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Customer experience has never been more important to the success of a business. Many businesses are using a customer data platform, or CDP, to unify their customer data and make it available to other systems, which facilitates the creation of a very personalized and enriched customer journey. According to Gartner’s 2019 Marketing Technology Survey, 43% of businesses polled have a fully deployed CDP and another 31% are currently working to implement a CDP in their business. In this article, we will focus on CDP uses and the data strategies that will enable a business to get the most from their CDP.

CMSWire spoke to Naras Eechambadi, founder and CEO of Quaero, an enterprise CDP company, about how he defines customer data platforms. He quoted The CDP Institute’s definition, which is that CDP is “packaged software that creates a persistent, unified customer database that is accessible to other systems.” Eechambadi emphasized that “neither the word 'marketing' nor the phrase 'customer modeling' is included in this definition. Previous definitions did define CDP as being marketer controlled, but CDPs have evolved into enterprise systems that serve other customer facing business functions beyond marketing, such as customer experience, service and sometimes even risk and fraud.”

Recognize What a CDP Can Do For Your Business

In late April, Gartner released another report entitled the Market Guide for Customer Data Platforms which suggested that a CDP should be effective at "centralizing data collection, unifying customer profiles from disparate sources, creating and managing segments, and activating those segments in priority channels."

When we asked Eechambadi how a CDP works in conjunction with a centralized data collection, he stated that “Many companies, particularly at the enterprise level already have a central data management system, such as a data lake and/or corporate data warehouses that houses much of their customer data. Where these exist, CDPs can source this data. However, these central repositories do not always contain additional subsets of customer data that would fuel personalization, such as data that may be resident in marketing clouds or call centers.”

Eechambadi went on to explain that this is often where the limitations of a business’ central data management systems comes into play, and where a CDP can really shine. “This data may also not be timely or immediate enough for certain marketing use cases. CDPs often have the ability to ingest data in real time and provide the ability to act on that information. In these cases, CDPs can then serve to feed these richer datasets bi-directionaly and back into the central data system after the fact, including any results and measurements from the actions taken.”

Determine How a CDP Fits Into Your Martech Stack

The collection of marketing and technology software that a business uses is referred to as a martech stack. The CDP works in conjunction with the martech stack, but whether the CDP is at the core of the martech stack actually depends on many factors. Eechambadi expounded on this relationship, and stated that it “depends on the CDP’s particular focus, how a company chooses to leverage the CDP, and the company’s vertical, data maturation, size, etc. Some (not all) CDPs have the potential to be the core of a marketing stack, serving as the data orchestrator that brings in data from other martech systems that are collecting customer data while feeding all of the channel specific engagement systems, e.g. personalization, email or paid media.”

Typically, a CDP is designed to connect to the various data points that a business accumulates, but that connectivity also depends on whether a business is using off-the-shelf technology, or proprietary software.

Eechambadi explained this connectivity, as he stated that “CDPs usually have pre-built 2-way connectors to most common sources of customer information such as marketing clouds, tag managers, billing and ecommerce systems as well as paid media channels such as Google and Facebook. For proprietary software packages, most CDPs can add custom connectors where needed, although this may entail additional work and expense. They can, therefore, be customized to meet the specific requirements of each individual customer, although some CDPs are more flexible than others in this regard.”

How Is a CDP Going To Enhance the Customer Experience?

When it comes down to it, most people associate a CDP with marketing, and to be clear, that is how it is most often used, however the ultimate goal of using a CDP is to create a better, more personalized customer journey.

When asked about CDP and customer experience, Eechambadi was emphatic that “They are inextricably intertwined. A CDP should ideally enable the execution and acceleration of a business’ customer experience strategy by optimizing the customer journey across channels and interactions. The choice of CDP should be driven by the customer strategy of the organization, not the other way around.”

CMSWire spoke to Peter Irikovsky, CEO of Exponea, and asked him about CDP strategies. Irikovsky emphasized the point Eechambadi had made, and stated that “A company’s customer experience strategy should result in a CDP strategy, not the other way around. Today’s customers prioritize relevance and speed, meaning the most effective CDP users will consider time to value and native omnichannel orchestration when developing their approach.”

Irikovsky believes that when it comes to enhancing the customer experience, a CDP is able to cut across the limitations of other methodologies. He reiterated that “Customer lifecycle management and consistent personalization across channels are a couple of the key tasks that a CDP is best suited for, but what it really boils down to is customer-centric marketing. A true shift in that direction, which more and more companies are realizing they need to make, requires a CDP.”

CMSWire also spoke with David M. Raab, founder and CEO of the Customer Data Platform Institute, who said that a “CDP strategy defines how the CDP will create that great customer experience. Important considerations with CDP strategy include the ability to connect with source and channel systems; quality of data available as CDP inputs; staff skills and capacity; and cooperation from other groups in the organization.”

We are all customers, after all, and we know how irritating it can be to be directed to content, products and services that have nothing to do with our needs and interests. Most of us have experienced the opposite as well — being shown content that appeals to us, and advertising that is relative to our interests. So how does a CDP facilitate such personalization? Eechambadi said that CDP allows a longview profile of each customer, and explained that “One of the key uses of a CDP is to create a single view of the customer, that includes all known information about each customer — their demographics, their purchase behavior, payment patterns, interactions within and across channels, cross purchase across brands over time, loyalty, price sensitivity, etc..”

By understanding the nitty gritty aspects of each customer’s journey, a business is in a better position to deliver content based on the goals of the business, aligned with those of the customer.

