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PHOTO: Justus Menke | unsplash

Christmas is eight months away, but I already know what’s on every CMO’s wish list: a customer data platform (CDP). Following years of increasing interest and scrutiny, analysts the world over are touting the potential of CDPs in 2021 and beyond.

For decades, digital marketers have focused on catering the right content to the right customer via the right experience. All of those experiences generate massive amounts of user and behavioral data. While basic analytics capabilities are table stakes for most of these digital solutions, a true understanding of the power of that data is a recent revelation for most. Whether it’s due to the death of third-party cookies or new regulations like GDPR and CCPA, owning and managing first-party data has never been more important. CDPs offer a promise to digital marketers to manage, activate and measure data in a central and holistic approach.

Catching Up With CDPs

If this is the first you heard of this type of platform, you're not alone. CDPs are a relatively new phenomenon. For years marketers attempted to solve these data problems by stitching together tools and custom applications. But as the proverb goes, "necessity is the mother of invention." Right around 2015, we began to see more commercial products surface focused on solving these problems — customer data platforms.

Dozens of products later, the big digital experience platforms wanted to get in on the action. In the last two years, Adobe, SAP, Oracle, Microsoft, Salesforce and Acquia all launched or acquired a CDP. A new line of demarcation between CDPs unfolded as a result: the point solutions and the platform suites. Point solutions are CDPs that focus on solving specific problems within the larger data ecosystem. Platform suites intend to provide a holistic set of capabilities to take over the data ecosystem. Hundreds of products call themselves CDPs, however there isn’t a clear benchmark on what defines a CDP. This sentiment was most apparent during a recent meeting I had with a known industry analyst focused on data platforms when he said the darndest thing: "Ali, customers rarely call me asking about CDPs. Vendors do." That really emphasized the lack of clarity and maturity in the market.

Related Article: What Can You Do With a Customer Data Platform?

How to Decide if a CDP Is Right for You

Given all of that immature raw potential, how do marketers know what’s good for them if no clear standard exists for CDPs? Easy, stay focused on the problems you are trying to solve. Customer data platforms should help you address your internal problems with data. These problems can be best described by one of these three statements:

  1. My customer data is fragmented sitting across many data sources.
  2. My customers are facing inconsistent or irrelevant experiences across many different channels.
  3. My organization doesn’t have actionable insights into my data and marketing efforts.

There are few certainties in digital marketing, but starting every CDP conversation with one or more of these problem statements should be gospel. That is precisely why CDPs are tools that focus on one or more of these three capabilities: data management, data activation and data measurement.

Data Management

Data is captured at every touch point of the customer journey, from anonymous visitors to returning customers. Mature digital marketing organizations rely on many tools to consume and store that data with no consistent way of combining it. Incomplete data sets, duplicate records and unreliable data models are just examples of the drawbacks of fragmented data. Organizations struggle to connect it all together to provide a single and real-time view of the customer.

Data Activation

When fragmented data is spread across siloed systems, it makes it unusable. Marketers have to execute campaigns and personalized experiences through heavily manual processes, moving and maintaining the same data across multiple systems. As a result, marketers spend a lot of time building the same campaigns repeatedly instead of building smart campaigns rooted in data analysis.

Data Measurement

Without a single, real-time view of the customer and a consistent activation model on that data, marketers are unable to have a clear measurement on either. CDPs can provide marketers a reliable methodology to capture insights on user data and behavior on journeys orchestrated in a meaningful way. They can use these insights to create attributions and scoring models that are relevant across the entire enterprise.

Related Article: Customer Data Platforms: A Contrarian's View

Do You Need a CDP if You Have an ... MDM, CRM, DMP, JOB, Analytics Tool?

A common question that pops up during my conversations with customers is: between MDMs, CRMs, DMPs, JOBs and analytics tools — why do I need CDPs? The answer is simple: none of them are supposed to do what CDPs can. I say "supposed to" because historically some of these tools have been altered to behave like pseudo-CDPs, but that doesn’t mean they should.

The most common comparison I see with CDPs are data management platforms (DMPs), especially for data management use cases. There are a lot of nuanced differences between DMPs and CDPs, the most prominent being CDPs ingest anonymous and personally identifiable information (PII) to create unified profiles while DMPs focus on anonymous segments. This makes CDPs infinitely more impactful now, with the death of third-party cookies on the horizon. First-party data will rule the day when third-party cookies go away completely, so managing first-party data effectively will be the top priority for any data-driven organization.

CDPs provide the additional benefit of streamlining compliance, security and privacy efforts. Because the data will be ultimately managed and leveraged in a centralized platform, it also streamlines the process of ensuring data is secure and compliant as well as preserves privacy benchmarks.

Related Article: Customer Data Platforms: The Truth Behind the Hype

Other Considerations When Debating a CDP Initiative 

This all sounds great, so why the caveat?

Knowing you need a CDP and doing something about it are two different animals. Organizations should look at CDP initiatives as an investment measured in years, not months. The “shiny new object” syndrome can blind organizations from preparing for a successful initiative by allocating enough budget and time to get that object shining for your cause.

But that's the easy bit. Most large organizations are spending more money and time trying to fix the problems that CDPs can streamline for them, so investing in CDPs is a good thing. The catch of CDP initiatives is the organizational readiness and buy-in. CDPs are supposed to provide a 360 degree view of the customer. To do that, they need a 360 degree view of the enterprise. Most organizations have disparate systems managing their disjointed data, that’s why a CDP can help. But often enough, organizations have communication, bandwidth and maturity problems which get in the way of successfully standing up a CDP. I know it sounds like a cliché message at a weekend seminar, but organizational readiness is the most impactful factor that determines success or failure of customer data platforms.

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Moving past organizational readiness, what should be considered when evaluating a CDP platform? Here are a few elements I encourage every organization to address during discovery and evaluation of commercial tools in the industry.

  • Data Management — Can the solution decouple, cleanse, normalize and manage data? What analytics, reporting and attribution functionality is available native within the solution? Can the solution ingest first, second and third party data?
  • Unified Profile — Can the solution create and manage unified profiles for accounts, contacts, users and teams?
  • Compliance, Security and Privacy — How does the solution cater for the shift towards first party data? Does the solution provide an added layer of confidence to secure your data? How does the solution factor regulations like GDPR and CCPA?
  • Activation — Can the solution create segments, support scoring and trigger campaigns for multiple channels?
  • Recommendations — What kind of automation (especially AI) is in place to recommend best action?
  • Integrations — What are the OOTB integrations available with known tools for data, measurement and activation?
  • Product Roadmap — Does the product roadmap account for your organization's vision and future product needs?

With those factors in mind, one thing is clear: CDP initiatives are as important as they are complex. The breadth and depth of considerations that an organization has to go through is very much beyond most companies’ internal capabilities. The scale of knowledge and expertise regarding data strategy, data architecture, data science, enterprise architecture, data engineering, data stewardship and full execution of this type of initiative is hard to house internally for most organizations. So, for most CMOs, finding the right partner to help you through this powerful journey is the first step in the marathon. In the end, no matter how amazing the present is when you unwrap it on Christmas morning, your holiday will turn into a hassle when you see those four little words on the box: some assembly is required.