Customer Data Platforms: Driving Next Gen Personalised Customer Engagement
Published on : Tuesday 05-01-2021
With growing realisation that customer experience is now a differentiator, CDPs are becoming more of a necessity than a choice, says Piyush Dewangan.
With the ever-expanding marketing and customer experience (CX) technology stack that organisations are assembling, and the copious amounts of data they collect from the customer, it is natural for valuable information to go unused. The disparities in data collection methods of different technology leads to an abundance of data and diminished visibility, and usable information is often lost in the maze of silos, embedded folders, and duplicate profiles.
The traditional marketing technology (MarTech) stack may provide a capability for centralised data integration and customer-level data for various marketing use-cases. However, the customer data unification at an individual-level remains a challenge. Marketers continue to spend significant time and resources in data integration, preparation, and unification project. Additionally, ever-growing complexities, volume and speed of customer data across consumer interaction channels are further adding to the challenges. CDP market has emerged to solve these challenges by providing an advanced data fabric platform for centralised data integration, profile unification from disparate data sources, audience segmentation, and activation in appropriate channels.
Quadrant Knowledge Solutions defines a CDP as:
“A Customer Data Platform (CDP) centralises data collected from multiple channels and sources, performs data cleansing and identity resolution, and unifies customer profiles to create a persistent customer profile database. The database is accessible to other systems for marketing, customer service, and customer experience management.”
CDP platforms integrate data from first-party, second-party, and third-party sources, such as website, web form, social media, email, eCommerce channel, CRM, DMP, and POS systems. They integrate a variety of customer data types that include personal, demographic, behavioural, transactional, engagement, and device data with unique identifiers such as e-mail, phone number or username. CDPs stitch comprehensive structured and unstructured data, perform analytics to create a persistent profile for individual customers, and create micro-segments of various customer types, therefore enabling marketers to execute effective marketing campaigns for exceptional customer experience across multiple interaction channels and touchpoints.
Data siloes to unified data – CDPs help stitch data seamlessly
Apart from the incongruencies and the abundance of data collection avenues of modern MarTech solutions, traditional data management systems have their own data collection siloes. Adapting and incorporating information from these into present day tools poses an added challenge to unifying customer information. Extracting actionable insights from customers’ data that is dispersed and disorganised seems to stump even marketing veterans. Hence, marketers constantly struggle with data unification to create a persistent customer data profile.
CDPs work as a foundation that tie data from multiple systems together, in real-time, for effective segmentation and targeting for various marketing campaigns. They enable marketers to implement data-driven marketing initiatives, providing an advanced data fabric platform for centralised data integration, profile unification from disparate data sources, audience segmentation, and activation in appropriate channels, leading to a visible improvement in customer engagement, conversion rate, and overall customer experience.
CDP market is transitioning to rapid growth stage of the overall product lifecycle
According to the recently concluded research by Quadrant Knowledge Solutions, CDP vendors continue to post strong growth momentum across a wide range of industry verticals and geographical regions. Driven by substantial growth opportunities, a majority of the CDP vendors continues to receive external investments to capture market opportunities and improve product functionalities.
For several years' marketers are facing significant challenges in collecting and integrating customer data. Marketers have traditionally adopted a variety of proprietary Big Data technologies including, data lakes, data warehouse, and such others. However, creating, maintaining and continuously updating unified customer profiles remains a challenge. Therefore, CDP systems are developed to create a single, unified customer profile to serve the purpose of delivering tailored experience and enhancing customer loyalty.
Customer data platforms' value proposition of integrating a wide variety of online, offline, and streaming customer data and integrating them to provide a unified, 360-degree customer profile is significantly appealing to marketers. CDP platforms continue to improve to cater to a wide variety of customer experience and digital commerce use cases. The CDP market is still in the early adoption phase of the overall product lifecycle. However, with continued product innovation and aggressive growth strategy by CDP leaders, the global CDP market is expected to transition to a rapid growth stage in the next two years. CDP leaders are increasingly focusing on improving the awareness about CDP capabilities and value proposition in providing a personalised customer experience. Additionally, the vendors are also partnering with large marketing technology vendors to improve technology adoption.
As per Quadrant Knowledge Solutions analysis, the global B2C CDP market, which has grown by 46.5% in 2019 over 2018, is expected to grow at a compounded annual growth rate (CAGR) of 38.6% from 2020-2025. The B2C CDP market is valued at $408.5 million in 2019 and is expected to reach $2.89 billion by 2025. CDP is expected to play a major role in providing the foundation for marketer's personalised customer experience strategy.
Growing requirements of personalised communication is driving the demand for CDP solution
Nearly 3.5 billion people, which is 45% of the world population, use at least one form of social media. With social media becoming the most prominent channel for marketing campaigns, targeted marketing and personalised communication have become an expectation. According to multiple industry surveys, over half of the customers say their loyalty towards a brand is directly related to personalised communication.
