“Whatever you are, be a good one.” ― Abraham Lincoln
Although David Raab coined the term customer data platform (CDP) in 2013, companies have been trying to uniquely identify customers and consolidate first-party customer information for multiple decades. Attempts ranged from the customer information files created for banks in the late 1980s, through to the data lakes and master data management systems still in use today.
Despite these efforts (which were developed to support the needs of multiple constituents), marketers still struggled to develop the complete omni-channel view needed to personalize interactions. Digital transformation, while introducing exciting possibilities for meeting customers in their moments, also exacerbated the problem. The increasing variety and volume of data in combination with the need for real-time reactions became too much for the traditional databases to handle. Marketers, in search of a solution tailored to their specific needs, expressed increasing interest in CDPs. Vendors jumped on-board and by 2016 CDP had become a full-fledged industry.
The Rise of CDPs Leads to a Rise in Confusion
CDP's meteoric rise in popularity continues unabated today. One analyst in the customer intelligence space told us that fully 45% of his inquiries are about CDPs. This has led to a not inconsiderable amount of market confusion. Vendors offering CDP solutions have come from areas as varied as tag management and DMP, campaign management, web analytics and data integration. Others, albeit a smaller group, bill themselves as “pure-play” CDPs, touting stand-alone customer database capabilities more akin to a supercharged MDM solution. Many of these offerings are dissimilar in capability making comparative evaluations difficult.
There have been attempts to standardize. One formal definition of the CDP is “packaged software that creates a persistent, unified customer database that is accessible to other systems." And the Winterberry Group suggests that the basic CDP has four primary capabilities: integrating audience data from multiple sources; managing customer identities; supporting real-time customer segmentation; and provisioning customer data to other systems.
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Beyond CDP — or Bust
Despite the high level of interest, the future for the basic CDP as defined above may not be as bright as it seems. The very nature of the problems inherent in unifying customer data, along with the real-time multi-channel needs of today’s digital marketer may very well force CDPs to evolve beyond the basics or fade into the background. In its most recent report on the state of the CDP market, Forrester put it like this: “For CDPs to be worthwhile of B2C marketers’ attention and provide solutions that legitimately advance marketers’ customer engagement strategies — they must mature on two axes: functional competency and automation and intelligence.”
What exactly does this mean? It means the CDP has to move beyond simple data storage and aggregation, get better at facilitating real-time interactions and incorporate more sophisticated analytics into the mix. This is not to say that various CDP vendors don’t have strengths in some of these areas — particularly with the marketing cloud vendors such as Salesforce and Adobe getting into the game. However, as the market evolves, companies considering a CDP should factor the following four CDP challenges into their buying strategy.
Established Data Infrastructures
For organizations with established data infrastructure and architecture, the requirement to import data into a CDP can have significant implementation and data synchronization costs. To work around this issue, companies may want to explore solutions that provide basic CDP capabilities (identity management, segmentation and data provision) without requiring a physical data move into a single database. While these solutions do exist, exploring them may require investigation beyond pure-play CDPs.
Related Article: Tread Carefully With CDPs to Avoid the 'Trough of Disillusionment'
Real-Time Event Detection and Analytically-Driven Data ActivationWhile CDPs allow for audience segmentation, the core capabilities of most do not extend to capturing events, digital and otherwise, as they happen. Nor do they provide the ability to act on these events in real-time (decisioning, triggering, next best offer execution, etc.). The lag in getting event information into many existing CDPs can be anywhere from hours to days, and while some CDP vendors are developing adjunct analytics capabilities to supplement the core CDP functions, the sophistication of these varies widely, as does the integration functionality. If requirements extend past core CDP capabilities, it may be better to look at purpose-built tools that offer basic CDP functions but are designed for analytically-driven automated decisioning.
Comprehensive Cross-Device Identities and Data Management
Keeping track of customer behavior across all devices and digital channels when customer activity is both known and anonymous is outside the scope of many CDP solutions. The strength of both data management and identity management capabilities can also vary significantly from one CDP to another because many rely on customer identifiers that are provided with the incoming data and cannot match on multiple identities across a single profile. If existing customer data requires data hygiene, advanced matching and merge rules, or other data management activity, look closely at the CDP to ensure that these capabilities are included, or plan to provide the activity outside the CDP. Otherwise the CDP will not perform as intended.
Related Article: Is That New CDP Truly a Customer Data Platform?
A core characteristic of the CDP is provisioning unified customer data to other marketing applications. But a common complaint is the integrations to other systems are more complex and time-consuming than advertised. This problem is magnified when customer experience programs extend beyond marketing and into other customer impacting areas such as sales, service, fraud and risk. All these areas need to apply analytically-driven contextual personalization to their customer activities and the CDP is the logical place to get the needed customer data. In this situation, the need for real-time event detection, analytically-driven decisions and cross-device identity matching will also carry over into areas outside marketing. If requirements extend past marketing or core CDP capabilities, it may be better to look at purpose-built tools that offer basic CDP functions, but are designed for more broad-based journey orchestration and analytics activity.
The problems that have drawn marketers to the CDP are very real and the upside for solving those problems is significant. But the marketplace for these products is nascent and quite likely will continue to evolve. It is imperative for companies considering CDPs to enter with eyes wide-open: gain a clear understanding of what to look for in a CDP and determine the specific needs in this area — both for today and beyond.