Tips for customer data platform buyers

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What do you need to consider before investing in a customer data platform? 

In the latest in our series on the rise of CDPs, we ask IT leaders for their take on the purchasing process. 

Ian Woolley, chief revenue officer of Ensighten, Lindsay McEwan, VP and managing director EMEA at Tealium, and Omer Artun, CEO of AgilOne, share their tips for organisations looking at the feasibility of introducing a customer data platform into their technology stack. 

MyCustomer: What do practitioners need to consider before they start looking for customer data platforms, to determine their requirements?

Omar Artun: Brands must first ask themselves what problem they’re trying to solve with customer data. What do they plan to do with customer insights - what programmes will they fuel? Will they be using the customer data to provide better customer experiences, enhance segmentation strategies, or develop 1:1 personalisation? In addition to understanding overarching goals for customer data, brands should also consider their communication mix (e.g., direct mail, email marketing, Facebook ad campaigns, etc.) and frequency, and how customer data and analytics can move them from their current state to a more desired state.

There are four key indicators that your company will benefit from a CDP:

  • If you have a significant amount of customers who frequently interact with your brand across channels, you will probably get a lot of value from a CDP. In fact, the greater the number of customers, interactions, and transactions, the more value a CDP will provide.
  • If your company gets a lot of value from 1:1 interactions (e.g., increased LTV, response rate, satisfaction, ROAS, etc.), you will get value from a CDP.
  • If there are multiple customer profiles spread across multiple systems, but you could benefit from a master customer record, you are likely ready for a CDP.
  • And finally, if you need a single customer view in real-time, so all operational systems can have access to real-time customer data across different interaction points, devices, and applications, you are likely ready for a CDP.

However, for a CDP to be successful, there are three key components that need to be in place before deploying a CDP:

  • Brands must have a well-established methodology for capturing customer data (including customer profile data, transaction data and interaction data) from both an operational and legal perspective. Although a CDP will have some data collection capabilities, CDP-driven data collection should supplement other first party data collection efforts. 
  • Second, a company needs to have the right staff who can understand how to leverage a CDP for outbound marketing, analytics, advertising, and customer experience use cases. The team should be data-driven and have the expertise to be able to effectively take action using the data.
  • Lastly, but just as important, the company needs executive leadership to push the organization to be customer-centric rather than organizational or channel centric. The mandate for customer-centricity should be a top-down directive. I can’t stress enough how important this is.

Ian Woolley: The first thing to bear in mind is whether a system will truly be of benefit. If you handle little to no data, the investment won’t be worthwhile. That said, if you’re looking to increase the amount of first-party data you own, a system will be beneficial as and when that happens - lay the groundwork and let the data flow.

Another thing to consider with recent events and the understandable concern over customer data leakages is that part of the decision-making involves a review of your Marketing Security or MarSecTM processes. Added to which with tighter privacy regulations coming into force is that they need to have a robust consent management tool and a solid and secure database to store what would be the key and most valuable asset for a CDP: Personal data. Once the network is tightly secured and all the right procedures are in place you can start seriously thinking about enabling a customer data platform from a place of governance and safety.

Lindsay McEwan: Organisations should plan to mitigate any risks associated with the transition to new tech, and evaluate whether appropriate measures are in place to protect customers’ personally identifiable information (PII).

MyCustomer: What kinds of questions should practitioners ask themselves?

Omar Artun: Brands and marketing executives should ask themselves some tough questions to assess where they are in terms of data and organisational readiness, and how their business is prioritised. To determine whether they’re ready for a CDP, marketers should evaluate whether: 

  • The IT department has the ability to identify siloed data sources.
  • The IT team can provide these sources on an ongoing basis to the CDP.
  • The company has all the data definitions/business rules required to make sense of the data.

To determine organisational readiness, marketers should ask:

  • Do I have the team in place to implement this? 
  • Do I have the project management & business leadership to implement this? 
  • Does my team have bandwidth to implement the use cases?