Quadrant’s research and analysis has uncovered the harsh truth that most businesses do not like to hear – consumers are likely to abandon a brand if communication is not effectively executed. The direct takeaway from this realisation is that organisations need to prioritise personalisation. It promptly follows, that in order to personalise communication, organisations need to know an assortment of facts about their customers. Data, such as preferred channels, professional and personal details, preferred language of communication, the kind of products they like, their web/ social media browsing habits, and how they interact with a brand after a purchase, can function as puzzle pieces that help an organisation gain a real understanding of a customer’s personality. This context is imperative to effective personalisation.
CDP platform is primarily used for integrating a wide variety of customer data and stitching together to create a single, unified customer profile. Depending on the vendor's capabilities and the maturity of machine learning and customer analytics, CDP provides a range of actionable insights to drive marketer's CX strategy in improving engagement and building customer loyalties. However, driven by the continued investments by vendors, CDP platforms have transformed to provide micro-segments of customer profiles and activation to a variety of marketing execution systems to drive personalised customer engagements.
CDP platforms value proposition in providing adaptive, real-time micro-segmentation and an ability to activate these customer segments across a range of execution platforms is emerging as one of the most powerful tools for marketers. However, driven by the intensifying competition, continued emergence of CDP innovators, and growing interest of MarTech vendors in the CDP market, CDP technology is continuously transforming. The most sophisticated CDP platforms are the one capable of performing real-time, 1:1 segmentation and activation across a range of execution technologies. While the current capabilities of CDP platforms in performing 1:1 segmentation is still not well-established and proven, the market direction is certainly towards the 1:1 personalisation. CDP is poised to become an established technology not only to provide a repository for unified profiles and customers insights but act as a foundation for the marketer and CX professional's 1:1 personalised customer experience strategy.
CDPs are effective in tracking customer preferences while ensuring compliance with global privacy regulations
Another key factor to consider, irrespective of the kind of organisation or data they collect, is global security regulations, like FISMA, PCI-DSS, NERC, ISO/IEC 27001, CCPA and the GDPR. While compliance with the global regulations helps in improving the organisation's security, non-compliance means a higher risk of information theft or misuse, huge penalty, negative publicity, and such others. Global regulations are increasingly becoming complex, requiring the organisations to focus on building robust security infrastructure and implementing best practices.
Since the primary value proposition of CDP is to track, store, and analyse known customer records, integrated privacy features are essential to the success of CDP. The compliance regulations, such as GDPR and CCPA gives rights to customers to opt-out of tracking and keep them as anonymous customers. Due to a lack of awareness, CDP platform – designed to track known customer data – is often perceived as the major roadblock to customer privacy and compliance to privacy regulations. However, the CDP platform with integrated privacy control is helping brands to comply with ever-growing compliance around data privacy. CDP provides an ability for customers to review what information they are sharing with brands and make changes based on their preference.
Third-party data collection is set to be revolutionised – Data collection and data storage will soon undergo massive changes
The recent declaration from Google that Chrome, following Firefox and Safari, will end support for third-party cookies by 2022, puts businesses that rely on third-party acquired data in a precarious position. Now, more than ever before, acquiring data directly from the primary source, tying it in with existing customer data and storing it systematically becomes extremely important. Organisations that previously relied on third-party sources to track customer journeys, have to alter their marketing approach. Amidst this upheaval, a number of MarTech vendors are promoting the adoption of customer data platforms. They are targeting the Retail, E-commerce, Industrial Manufacturing, Energy and Utilities, BFSI (Banking, Financial Services, and Insurance), Healthcare and RTIM (Real-Time Interaction Management) sectors to improve omnichannel customer engagement strategies.
According to Quadrant’s customer surveys, a mere 15% of organisations believe they are utilising the data they collect for its complete potential. Most organisations are aware that their data management systems lack the visibility that is vital to truly create impactful strategies and outcomes. With a realisation that customer experience is now a differentiator between organisations, and marketing technology being automated and intelligent, CDPs are becoming more of a necessity than a choice. Additionally, the aforementioned data only takes B2C organisations into consideration. CDPs are also gaining immense popularity in managing B2B relationships, and its utilisation for the same will also contribute to the growth of the CDP market.
As per Quadrant's analysis of the overall market, the growing popularity of personalised customer experience strategies, the need for data security compliance, and the changing norms in customer journey tracking across industry sectors, is affecting the CDP market, and will lead to significant adoption, and staggering growth across a variety of industry sectors during the forecasted years of 2020-2025.
Piyush Dewangan is a highly motivated market research and consulting professional. With around a decade of experience in handling several client-specific consulting and research projects, Piyush has developed unique skills to understand the technology market and finds his job of conducting technology research extremely satisfying with every day coming with new learning opportunities. In the process, he enjoys the opportunities to speak with several global business leaders on various technology domains.
“My company focuses on strategic research and consulting projects for multiple technology domains, including Network Security, Cyber Security, Internet of Things (IoT), Supply Chain Management (SCM), Network Infrastructure, and Information and Communication Technologies,” says Piyush.
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