A CDP can be useful but is not necessarily a quick fix for your data problems: here’s why
Customer data is the fuel that powers your sales pipeline. Every marketer knows the importance of data but also the frustration that comes with data that is siloed, inaccurate, irrelevant or inaccessible. While Customer Relationship Management (CRM) and Data Management (DMP) Platforms go some way to collecting and collating data, the CDP is specifically designed to help marketers locate the holy grail of a single customer view. Currently, only 14% of companies say they have a 360-degree customer view [Gartner], while 67% of managers and executives report they are not comfortable accessing or using data from their analytics tools. [Deloitte].
Customer data platform software is becoming more popular and is often seen as a quick fix way to buy a company out of its data issues. Unfortunately, it’s not that simple. In a 2022 Forrester study, while 66% of CDP users believe that adopting this technology is essential for their business, only 10% said that the CDP they have meets their needs. In MarketOne’s experience, the problem here is not the CDPs or their capabilities but an organization’s approach, specific needs, internal resources and skills. Before you sign away a hefty chunk of your marketing budget, it’s worth asking these questions first.
1. What are my use cases?
Many B2B companies make the mistake of buying technology and then struggle to align it successfully to business needs, integrate it fully with the legacy martech stack, or find themselves entangled in its technicalities, never making full use of its capabilities. Determining robust use cases upfront (and ensuring organization shared understanding and buy-in in terms of skillsets, bandwidth and resources, not to mention governance and workflows) is essential to success. You will either confirm your need for a CDP, or discover that a different, and perhaps less expensive, option could address your pain points.
USE CASE (noun): The current situation, the desired outcome, plus any supporting activities or future complications to reach your marketing or business goal.
Popular use cases for customer data platforms include:
While the above are useful as a general framework, your use cases should be far more specific. ‘A single view of customer’ is too vague to be an effective use case as every B2B business will have a unique first-party data set tailored to their industry and business objectives. By setting out and prioritizing your use cases with clear technical and business requirements, timeline, capabilities and resources, you will ensure that you can better guide selection of a CDP or alternative solution.
2. How do I collect high quality data?
Feeding data into your CDP adds another layer to your data infrastructure but doesn’t do anything to address the quality of this data and to make sure it’s up to date and accurate. Even with a CDP, you’re still going to have to create standardized data sets, i.e. taking data from different sources and putting them into a consistent format that sticks to the same standard. You will still also be faced with data cleansing, improving the quality of the data by removing duplicates, discarding incorrect, inaccurate, irrelevant or incomplete data. You can proceed with this low-quality data, which may hurt the effectiveness of your marketing campaigns, or use more resources to address data quality.
How do you define what those data sets should be? You need to start by defining your use cases upfront, which should be measurable, provable, within a defined time frame and are pragmatic business objectives. As we detailed above, typical use cases for a CDP are unified customer data, enhanced personalization, cross-channel messaging, and actionable analytics. But even with these use cases vigorously set out, the potential of a CDP often falls short.
3. How do I define my data?
Data is the fuel for the marketing machine and without it, all the best martech tools in the world won’t help your business achieve its goals. If your data isn’t up to scratch, plugging in a customer data platform can’t simply transform bad data into good. Before you consider a CDP, you need to ‘normalize’ your data, lining up all the different data sets against each other, defining common fields, matching, replacing, filling gaps. The adage of ‘garbage in, garbage out’ still applies.
The capabilities of a CDP, including segmentation, personalization, recommendations and campaign optimization rely on identity resolution. At the end of the day, a CDP has to fix many of the similar issues that a data warehouse usually comes up against: creating insights through analytics, consolidating data and integrating with other technologies.
4. Do I have enough data?
A CDP operates by collecting customer touchpoints from multiple sources, on and offline, via batch and real-time data. If your organization doesn’t have a data-driven culture and sharing, monitoring, activation and attribution of data is not part of its DNA, there may not be enough data sources to feed into the CDP to make use of its strategic potential. If you have only a few data sources to draw on, you’re at risk of using your CDP like a sledgehammer to crack a nut.
5. Do I have the resources to implement and deploy it?
It may seem obvious but if you have a new piece of technology, you are going to have to find or develop the skills needed to teach your team what it does, how to use it and how to get the best out of it. Your customer relationship, marketing and sales professionals will be the main users but during the implementation stage they will need IT support for integrations, setting up emails etc. Analytics skills will also be useful for dashboard tracking, A/B testing and reporting. Make sure you have the three skills sets of Training, IT support and Analytics in place before you start.
So, does my business really need a customer data platform?
According to a Forrester / Zeta Global 2022 study, only 1% of marketing executives feel that their CDP will meet their future needs. Moreover, the study revealed that over half of respondents struggled with the technical challenges of their CDP including integration, implementation and execution.
A CDP is only one route to a ‘single source of truth’ about your customers. It’s possible that you can save yourself the expense in purchasing and managing a CDP and use the data you already have more effectively. Collecting data that you don’t need can make your job as a marketer more complex than it needs to be. More data doesn’t necessarily equal more insights. Instead, perhaps the questions to ask are: How can I align my current martech stack with my business goals? What identity resolution tools do I have at my disposal? How can I bring existing data to life?
Even complex segmentation and the ease of managing consent and preferences – the two big selling points of a CDP – can be orchestrated with a better data management strategy in place and close attention to your organization’s privacy compliance or attribution.
Perhaps the biggest opposition to any organization considering a CDP is the purchase expense – there’s a reason why so many businesses build their own, which is still a costly path to take. There’s also the total cost of ownership – as all data needs to be replicated to the CDP, it’s often necessary to double storage and so double the cost of this storage.
While collating all your data into one place is a worthy goal, and creates opportunity for new insights, it’s not necessarily the solution. Research reveals that the average organization has 2.3 different CDPs [Gartner] and more businesses are designing their own custom solutions, at cost. But gathering lots of data in a single place won’t necessarily bring about success..
Bear in mind too that there are first-generation CDPs with differing capabilities – some integrate with CRM systems and DMPs while others simply collect and manage customer and marketing data – and more advanced CDPs that link with machine learning or digital customer experience management platforms (DXP). Setting out your business and marketing needs should set your course to the right choice for your B2B.
Insight, personalization, identity resolution – all depend on fast and efficient access to customer data. Customer data platforms are expensive and complex to set up and manage; they also require time and resources to maximize their capabilities. They are often sold as a fix-all solution to data problems, but in fact are as reliant on good quality data as with any other piece of software. Nevertheless, if a CDP is right for your business, it can harmonize customer data from various sources to create a unified view, enhance data security and compliance by centralizing data management, and foster data-driven decision making across geographically dispersed teams, ultimately driving operational efficiency.
In order to determine if you really need a CDP, start by looking at your specific business goals, data readiness and internal alignment – have a read of our blog ‘How can a Customer Data Platform help my B2B business?’ for more on the benefits, as well. If you have doubts about any of these, then it is not yet the right solution for your business.