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What is a Customer Data Platform and what are the benefits?

online and offline worldsToday we exist in two worlds – the offline world and the online world. The two are fusing by the day.

Both worlds capture traces about our lives: how we spend our money, where we live and where we go. It records what we drive, where we work and our family status. Add to this our daily step count, the web pages we browse, our mobile behavior, our social media engagements and so on. The amount of data generated by an individual on a daily basis is almost unquantifiable.

The problem? All this data is in many different databases and it’s not always easy to get at. How can a Customer Data Platform help solve these problems?

I’ve spoken to at least 10 fellow marketing directors over the last year, from many industries, at businesses of many different sizes. All of them have shared an issue around data access.

"We are behind the curve and unable to do effective personalization due to a lack of data that we can access."

"We cannot tie our online customers to our offline customers. We can do some manual matching but it takes a long time and not effective."

"We outsource to an agency that manage our data and provide us with feeds and 12 RFV based customer segments. We can analyze some of the data and get reports. I know we can do a better job with the data, but it’s hard to know how much better without knowing where to look."  

Essentially, for these marketing leaders, their valuable customer data is hidden - held beyond their reach by their IT department, or sat with a third party managing their data and data analytics.

Making marketing more efficient 

For marketers looking to work more efficiently, and for their efforts to be more effective, these issues hold them back. It means none of their marketing campaigns are as successful or personalized as they could be.

For example, one marketer from a retail company said to me, "We know we're repeat mailing catalogs to people we shouldn't. But we're reticent to change the model or selection because we don't have the right attribution analysis in place."

Marketers are always eager to take advantage of new technology, yet can understandably get confused about the many solutions that provide real benefit to them. Therefore, I am adding my voice to a growing number of marketers championing the value of a Customer Data Platform (CDP).

A CDP as an evolution of something all modern marketers (should be) familiar with - a marketing database. In this case, a CDP is a marketing database purpose-built for the API-driven world and ‘pick and mix’ marketing technology stacks in mind, while also allowing for the integration of offline sources and legacy database and infrastructure.

But what does a Customer Data Platform do?

At their core, CDPs have three primary functions:

  1. They pull in customer data from the disparate data systems of your choice
  2. They match, merge and cleanse this data into a unified record for each customer
  3. They make these records visible to your other marketing tools to ensure the consistent treatment of customers

They do a lot more, too, but this is where it gets confusing. Simply because different vendors have different interpretations of what else constitutes as part of a CDP. For example, more feature-packed CDPs can also incorporate campaign management and real-time personalization as part of the package. Others don’t.

Some vendors talk about CDPs creating ‘Golden Records’. Others say data is consolidated with a ‘Single Customer View’ (SCV) process. My take on the difference is that a Golden Record specifically doesn’t mention the word “customer”, because it enables the CDP vendor to refer to anonymous data that continually grows. Associating CRM data (that is, personal data) with these Golden Records is what creates the SCV. You should also note that some CDPs will unify offline interactions AND postal address data with online data about devices, IDs and events. Others unify online data only.

The benefits of standardized data

One of the key benefits of an SCV is 'normalization', the process of standardizing data that exists your different business systems. The same person, or product, may exist in three different data shapes and say three different things.

For example, a retailer knows a product as a ‘black dress’. That same dress is also purchase code 'MX2431’ in one system and SKU code 'LBD-1151’ in another. Being able to bring all this data together and give it a standardized format is difficult, but extremely valuable for marketers. Namely, to track the buying behavior of their customers across systems and build a more joined-up view of their engagements with you.

However, being difficult also means that having a CDP and a Single Customer View is expensive. This means a barrier to implementation for smaller businesses and explains why marketing departments often have to outsource to others.

Justifying the investment

However, when you calculate the ROI of a CDP, it’s sometimes the case that even smaller companies can justify the investment. Take two examples of the benefits to retailers I’ve worked with:

One was spending in excess of $60k a year for a company to manage their data, and provide them with targeted lists created by a simple RFV formula. This analysis was used to work out half a million best targets for their next catalog mailer.

The problem was that deeper analysis of customers and transactions – bringing together the previously disparate online and offline data with an SCV – found that 40% of purchases from the company’s last four catalog campaigns had a propensity to buy online anyway. The attribution was way off. In fact, it turned out the company would have achieved a similar result if it mailed out just 180,000 customers.

Similarly, a large retailer in the UK had purchase and returns data held by two different elements of the business.

buying onlineThe online department would regularly count customers buying multiple items, often three or four of the same item. However, after linking this data with offline, in-store data, it was revealed that those same customers were returning many items back to the store. They were buying multiple sizes and returning those items that didn’t fit. Obvious, right?

When the data was siloed, it meant that online these customers were considered big spenders, buying four or five items at a time. In reality, they were only buying one. Consequently, learning the true value of a customer’s lifetime value or the performance of a catalog was often over-inflated by 300-400%! The company’s so-called VIP customers – singled out for appropriate treatment and marketing resources – were nothing of the sort.

Through a paid CDP proof of concept that created the SCV, and a few hours of analysis, the business was able to justify the investment very quickly.

Marketing technology has had its fair share of ‘white elephants’, but with brands of all types expected to give their customers a personalized, omnichannel experience, having better control of customer data, and the ability to bring it together into a trustworthy and unified view is no flash in the pan. In fact, I’d argue having a CDP needs to be the foundation for all forms of marketing.

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Marketer's CDP guide


To discover more about how CDPs differ from other data management platforms, as well as what makes BlueVenn different to other CDPs, take look at our new eBook, A Marketer’s Guide to Customer Data Platforms – available now!

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Topics: Article Customer Data Platform