Select the CDP That Fits Your Data Strategy

There are several types of CDPs that are available, and each has attributes that are suited towards specific goals. To effectively use a CDP, a business needs to clearly define the strategic priorities that govern the data that is collected. Typically, these are more easily clarified by determining the case uses for that data. How will the data be used to improve the customer journey? What interactions need to take place between the customer and your business to facilitate your goals? How will marketing interact and collaborate with IT to achieve those goals? What software will be required, and how will it have to interact with other software packages?

Eechambadi said that CDPs “can be broadly classified based on three attributes.” Breaking it down, the different types of CDP are defined by their capabilities, specifically, their ability to:

“Ingest data from multiple sources, resolve identities across these sources, and create a single customer view. This also includes the ability to allow data engineers to transform the data, create workflows and data sets and otherwise orchestrate the data for use by analysts and other users.”

“Provide the ability to analyze the data and derive insights, either for simple descriptive analysis through dashboards and reports or through sophisticated modeling using advanced data science tools and techniques, including machine learning and artificial intelligence.”

“Engage with the end customer through personalized interactions through multiple channels, orchestrated through outbound connectors across a company’s martech/adtech stack.”

Some CDPs are able to accomplish more than one of these tasks, and generally, the functionality of the CDP is limited by the capabilities of a business’ current martech stack. The case uses that a business prioritizes will determine which type of CDP they should use, and in some cases, the CDP will be able to enhance the functionality of the existing software infrastructure. Eechambadi suggested that “CDPs can be chosen to complement and leverage the existing legacy tech or, in some cases, to rationalize and streamline the marketing stack by eliminating redundancies.”

The basic function of a CDP is, as Raab said, “to create a unified, persistent customer database,” but most CDPs have the ability to do much more. Raab stated that “Some have additional features including predictive models, individual-level message selection, cross-channel orchestration, and even message delivery. Many marketers prefer a single CDP that combines the data, modeling, selection and orchestration functions, since this saves the need to purchase and integrate separate systems. Other marketers want the CDP to do only the data work because they already have solutions they like for the other functions.” He also suggested that prioritization of data sources is an important consideration, and said that “companies need to prioritize which data sources and channels are connected and expand the scope slowly over time. This enables them to work in reasonable-sized stages and to deliver value at each stage. Proper prioritization depends on close understanding of the implications of including each data source and channel system, so it does require careful analysis.”

Your Data Strategy Revolves Around Your CDP Use Case 

The creation of use cases is beyond the scope of this article, however CMSWire recently published an article entitled Developing CDP Use Cases: A Guide for Marketers that discusses the process specifically for CDP. It’s crucial to work through the process of determining the specific use cases for your CDP, because they are used to decide the type of CDP that is most appropriate for the goals of your business.

Raab suggested that “Any process that requires customer data could be a CDP use case. But the use cases which are largely impossible before a CDP is put into place are use cases that require combining data from multiple sources. Such cases include retargeting, where email or advertising messages are sent to individuals based on what those individuals did on the company website. An important extension of this is removing people from retargeting campaigns immediately after they make a purchase.”

Some case uses are atypical, but show the versatility of the CDP. Raab said that his favorite example of this is “an airline that used CDP data to understand which of its routes had the most high-value fliers, so it could position extra aircraft to ensure those flights would be made even if there were equipment problems.”

Other examples of CDP use cases range from personalized marketing to marketing for specific channels in your business. As Eechambadi put it, “A typical example is the use of CDP to personalize marketing at scale, i.e. ensure that messaging to a single customer is consistent across channels and is taking into account a customer’s behavior and the effectiveness of individual channels for each customer.”

Another case use involves the specificities, or touchpoints, of the customer journey as they go through the process of interacting with your business online. Eechambadi pointed out that this is increasingly being used by businesses that are trying to narrow down their marketing methodologies. He said that “Media attribution as a CDP-enabled use-case is less typical but growing. This is to make marketing spending more efficient on paid media, by measuring the effectiveness of spending across channels for specific segments and also targeting customers more accurately by channel, e.g. some segments may be better reached through Facebook while others may respond more readily to ads on Google.”

Collaboration Between Departments Is Vital

Often, the biggest hurdle that is faced by businesses that are implementing a CDP is the lack of collaboration between marketing and IT. Marketing knows the details of what they need, and what they require from the software. IT knows the technical aspects of setting up a system that can provide the functionality that marketing requires, and if it is practical within the business. “Behind all challenges related to data, technology, process, use-case design, etc., are the people behind it. So yes, in that sense the biggest challenge is often that lack of collaboration between marketing and IT. Unfortunately, marketing does not always collaborate with IT to find the optimal CDP solution. Too often, marketing is trying to find ways to work around IT and is a reluctant partner,” Eechambadi.

The collaboration should extend to other relevant departments as well. Eechambadi suggested that “the most successful CDP implementations we have seen are those where it is a joint, collaborative effort between not only marketing and IT, but also includes data science and/or analytics teams since they tend to be heavy users of CDP and can act as an effective, data savvy and technologically literate bridge between marketing and IT.”

Conclusion

To create an effective CDP strategy, a business needs to first recognize exactly what a CDP can do for them. Once they define their goals, they are then able to determine the specific needs of a CDP through use case analysis. By ensuring that marketing, IT and other departments collaborate as they develop their CDP data strategy, a business will be able to more effectively integrate a CDP with the business’ martech stack to create a positive, personalized customer journey.