What’s a CDP?
In case you didn’t catch my broad coverage and analysis of the CDP space over the past year, here is the official definition of a customer data platform (CDP), as provided by the Customer Data Platform Institute:
“packaged software that creates a persistent, unified customer database and integrates first-party, personally identifiable information (PII) and anonymous, third-party data—and makes this data available to other systems for executing a host of critical marketing functions.”
Unlike a customer relationship management tool, which focuses more on communication between the enterprise and customer, a CDP focuses on pulling data from as many places as possible, both online and off, and unifying that data to create meaningful customer profiles. These profiles, then, allow marketing teams to create new and more personalized customer journeys to connect with their customers in even more meaningful ways. In theory, these new outputs should be a more robust and engaged customer interaction, and I do believe with the right data and resources, this is what can be achieved with the investment in CDP technology.
However, the above-mentioned research is showing that there are still gaps between what these platforms can do, and what enterprises are able to do after investing in CDP.
What’s seems to be happening now is more like this: marketing teams are using CDPs primarily to unify their own data lakes, i.e. the data they personally create from their customers. In fact, less than half integrate product usage, third-party information, social media data, app and cookie info, or offline data into their CDPs, even though that’s one of the primary reasons CDPs were developed. As I see it, these data points indicate that companies are slow to fully implement and integrated CDPs, even after investing—something that happens frequently during digital transformation, but it also means there’s still a lot more value to be had from CDPs that aren’t being fully realized.
Looking Beyond the Current State of the CDP
If you have tracked the biggest challenges of digital transformation and technology ROI, it probably wouldn’t surprise you that companies are investing in CDP and aren’t realizing the full potential of the technology. According to the Treasure Data report, only 60 percent of marketing teams are using CDPs to map customer journeys. There’s a lot of room for growth here. We already know this because of the still-lacking customer journeys we’re continuing to experience, especially in the B2B space. I see all of this as untapped potential. Based upon my analysis, CDPs offer distinct value and there are many great solutions from technology leaders like Adobe, Oracle, Microsoft, Salesforce, Twilio, and Treasure Data, among others rising in the space. And while each solution approaches their CDP slightly differently, let’s just say the less than stellar outcomes that were highlighted in the report were more an indication of enterprise issues with implementation than the tech’s ability to do the job.
For instance, according to the Treasure Data report, CDPs currently have the least impact on offline and in-store sales. This revelation is not in itself surprising. Many stores and brick-and-mortar service providers have been closed or operating in limited capacity for the past year. The important thing to keep in mind is that the post-pandemic economy (in some capacity) will in fact open soon. And when it does, marketing teams will have even larger pools of potential data to add to their swatches about offline user behavior. When they finally complete the process of integrating and unifying all of that data, it could be huge for reinvigorating retail and “traditional” in-store markets.
A final interesting detail from the report: the CDP has yet to replace the many complex members of the marketing stack. It continues to exist alongside the CRM, data lakes, and any other data management platform a certain company may have chosen to utilize. According to the report, companies rank CDPs and CRMs around the same level of importance currently. But CDPs are still relatively new so it’s impressive to see that they’re similar to CRMs. Why does this matter? Because eventually, when the CDP is optimized, I believe we will see a shifting reliance on the martech stack and, which will yield more reliance on an overall ecosystem of data links that flow into the CDP, helping to make life much easier for marketing teams the world over.
Here is the thing: CDPs may have skyrocketed in popularity in 2020 due to the pandemic, but they aren’t new. Marketing teams have been trying to sort out the kinks associated with CDPs for a couple years by now. What’s happening in the market now is that CDPs are finally starting to show some value. They’re helping to drive sales (online), improve ROI, and obviously reduce the time spent churning data. The big mistake would be to assume that this is all CDPs are capable of.
Where CDP Development Companies Stand
The good news from this report? I am confident that the companies building CDP platforms have a huge opportunity to capitalize on this burgeoning market. That means better features, more attractive offers, and more partnerships with companies for data integration. Updates and enhancements will continue to roll out from the companies I mentioned above, for instance, Microsoft is set to release new updates for its CDP in early April.
As we continue to become more familiar with CDPs, what they’re capable of, and how to truly connect them into the greater data ecosystem (rather than simply our own personal data pathways), we’ll see even greater value being generated.
The original version of this article was first published on Forbes.
Daniel Newman is the co-founder of V3*Broadsuite and is an experienced C-level executive, serving as a strategy consultant for small and mid-sized businesses. He’s also an insight/analyst partner to four Fortune 50 enterprises and previously served as the co-founder and CEO of EC3, a hosted IT and communications services provider. Prior to that, he served as the CEO of United Visual, Inc. in Chicago Illinois.
He is a widely published writer who contributes weekly to Forbes, Entrepreneur, Huffington Post and industry publications such as Commercial Integrator, Sound & Communication and Corporate Tech Decisions. He’s also author of three best-selling business books including The New Rules of Customer Engagement, The Millennial CEO, and just recently Evolve: Marketing (^as we know it) is Doomed.
Daniel has established a reputation as a leading thinker in topics such as Social, Big Data, Cloud and Mobile. He has been named to many top influencer lists in all of these areas, including recognition by the Huffington Post as one of the 100 business and leadership accounts to follow on Twitter. He is also an adjunct professor of management at North Central College.