The CDP space refers to a period of about five years ago when the first customer data platforms were developed. now, there are many different platforms available, each with its own unique features. The industry received $680 million in funding in the first half of 2019, and 71% more people were employed in 2020. In 2022, the trend of open MarTech stacks will be driven by the need for data analytics, and CDPs will play a key role in this trend.
Salesforce is building a customer data platform, which is a big news.
There is still a lot of room for growth in the market for customer data platforms. In 2017, a survey found that 28% of marketers said that having multiple, disconnected marketing tools was their biggest problem. The number of marketing technology tools has increased from 5,000 to 6,829 from 2018 and shows no signs of slowing down.
So CDPs are coming to a stack near you. There is limited information available about what virtual assistants are, how they work, and how to get the most benefit from using one.
What Is a CDP (Customer Data Platform)?
A customer data platform (CDP) is a system that collects and organizes customer data from various sources into a single database. It then links this customer data to customer IDs, allowing businesses to better understand and engage their customers.
There are many ways to segment customers and their data, including behavior, location, device, demographics, firmographics, technographics, and more. It serves an array of data management needs
If you set up a CDP correctly, you can use it to collect data from all of your company’s marketing, sales, and customer success tools and tie it to a single, consistent identity. This gives you the ability to create customer profiles. There will be no more tarot decks depicting half-imaginary marketing personas, and no more attempts to determine if a mobile user and a desktop user are actually the same person based solely on browsing data.
Most marketers have to use a lot of different apps and tools that fit together, which can be overwhelming. It’s like a waiter carrying a lot of plates in a comedy movie.
Add to the pile? Heck no.
Thing is, though, CDPs can be revolutionary. CDPs are a significant upgrade from previous marketing strategies. If you implement a customer data platform correctly, your business can see a significant improvement. Implement it wrong, and it becomes exponentially bad.
The CDP Opportunity
A CDP, or a customer data platform, is a software that allows you to store all your data in one place and use that data with all your other tools. That means you can:
- Move data back upstream to tools that handle previous stages of the cycle. This setup gives you feedback on each action you take, and let’s data from one tool inform actions everywhere else in the stack.
- Automate this process and you’re getting updated customer data in real time.
- Each of these is huge, both together can be a totally new ballgame.
This is an example of a website visitor who views multiple pages on the same day.
The question is, what do you do about visitors who are inbound sales leads, marketing leads, or just someone who got lost on the way to your press pack? If you are like most businesses, when you get a new lead, you will put them into a high-touch marketing program and might offer a live chat option. Perhaps sales will increase because of them as inbound leads.
The problem with this approach is that the decision as to which action to take often depends on:
- Which tools are used to collect the data.
- Who owns those tools.
If you want your marketing team to be in charge of monitoring your website, use a tool like CrazyEgg. If you want your sales team to be in charge, use a tool like LeadFeeder.
If there is a lack of clarity and both departments have some data but no clear direction, then both departments may take action without knowing what the other is doing.
The customer’s perspective is that this is a recipe for a disaster. Customers don’t like handoffs, so they must really hate it when the message is unclear or when they feel like they’re not being heard. A company that only tries to make a profit off of its customers is not likely to develop a good relationship with them.
It’s not a question of who has the right message, it’s a question of who is best at reaching the customer I have seen sales and marketing work together to reach and convert the same customer. The problem is not that they have the wrong message, but that they are not good at reaching the customer. The problem wasn’t that the data wasn’t aligned, it was that there was no way to send the data to different departments in a timely manner.
SDRs continuously contacting a customer who had already made a million-dollar order through the website and asking when would be a good time to talk about making their first order was not something that could be stopped.
Instead of meeting a prospective customer with generalized messaging, how about if we meet them with targeted messaging that is based on what they have previously shown interest in, along with data we have on previous customers who have similar characteristics to the prospect?
Would it be more effective to use a combination of behavioral, geographic, demographic, and technographic data to trigger departments to act, rather than just relying on behavioral data?
This has doubled ROI for companies. We’ve seen it happen with our clients, and it’s not dependant on location or type of business, but on the choice of data platform, stack taxonomy and implementation.
A CDP presents an opportunity to connect the data from all of your marketing tools together and finally realize the potential of data-driven marketing automation.
What Makes a CDP Different from CRM, DMP, or Marketing Automation Tools?
There are three main types of customer data management tools: CRM tools, CDPs, and DMPs. Some marketers are using marketing automation tools, with or without a CDI. I’ve seen a Frankenstack or two in my time.