To determine business readiness, marketers should ask:

  • Have the teams defined the use cases we will need around outbound marketing, advertising, customer experience, and analytics?
  • Are these use cases prioritised, and mapped to value/KPIs?  

Ian Woolley: The questions to ask to send them on the road of CDP discovery should be: How big a company are they – what kind of system do they really need? What metrics are important to them – will a full holistic view of the customer be beneficial? Do they need to adapt sales and marketing behaviours to keep up with customer needs – is analytics the way forward for their business? Is the website GDPR compliant? Are they protecting their customers’ data?

Brands and marketing executives should ask themselves some tough questions to assess where they are in terms of data and organisational readiness

MyCustomer: How can buyers convince the CFO that investment in this kind of technology is a wise decision? How can you get buy-in?

Omar Artun: One best practice that helps is to build campaigns early on that explicitly demonstrate the ROI of the CDP. Once management sees the results, usually improvement in leading indicators such as customer engagement and satisfaction, it’s fairly easy to tie hard ROI to the ability to activate first party data across marketing, customer experience, and ad initiatives. While these indicators may not produce immediate results or an increase in revenues they do point to success.

It’s helpful to make the case that a CDP actually helps “future proof” a business by being able to handle any data sources -- not just now but for future technologies and data sets as well. A CDP also reduces the time it takes for analysts to analyse customer data; instead of taking weeks to answer questions about how many customers are browsing online and buying in-store, etc., this can be cut down to near real-time because a CDP can easily answer questions like that. Analysts digging through data is not only an expensive endeavor but also time and revenue lost.

Lindsay McEwan: Information overload is a daily problem, but one that can be solved. CDPs are not a new type of tech but they have recently gained increased recognition as a way of taming uncontrollable data stacks. Demand for the solution is high, with CDP investment expected to hit $1 billion by 2019 and – because of the unprecedented and continued growth of customer data – more and more businesses are finding themselves needing assistance to collect, enrich, and analyse data.

A CFO will, of course, be interested in the cost of outlay, the long- and short-term financial impact versus the long- and short-term benefits of implementation, as well as how the CDP actually works.

CDPs are able to connect several data streams such as first-party behavioural insight, historic purchase records, and third-party interaction data, creating one storeroom of insight. From here, marketers can build individual profiles, using data from multiple channels and screens. Most CDPs complete this process in real time, which means information collected from smartphones, PCs, connected cars or wearable tech can be instantly fed into profiles and fuel communication efforts or business decisions.

CDPs are not a new type of tech but they have recently gained increased recognition as a way of taming uncontrollable data stacks.

MyCustomer: Are there any particular challenges in the customer data platform market that buyers need to be aware of?

Ian Woolley: The recent General Data Protection Regulation puts privacy among the top priorities and as one of the biggest challenges when considering a CDP - and of course when generally handling personal data. Businesses should have changed the way they collect and record consent from customers by requesting their personal information in a more transparent way. By not doing so they would not only be handling data illegally but could also be held accountable for huge fines and loss of customer trust.

A great thing about the CDP is that it plays a powerful role in enabling both implicit and explicit user consent models governing data collection and compliance. This helps businesses to initially gain the consent required through the website and also stops data leakage by identifying privacy risks and stopping third-party vendors from passing customer data to other parties through the unauthorised “piggybacking” of additional tags. These are crucial measures to cover very important compliance bases.

With the recent news stories highlighting companies who have inadvertently shared their customers’ data it is obvious the financial and brand damage that can result.  It is critical that organisations review the Marketing Security processes and invest in a MarSec solution as part of the CDP selection and implementation.

Because of the unprecedented and continued growth of customer data – more and more businesses are finding themselves needing assistance to collect, enrich, and analyse data

Lindsay McEwan: Due to the popularity of CDPs, there are a number of different products on the market. And not all are built equally. There has been some confusion in the space as to what constitutes a “real” CDP; as the industry-leading pioneer, Tealium defines a CDP as being a cross-organisation tool that focuses on orchestrating data into a single source of truth.

