"Not another acronym!” we hear you say. Well yes, marketers, but stay with us because CDP is one acronym many in the industry are becoming familiar with and so will you because it’s here to stay and very (very) relevant.
Here at Arktic Fox, we’re all about bringing you the marketing industries “need to knows” without the jargon, so we’ve teamed up with some fellow experts to talk CDPs and answer some of the most commonly asked questions.
So, let’s get right into it.
Customer data platforms. You’ve heard about them or maybe you’ve been assigned the task of implementing one. The popularity of CDPs is increasing and it’s no surprise. The rapid nature of digital adoption has meant there is more data than ever before at a marketer’s disposal. With so much data available from a multitude of sources, the ability to have a single, holistic and truthful view of a customer is getting harder and harder.
But more data doesn’t automatically mean more or better outcomes. In fact, the influx of data has left many marketing teams scrambling – they simply do not have the resource or the infrastructure to manage the growing data load, which is inhibiting the ability to for marketers to unlock value. According to Forrester, “60% - 73% of data will go unused because it’s poor quality and improperly formatted for the applications that require it.” It’s enough to send shivers up any data-driven marketers back.
To shed a light on all you need to know, we spoke to key platforms providers in the customer data field in Billy Loizou, Vice President from Cheetah Digital and Kate Murphy, Head of Retail from Lexer for their insights.
But first, let's start with a definition and the benefits of a CPD.
What is a CDP and how does it work?
A Customer Data Platform is software that allows data to be aggregated and unified from a variety of sources into one single view (think CRMs, data warehouses, transactional databases etc). To do this a CDP uses what is called connectors or APIs, this allows data to be bought across from various platforms into the CDP. Once aggregated, CDPs allow marketers to effectively activate and mine data to enhance the customer experience and derive value from data assets. To activate the data CDPs usually push data out to key channels and touch points ie Marketing Automation, social media and others.
What is driving growth and uptake of CDPs in the space?
Data proliferation, changing customer expectations, the increasing importance of first party data and disparate data sets are just some of the many factors driving CDP uptake.
According to Kate, “the greatest pull toward CDPs is evolving consumer expectations. Companies like Amazon have dramatically changed the way consumers think about service, personalization, speed, and convenience. To keep up with these expectations, businesses need to rethink their approach to customer engagement and CDPs are an incredibly effective tool for informing that transformation. The depreciation of third-party cookies and the rise of identity-based targeting on Facebook has also increased the value of first-party data.”
Where do I start if I want to introduce a CDP?
Before introducing a CDP (or any MarTech for that matter) it is vital that there is complete clarity over the desired outcomes and what exactly is to be achieved by introducing a CDP.
Billy from Cheetah Digital says, “the first place to start is by identifying use cases or business problems which you want to solve or create, then break down the use cases into customer journeys, systems that need to integrate with one another and data architecture to see if you need new technology to deliver them or not.”
Who should manage a CDP within an organisation?
There isn’t one answer to this. Accountability and ownership of a CDP will be different, depending on the organisation and its structure. The two major players here are IT and marketing. What is important is that marketing plays an active role in leading the platform selection to ensure the system is fit for purpose and useable.
Kate from Lexer believes “most commonly, marketing, digital, or ecommerce teams would manage a CDP. However, rich customer data and insight is beneficial not only to marketing teams but to the entire business. Winning brands orchestrate customer experiences across teams, channels, and touchpoints, and in order to do so, every team needs access to the same dataset.”
However, accountability and ownership will only get you so far. The relationship between IT and Marketing is vital to drive and deliver success with CDP. Billy suggests “the closer the relationship between IT and Marketing the faster companies will see ROI on their investments. This will also see a top-down approach to alignment for the vision of the business and remove the angst between departments. IT is there to assist the Marketing team on assessing the integrity of SaaS and if it fits into the organisation's technology roadmap.”
Can we store un-identified data within a CDP?
