like a virus, customers can change their behavior in an instant. Consumers and employees acquire information about their environment, interactions and success (or lack thereof) and create schema (learnings, understandings, perceptions) which compete in the decision-making process and are acted upon. 

In a real-time world where everything is accelerating, businesses are starting to act more like CAS, dynamically engaging customers and satisfying their needs. The good news is that Customer Data Platform (CDP) vendors are making it easier than ever before. The bad news is that martech buyers are making it more difficult!

Related Article: CDP vs. DMP: What's the Difference & Which Is Best for Your Business?

Martech Buyers Bite Off More Than They Can Chew! 

Over the last decade, the number of available martech applications has exploded from roughly 200 available solutions to over 10,000. We see two disparate trends as a result of this. First, companies are continuing to invest in automation at an amazing rate; according to IDC, 54% of mid-sized companies and 34% of all companies will increase martech spending in 2023. Conversely, IDG reports that 31% of all companies want to reduce their martech stack, 28% want to fundamentally restructure their stack and 24% want to switch vendors.

So how did this martech buyer spending spree and martech user dissatisfaction simultaneously come about? It’s not simple. Just like a daily grocery store shopper finds more exciting options to purchase than the day before — after a week the fridge is full. After two weeks they’re throwing food out to make room for more leftovers. The reason companies are buying the technology is because it works. These new applications improve performance, and in many cases, are essential to staying competitive.

Like leftovers in the fridge, companies are acquiring and implementing the tech but only capturing a fraction of the value. Because martech buyers fail to invest the time and resources required to thoughtfully configure, train and adopt new applications, their efforts create considerable technical debt (unrealized technology value).

Oftentimes, companies think they can buy and implement the technology now and figure out how to make them work later. But they never do. Instead of doing their jobs faster, better and cheaper, this approach often creates more work since the technology is never fully integrated with other systems or processes, often managed as a one-off. This increase in one-offs is prompting many businesses to restructure the martech stack and/or switch vendors.

Related Article: Quest for Unified Customer Data: How CDPs Enter Mix

Learning Opportunities

CDP Vendors are Doing the Heavy Lifting 

Companies that do their homework quickly learn they need a CDP because it solves two key challenges. First, it addresses the company's customer data integration and management needs. Second, it dramatically simplifies martech stack integration and standardization. Because CDPs come with a large tool kit of connectors, SDKs and low code/no code APIs — and because CDPs are designed to manage enterprise customer data, tackle tough data challenges like customer ID resolution, real time data processing and data privacy management — the decision to implement a CDP is a no brainer.

Marketing teams trying to evolve from siloed multichannel marketing to integrated cross-channel marketing know CDPs are required to establish and maintain a single view of the customer and support best practices (customer journey orchestration, hyper-personalization and AI campaign optimization). 

Additionally, CDP vendors deliver different combinations of pre-integrated native functionality at two, but sometimes all three, layers of the martech stack. This includes the data layer, services layer and engagement layer. These integrated CDP solutions deliver significant enterprise operational benefits such as:

  1. Reducing the need for single point solutions and eliminating redundant software functionality common in most martech stacks today

  2. Reducing the overall cost of martech software

  3. Simplifying management and minimizing application integration and configuration efforts — CDP solution companies have already done this 

Although they’re incredibly helpful, no CDP has all applications at all levels of the martech stack — and product roadmap strategies for CDP companies can vary greatly. On one end of the spectrum, the focus is on breadth of capabilities. Enterprise platform companies are working on automating the “demand side” of things: sales tech, service tech and martech. For these CDPs, functionality, product maturity and component integration are key considerations. Additionally, these companies lean heavily on third party integrators, which come with extra concerns that makes this approach unappetizing for some CDP buyers.

On the other end, CDP vendors are focused on depth of services. These vendors specialize in marketing users or specific industries sectors such as retail or publishing. They often provide best practices expertise, pre-integrated and pre-configured systems, trained AI and optimized data sets to optimize a martech buyer's success. For narrowly-focused CDP vendors, questions arise about longevity and sustainability in an industry due for consolidation.

What Will These CDP Companies Do Next to Compete?

With the death of third-party cookies, CDPs subsumed all the functionality of the DMP, making DMPs redundant. Still, we see some CDP vendors scrambling to build data ID graphs to include in their offering. This data enhancement capability captures and processes online customers and prospect behavioral signals needed to identify in-market shoppers by category, shopper buying intent and location.

Using the analogy of the three systems walking into a bar, it’s as if the CDP vendors are not just expanding a best practices bar, but are also saving the owner years of effort and boatloads of money provisioning the bar with the spirits, menu items, entertainment and the customer knowledge required to compete and win. 

CDP solutions vendors are making it easy and cost effective to automate and integrate the martech stack. CDPs capture the data and support the feedback loop so companies can measure what’s working. They not only enable real time customer engagement but also support the predictive and optimization analytics to support smart real time decisioning. In short, CDPs are making possible the evolution from Complex System to CAS a reality.

See how businesses can more effectively adopt CDP technology and make it a reality in my next article.

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