It’s therefore important for IT specialists, analysts, and marketers to choose a robust platform. A good CDP will be able to break down siloed data storage; have online and offline consolidation; share data in real time; have data protection built-in; and be flexible and user friendly. By making sure a CDP ticks these boxes, buyers will be in the best position.

A “true” CDP, empowers customers to orchestrate their data and respond to changing consumer behaviours in the moment, rather than focusing solely on static campaign orchestration. Tealium’s CDP offering enables clients to use real-time data to personalise marketing communications with greater accuracy, and provide a superlative customer service experience.

Omar Artun: The Customer Data Platform market is definitely a nascent market and with more than 80 companies claiming to be a CDP, there is some fracturing and a lot of confusion. Gartner’s A Marketer’s Guide to What Is – and Isn’t – a Customer Data Platform (login required) helps to clarify how a true CDP should be defined. Gartner basically broke the CDP criteria down into three key ingredients:

  1. identity resolution;
  2. analytics; and
  3. data activation.

Many of those claiming to be CDP vendors don’t offer all three, these include tag management companies, mobile app vendors, personalisation tool providers, and others that have rebranded themselves as CDPs in order to take advantage of the recent hype and market growth trajectory. The confusion many marketers are currently experiencing is warranted. Having been a CDP for more than 10 years we’re in a unique position because while we’ve refined and added features to our platform over the past decade, at this point it is very mature, proven, reliable and with a lot of customer success to back up our claims.

MyCustomer: Once practitioners are at the solution selection stage, what advice can you share to help buyers find the most appropriate vendor for their needs?

Ian Woolley: When choosing a vendor, make sure their Customer Data Platform meets your businesses requirements. Different vendors will specialise in supporting small or large organisations. If you’re a small company, you won’t require all the tools of an enterprise version and would end up wasting finance. On the other side, a large organisation using a smaller solution wouldn’t get the most out of their customers’ data. This could lead to unsuccessful marketing campaigns and damage your branding.

Many companies look at building their own stack or best of breed solution. With large enterprise brands it is difficult to find a single tool that matches all their requirements, where a number of separate technologies that allow for the different element of a CDP (Data Collection and Management, Data Governance and Security, Segmentation and Activation) can often be the best approach and result in the quickest and most cost effective route to success.

Ultimately, the proof is in the pudding. If the vendor has good online reviews and works with a plethora of organisations and well-known brands, then they’re doing something right. Do due diligence and research the companies you’re interested in and look at their case studies - which will speak for themselves. If a vendor works with similar businesses to yours in size and industry, then you will realise they’re right for your journey.

Lindsay McEwan: Carefully selecting an agile, secure, and powerful platform that can work well with existing technologies will make choosing a CDP a less difficult task. The Relevancy Group recently released T­­he Relevancy Ring CDP Buyer’s Guide 2018 where more than 400 qualified marketing executives – across the financial, media and publishing, retail, e-commerce and tech sectors – gave their thoughts on CDPs currently on the market. The analysis assessed each CDP’s ability to manage data, how innovative each product is, how effectively the platforms facilitate collaboration, and overall efficacy.

The Relevancy Group’s report is a valuable resource when it comes to choosing a CDP. Some vendors will claim to be the latest and greatest, but a good CDP will ultimately streamline your business, boost efficiency, and put the customer at the center of your business.

Carefully selecting an agile, secure, and powerful platform that can work well with existing technologies will make choosing a CDP a less difficult task

Omar Artun: Before you make the final decision on a CDP vendor, I would advise brands to make sure they are evaluating the CDP’s technical capabilities against the full range of their use cases. Make sure you completely understand the complexity of the data required for your use cases, and weigh that against the technical abilities of your data and marketing teams as well as the CDP. Brands should question CDP vendors about their product roadmaps, more specifically about the functionality they plan to add a year or two down the road. This will indicate whether the CDP can scale with you and whether it will be able to handle additional data from other systems you plan to leverage. A CDP is an investment, and you should rightly expect to see ROI on it in a reasonable timeframe. 

About Neil Davey

ND2

Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.

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