When it comes to storage of de-identified data within the same environment as PII (personally identifiable information), it can become a little more murky as to what is possible from a platform point of view as well as the implications around privacy. Some CDPs will claim this isn’t possible whilst others can adopt some level of work around to make it a reality. Once de-identified data is merged with PII it is subject to the privacy act and therefore brands should operate with caution before diving in.
Kate from Lexer advises that some CDPs can store un-identified data and others cannot.
“The true power of a CDP lies in its ability to analyse, segment, and target known customers or prospects based on known attributes. There are other tools for analysing and retargeting unknowns, but working with known attributes improves the confidence and decisiveness of the teams who use them,” says Kate.
We have a data lake / data warehouse - do we need a CDP?
The need for a CDP if you already have a data lake or warehouse will depend on what capabilities it currently has.
To help you to determine if your data warehouse or data lake is fit for purpose, Kate suggests some of the key considerations are:
● Does your data lake / data warehouse provide a unified and enriched single customer view?
● Does it have identity resolution, deduplication, and data cleansing?
● Can your business users self-serve access to insights, campaign activation, and measurement?
● Does it provide predictive analytics or segment-based reporting?
If your data lake / data warehouse provides all of these features and capabilities on its own, then you might not need a CDP.
Like all MarTech there are lots of players in the market. What are some of the critical questions I need to ask to ensure I am buying the right tool?
Like many people would agree, relationships are everything and who you choose to partner with when it comes to CDP will be a determining factor in the success of the project. The first and arguably the most important question to ask is simply can the platform solve the problems we have and enable our strategy? But what else is important to understand?
Billy suggests you delve deep into the technical aspects and cost structures to ensure you know what you are really buying and what support you can expect going forward by asking the following questions;
● How does your platform connect into our other tech systems? Are they out of the box or custom connectors?
● How does your platform support identity matching?
● Does your platform support unknown to known identity linking?
● What Machine Learning algorithms do you provide, and what changes can I make to the algorithms?
● Post implementation if I need to make changes to my account, how do I achieve this and what is the cost?
According to Kate, experience matters as does the ability to effectively implement and scale the platform. One of the most important questions you can ask is: Does this vendor have experience in my industry category with brands of a similar size and nature? If your business aligns with the vendor’s core customer group, you can feel more confident that the solution will fit your needs.”
We also know that the implementation is a big determiner of success. Ask vendors questions like:
● How long does the implementation process take?
● Who leads the implementation?
● What’s required from a technical standpoint?
● How many references and testimonials can they cite about the user experience and quality of the implementation?
● How flexible are the integrations and data consumption pathways?
Kate adds, “you have to learn to crawl before you can learn to run, instead of pushing for overly complicated strategies right away.”
What are the most common mistakes marketers make when trying to implement a CDP?
The types of mistakes marketers make when it comes to CDPs aren’t so different to the mistakes marketers make when it comes to MarTech in general.
Some of the most common mistakes include;
● Lack of clarity of strategy.
● Attempting to build maturity too quickly.
● Lack of skills and expertise to leverage the platform.
● Following the market.
● Lack of collaboration with IT.
Billy says, “the me-too complex is alive and well here... We follow trends in the market that CDP is the next big thing so we need to add one to our stack. But equally we see an assumption that a CDP will solve all of our marketing data problems which is simply not the case.”
A CDP powers other platforms such as marketing automation - how can marketers demonstrate return to help garner investment?
When seeking current and future MarTech investment from stakeholders, it’s all about demonstrating return and building credibility. As with all MarTech implementations, the chosen product should provide benefit in return in one or several areas of revenue, customer impact and business efficiency.
Billy frames it nicely, outlining that it is important to consider the key metrics the CFO cares about:
● Volume: How will this new addition to our technology stack allow us to attract more customers?
● Velocity: How will this new addition to our technology stack allow us to increase frequency of purchases?
● Value: How will this new addition to our technology stack allow us to increase average basket size?
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