What do marketers find as their biggest challenges in 2020 and 2021? According to the Forrester Infographic: The State Of Enterprise Marketing Technology released this month, most marketers ranked attributing marketing performance across interactions (49%) as their biggest challenge in the next two years. Retaining current customers (43%), understanding customer behavior across channels and devices (42%) and integrating online and offline interactions (42%) were next. 

Customer Data Platforms (CDPs) promise to help marketers and brands with the latter two challenges. And marketers, no doubt, have become believers in CDPs: the numbers will be out soon, but the CDP Institute reported the industry will reach $1 billion in 2019 and grew in funding by $680 million the first half of the year.

It’s too early to tell what the year ahead will bring for CDPs in terms of money, but we’ve collected some thoughts and insights from pundits on what’s important to consider about the technology and practices around CDPs as we close out the first month of the year.

Big Year Ahead for Big Vendors?

Many of the big marketing technology players have entered the CDP fray this year, following the lead of the more pureplay vendors like Arm Treasure Data, Lytics, RedPoint Global, BlueConic and AgilOne, now under the Acquia roof.

Ovum in its Ovum Market Radar: Customer Data Platforms released in November noted that Adobe, Oracle, Salesforce, Teradata and SAP have entered the CDP mix at “various stages of progress.” Teradata announced its CDP on Oct. 22. SAP announced its enterprise grade CDP in May and plans to go for general availability (GA) this year. SAP announced its CDP in May. Salesforce and Oracle will GA this year. “Their entries into the category will majorly impact the CDP industry, solidifying the category and raising awareness around the growing importance of CDPs,” Ovum researchers wrote. “Despite the race to launch their own CDPs, it could take years for the enterprise players to catch up to the established pureplay CDPs, which remain agile and platform agnostic. Conversely, they will inevitably take business from the smaller CDPs in the long-run.”

According to Forrester in its B2C marketing report on CDPs this month, Oracle is currently piloting its CX Unity product. Salesforce has announced Customer 360 Truth, a data management offering set for release this year. Microsoft discussed a "CDP vision" for its Dynamics 365 Customer Insights product in November. And Adobe Adobe Experience Platform was the first to enter this scene, with its real-time CDP becoming generally available in November, according to Forrester.

Related Article: 4 CDP Case Studies: AgilOne, Arm Treasure Data, BlueConic, Lytics

CDPs Will ‘Jump the Shark’

Patrick Tripp, SVP of product marketing at Cheetah Digital, predicted that in 2020 Customer Data Platforms will “jump the shark.” “When all of the niche vendors claim to be CDPs and use the same messaging,” he added, “the category becomes diluted and the term loses its meaning. Marketers are confused about whether or not they need a CDP — and what a CDP even delivers.”  He cited CDP Institute founder David Raab’s words from his RealCDP report, which attempts to address market confusion: “The CDP industry faces two challenges. First, many firms offering a CDP or CDP alternative fail to build the complete, shareable customer database that is the heart of the CDP concept. Second, legitimate CDPs vary hugely in the additional features they provide, leaving buyers confused by the range of options.”

Tripp suggests not to jump at the next shiny toy under the marketing tree. Focus on what your organization is trying to achieve and how it activates insights from data sources to deliver real value to customers. “Most marketers,” he said, “don’t need an IT stack to do that.”

CDPs Will Drive Better Experiences

Carl Pieri, global head of demand generation for HubSpot for Startups at HubSpot, said he is “incredibly optimistic about the future of CDPs and how they are going to drive a better experience for all of us who interact with data-heavy brands in the future.” It’s difficult to drive a great experience for your customers, Pieri said, if you are working with bad data. “One surefire way to get bad data is by leveraging a bunch of systems that don't effectively communicate with each other,” Pieri added. “CDPs will be particularly important for SaaS businesses that are trying to improve adoption of their products.”

Why? Because, he said, they will be able to drive a much better experience around onboarding/adoption/usability and will end up setting the standard for how all companies need to operate. “Businesses that resist CDP adoption or fail to leverage it effectively will no longer be able to keep their users and customers happy and won't be able to effectively drive new business,” Pieri said.

Learning Opportunities

Related Article: Will the CDP Marketplace Consolidate in 2020?

CDPs Will Raise the Bar for Consumer Expectations

Another CDP fan is Bruce Hogan, CEO of SoftwarePundit. He predicts thousands of SMBs will leverage customer data platforms to finally achieve personalized digital marketing. “This will raise the bar on consumer expectations for all businesses,” he said. “Marketers have been speaking about personalization for a long time. Until very recently, the necessary tools have only been accessible to enterprises with large enough budgets to afford products from vendors like Salesforce and Oracle.” But new tools have emerged that have modern data models that make it possible for smaller companies to create massive data lakes that aggregate all customer data in one place.

Some of the most powerful use cases for such solutions will include:

  • Emails triggered by customer actions that include fully personalized content. For example, highly personalized abandoned cart emails sent at the exact time when you're most likely to visit your inbox.
  • Complex cross-channel marketing campaigns that use a series of interactions to nudge buyers to a transaction. Imagine a search ad that references a Facebook ad you just clicked on for a product you viewed a week ago, Hogan said.
  • The ability for companies to use A/B testing to identify entire segments of customers that should be excluded from marketing campaigns. This will result in significant cost savings, Hogan predicted.

Challenges Include Implementation, Silos

Hogan realizes there will continue to be challenges around CDP like with any other marketing technology. Particularly, major challenges for customers of CDPs in 2020 will be:

  • Getting data, engineering and marketing teams to learn to work together to implement CDPs successfully.
  • Overcoming the siloed nature of marketing teams. Historically, marketing teams data and operations are siloed by channel. To get value from CDPs, Hogan said, marketers need to think about the customer holistically.

CDPs and CRM Part of the Big Martech Picture

The comparisons between CRM and CDP are still prevalent. Just this month, Segment, a vendor that providers a CDP solution, formed an alliance of more than 200 companies that attacked CRM software for not being enough for brands to manage customer data in today’s digital world.

Joe Stanhope, vice president and principal analyst at Forrester for B2C marketing who co-authored Forrester’s report on CDPs, said clearly CDPs and CRMs are different capabilities. Marketers should take note that in many ways they are “more mutually exclusive than overlapping.” “CRM systems, especially for customer service and sales and support, do provide that customer record for operational customer experience,” Stanhope told CMSWire. “The Customer Data Platform, generally speaking, is used as a source of customer data to support direct marketing, typically email marketing and messaging.”

They each have their place in the modern enterprise, Stanhope added. It doesn’t have to be competitive, although CRM is certainly not enough, he said. “I don't think anyone agrees that CRM is enough," Stanhope said. "All these categories are part of a much bigger pie. And really what you're talking about is trying to bring these pieces together. The data, of course, is a very broad set of customer experiences and all these contribute to it in their own way.”