The lowdown on customer data platforms

CDPs have become the latest must-have tool for marketing teams. We speak to the brands making the most of this new martech

Marketers have sought a single view of their customers ever since the word ‘omnichannel’ was first coined. After all these years, could the martech industry have finally delivered a solution?

Customer data platforms (CDPs) shot to prominence in 2018 as the latest must-have tool in the martech stack by promising once and for all to unify all customer records into a single source of truth.

While other tools have claimed this capability, marketers have often resorted instead to creating bespoke data lakes. But these solutions have generally lacked the ability to query and activate data easily. Now, CDPs promise that functionality in a packaged solution, offering a repository for first-party personally identifiable information (PII) and a means to segment and activate it quickly.

The sales pitch

US-based marketing technology expert, David Raab, has been tracking the emergence of packaged CDP solutions since 2013, when he bestowed the category with its name. He says it took until two years ago for the market to show much interest.

Today, he estimates sales of dedicated CDPs to be worth around US$600 million ($830.4m) this year, rising to US$1 billion in 2019.

“They have become popular because marketers have many more data sources than they used to, so they have a greater need to pull their data together in one place,” Raab says.

“And because their customers assume marketers are going to follow them across all channels, they want that personalised, relevant, consistent treatment. This only happens if you assemble the data in one place and then share it all out across all of the systems.”

Inevitably, CDPs share features with other customer data tools such as data warehouses, CRM systems and data management platforms (DMPs).

“Data warehouses are usually custom built, whereas a CDP is packaged software you buy from a vendor that has all the connectors and processors to unify the data across different systems to structure and store and expose that,” Raab explains. “DMPs are designed primarily to match cookies for advertising audiences. So they don’t store the detail, and they don’t typically work with PII.”

Hence CDPs play very well within organisations where personalisation is a high priority.

One example is Village Entertainment. General manager for marketing and sales, Mohit Bhargava, says his company has a very clear objective to increase its focus on owned media. This has driven its decision to acquire a CDP from Lexer.

“What we wanted to establish was a comprehensive view of customer,” Bhargava says. “So we sought out a repository of data that was user friendly, where we could ingest all member and customer information and create a unique identifier for every individual.”

The CDP enriches Village Entertainment’s existing customer insights by pulling in transactional data, Net Promoter Score (NPS), online analytics and ecommerce data. This is then overlaid with third-party data available through Lexer.

“These are all very useful to us to enrich and effectively segment our customer base,” Bhargava says. “The capability to then plug into third-party resource tools like Facebook, email and so forth has informed our direct marketing strategy.”

Bhargava says greater customer knowledge has helped Village Entertainment fine-tune its marketing, with the CDP enabling it to build and activate audiences on the fly. “The business case was pretty straight forward – if we were able to reduce our radio spend by 5 per cent, which we have, this thing paid for itself,” Bhargava says. “By onboarding the CDP we have been able to save money on our paid media, because we have improved our capabilities on direct marketing, and we are seeing the results.

“The CDP is where we can really get smart with how we communicate. We are reporting savings in our year-on-year spend without conceding any loss in marketshare.”

Bhargava is now investigating using the CDP to underpin commercial data partnerships. Lexer VP of sales, Luke Coley, says Village is typical of users.

“Many of the customers we speak to have made big investments in marketing clouds or very monolithic platforms,” he says. “But there is a perception they still don’t have an accurate an accurate view of their customer at every point.

“And a lot of companies claim they have a CDP, but it’s probably a data lake with a couple of extra features, so it is not operationalised. They still have to do queries of data and provide that back to the marketing team who push it into a platform for automation. CDPs pull that all together and automate it.”

As with Village Entertainment, Coley says many are exploring using the CDP as a safe harbour for second-party data, as it can provide additional security and protections in the workflow, such as hashing PII.

He says more advanced users are also making these the basis for predictive marketing activities such as churn management and next-best offer, thanks to the customer histories they hold.

But even less-sophisticated clients are taking an interest, such as tier-two and three retailers, who see CDPs as a means of fulfilling their need for CRM, DMP and email marketing capabilities in the one platform.

Increasing choice

Alongside marketing’s rising interest in CDPs is the number of providers. Coley is aware of at least four that have entered the Australian market this year. He claims some are just DMPs in disguise, due to their lack of ability when it comes to managing first-party PII. Even those that do qualify as CDPs have origins ranging from tag management to social listening.

Tealium, for instance, was founded 10 years ago and evolved out of tag management. Today, Tealium managing director for Australia and New Zealand, Eyal Mekler, says the CDP is just part of his company’s overall offering as a utility that solves data fragmentation through its Universal Data Hub. “We want to be the data supply chain for the enterprise,” he says.

Whereas some CDPs focus on known visitors, Mekler says Tealium helps clients engage with people before they identify who they are.

“It’s about being able to not only to engage with known visitors, but also with people before they identify who they are,” he says. “A big part of what clients want to do is build an identity resolution strategy. We are helping them understand visitors on their websites – what their affinities are, what their behaviours are – and using that to drive more relevant content.

“We have organisations who want to take our data and push it directly to a DSP and remove the need for a DMP altogether. Others want to fuel their DMP with better data, and that’s where they use us. Yes, a DMP can segment, but it wasn’t built to in the way we can.”

Understanding customers better was a key reason why NRL rugby league team, Cronulla Sharks, decided to purchase a CDP.

“Inherent in the values of sport and sporting clubs is a deep level of fan engagement and passion,” Cronulla Sharks head of digital, Scott Maxworthy, says. “So we focus on the customer experience.”

The Cronulla Sharks uses Tealium to stitch together 32 different data sets across the organisation including website, shop, stadium and Leagues Club. That knowledge is fed into marketing automation or other systems to drive personalised communications.

“It’s not about trying to build awareness of what the brand does, it is more about who they are, enriching those profiles and personalising their experience out of that data,” Maxworthy says.

One area where that capability has been applied is to memberships, and it’s been used across the website in conjunction with Marketo.

“All of a sudden, we had visibility of what people were doing across our sites,” Maxworthy says. “If someone went to our member page and dropped out, it initiated a trigger for the telemarketing team to follow up. That paid $300,000 in revenue in the first six months, just purely on cart abandonment.”

What Maxworthy is pleased with is seeing fans experiencing better engagement. A key way is through receiving personalised emails and not being spammed with irrelevant messages.

Ultimately, he wants to see the Cronulla Sharks give every fan the degree of personalisation they might expect when they visit their favourite coffee shop. “We just do it at scale with the 15,000 people that turn up on game day,” he says.

As Mekler describes it, CDPs are returning marketing to the level of customer service once expected from the local corner store, where first-party data was held in the minds of the owner and their staff.

“Then digital came along and first-party data didn’t exist, and that relationship was lost,” Mekler says. “What CDPs are enabling organisations to do is to have that same kind of relationship, but at scale and via a digital engagement.” 

Up next: Why The PAS Group brought on a CDP, plus your checklist on how to choose a CDP for your business

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