What distinguishes these types of applications from each other? First up, here’s the quick-and-dirty checklist:
|Holistic customer data||No||No||Yes|
|Lasting customer profiles||No||Yes||Yes|
|Works out of the box||Yes||Yes||Yes|
|Cross-channel personalization||No||Not usually||Yes|
|Main data types||Third-party — tags, cookies, devices, and IP addresses||Personally identifiable first-party data — names, emails, mailing address||All marketing and sales data|
|Insight and analysis||Aggregate||Aggregate level||Individual-level|
A good customer data platform should be able to integrate data from all available sources in order to get a comprehensive view of the customer.
The platform keeps customer data for a long or discretionary period of time.
Does the program work without any public relations or do you need to set it up or adapt it?
Is the data in the platform updated in real-time or does it take time to percolate through the system?
Open platform: Is getting data into the system simple? Is getting it out again simple?
Do you want a tool that allows you to personalize the customer’s experience across multiple channels?
Does the platform allow you to connect existing IDs with new data from new sources?
The platform processes several types of data, the main ones being: -user data -device data -location data -health data -sensor data Which types of data does the platform process? The main ones are user data, device data, location data, health data, and sensor data.
Does the platform give reports and insights on groups of customers or on individuals?
Which stage of the customer’s journey is the platform functional and useful?
Limits and problems of marketing automation
Even though marketing automation provides many benefits, there are still some limitations.
- Data accessibility
- Marketing automation fatigue
1. Data accessibility
In the early days of marketing automation, most people were focused on the web. The situation is now completely different.
Users now interact with digital products in much more complex and different ways than in the past. User interactions are becoming more complex and there are more devices, so there are more SaaS products that focus on specific markets with specific needs.
The perfect combination of products with specific features is not only cost effective, but can also provide a better quality compared to traditional all-in-one solutions.
SaaS stacks tend to create a lot of data fragmentation, which can make it difficult for companies to move quickly. Valuable customer data is buried in these disconnected tools.
Data is still the most important factor in the success of many departments in every company, including marketing.
The more complex your system is, the more customer data you will have to manage using different tools, and the more time you will need to spend to get a clear understanding of the situation.
2. Marketing automation fatigue
When it comes to product metrics, traditional Marketing Automation platforms have multiple handoffs that can lead to communication gaps, data blind spots, and an inability to scale the process.
A marketing automation platform is good at providing personalized content to users, but it is not so great at onboarding new users and gradually letting them test and try your product features.
Data management platform and marketing automation capabilities
Let’s have the panoramic view:
- We have SaaS products that are able to generate an incredible amount of data from one side. They are cost effective and really powerful when combined together but sometimes completely disconnected and hard to integrate without extra work done by engineering teams.
- Automation engines from the other side: powerful products that aren’t completely unaware of the stack that you’re using and the data it is producing. Just like cars with a great engine but no wheels.
If the data is skewed, wrong, impartial, or nonexistent, then the actions will also be skewed, wrong, impartial, or nonexistent.
This is where the Customer Data Platform comes in. It integrates seamlessly with each of the SaaS products you’re using in your stack and has advanced automation capabilities to operate.
A customer data platform will give you a comprehensive view of each of your customers.
A sample of questions that can be answered by Customer Data Platforms:
- Is this user active or not?
- Did they ever pay for my product?
- Where do they prefer to be contacted, via email or with browser notifications?
- How many tickets did they open in the last month?
- What’s the NPS score for my product?
- What are the chances of churning for this user?
You can use the data to create groups with common characteristics and target them with marketing that is relevant to them. This will result in a better experience for your customers.
The Cycle of Customer Data Platform will look like this:
- Connect the applications you’re using in your stack;
- Combine, analyze the data and connect the dots;
- Understand and extract relevant business insights;
- Act: take or suggest decisions based on what you’ve learned so far.
Why customer data platforms will be a game changer
Customer Data Platforms will continue to fill the current technology gap in three important ways:
- Data loss minimization
- SaaS stack scalability
- Tactic fatigue
Data loss minimization
A Customer Data Platform is aware of the specific tools you have included in your software stack.
SaaS stack scalability
While all-in-one vendors usually have high substantial switching costs, Customer Data Platforms give to modern companies the ability to change their stack on the flight as their businesses evolve over time.
The ability to change technology quickly without losing data is critical for companies.
If your marketing stack is able to manage a large number of touchpoints and interactions with users, it will be easier to create unique user journeys.
The more you know about your customers, the more likely you are to give them amazing experiences.
It’s never been more important to understand how new technologies will affect consumers. This also creates new challenges for people who are not directly involved in software engineering.
The marketers and product managers who are able to use the right technologies tomorrow will have a serious impact on your business.
I see the next big challenge as connecting the increasing amounts of data we’re collecting with the ability to take action on that data. We’ve made a lot of progress, but there are still many innovations yet to come.
If you’re worried about data loss, tactic fatigue, complexity, or scalability issues, you should look into customer data platforms as a potential solution.
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