marketingtechoutlook

The Rise of Customer Data Platforms

By Michael Kaushansky, President Helia & CDO, Havas

Michael Kaushansky, President Helia & CDO, Havas

The concept of a customer data platform (CDP) is nothing new and has been around for a while. Not too long-ago, marketers knew the value of customer data and they pioneered early prototypes of the CDP by accumulating demographics, geographic preference, interests and even sales transactions—all tied to a known physical customer and household. Of course, back then reaching these customers on a 1-to-1 basis was limited to mostly direct mail, call-centers and in some cases email. The rise of digital technology offered many new opportunities to reach customers on a 1-to- 1 basis albeit these datasets where different, they were anonymized-approximations of what defined a customer and a household. The digital marketer never truly knew the entirety of their target audience. Nevertheless, these datasets were highly actionable through digital media, websites and mobile devices and so they continued to amass and scale.

Over time, the CRM datasets and digital datasets never truly blended. Separate marketing teams formed on the brand side (one focused on CRM and the other on digital), resulting in standalone agencies that would service CRM or digital clients. As digital advertising continued to flourish, some brands started to feel pressured. Their digital dollars were just not big enough to continuously fight for digital audiences (prospects) and consequently digital targeting demised in efficiency. The third-party datasets (data informed by cookie tracking) were inaccurate, problematic and costly. Brands started to realize that the true value of their business lies with their existing customers (CRM). In fact, we know that most of the revenue for brands is recurring revenue, and it is much less expensive to retain a loyal customer than to fight to get a new one. Because of the proliferation of digital touch points and the importance of digital media, brands demanded to make their CRM data work for them digitally. They demanded a digital-bridge, a link between their CRM data and the digital audience. This demand created a whole new category of marketing technology called, “on-boarding services”. Essentially, service providers that could link a customer’s offline profile to an online cookie or digital ID. Service providers such as: LiveRamp, Neustar, Adobe, etc.

"The total cost and revenue per customer is calculated to know which customer segments are driving the needle in terms of performance"

The on-boarding is somewhat convoluted, expensive and complex. Not all records can be mapped from offline to online, match-rate estimates are between 30 percent and 60 percent and may biased. Essentially, brands pass their CRM data to an on-boarding service provider for targeting; this is managed by a completely different team, likely an agency. Concerns started to surface and rightfully so. How would a brand deliver a consistent experience across both CRM channels and digital channels? Would their data be safe with these third party on-boarding service providers and subsequent platforms? Who would own the data? Could the data be passed back, from online to offline, such that CRM could get smarter?

These questions continue to percolate and brands must address them internally and eventually with customers. This is further exacerbated by the fact that CRM/IT leaders are somewhat disconnected from their digital marketing counterparts. Brands need to, not only take better control of their data, but to align their operations so that CRM and digital teams collaborate. The time is ripe to revert to the core mission of having a unified customer view, manage a consistent approach to communication across channels and deliver a personalized experience.

Brands who have invested in CDPs have a distinct advantage. One example is smarter remarketing to likely customers. Using a CDP, a brand can execute highly targeted cross-channel campaigns leveraging real-time consumer signals. A global hospitality advertiser can track your online property and room discovery across devices. If you (the consumer) do not “book”, the brand uses sophisticated logic to establish the reason and will hit you up on your device of choice–based on the likelihood of you (the consumer) seeing it. Another example is the ability for a brand to truly know the cost and revenue at the customer level over time. By having all the data connected across channels: both offline and online, owned and paid. A total cost and revenue per customer is calculated to know which customer segments are driving the needle in terms of performance.

To achieve this, brands must get their data organized, centralized and unified into a single platform. Viola, the rise of CDPs! As mentioned, the CDP although not a new concept, leverages new technology to unify a customer’s data. Brands are not new to data management in fact most advanced brands are using some time of data management platform (DMP) for their digital anonymized audience. The issue is that the same brands that leverage a DMP also manage a standalone system for their existing known customers (CRM). The CDP is the bridge between anonymized and known customer data, to provide a complete customer view.

The objective is to build rich customer profiles at the speed of data for each customer and prospective customer. The mechanics are quite simple, start with a unique customer ID and through a sophisticated dynamic process of deterministic and probabilistic matching append relevant data as it becomes available until a customer profile is complete. From there, segmentation can be developed, followed by persona definition, channel preferences and even predictive mindsets. It is true that marketing starts with data and the more organized, centralized and accurate your data is the better chances you stand to win.

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