Segment's US$175m cash injection highlights rapid rise of customer data platforms

Vendor sets its sights on taking on traditional CRM vendors with its distinct take on the customer data management platform

The next-generation customer data management space is rapidly heating up, with upstart US vendor, Segment, raising a whopping US$175 million in funding for its new customer data infrastructure offering.

The latest series D funding round was led by existing investors, Accel and GV, along with new investor, Meritech Capital. Other participants include Sapphire Ventures and Thrive Capital. The investment injection brings total funding to $284 million and counting.

The funding will be used for aggressive global expansion, including new Segment offices in the US, Asia-Pacific and EMEA, as well as more staff to add to its 350-strong workforce. Investment will also go into developing out the vendor’s customer data infrastructure platform, as well as go-to-market activities and building out a partner network.

Segment is claiming a new take on the traditional CRM approach, with a platform that brings together first-party customer data captured from all business interactions. It unifies these various data sets, then automatically routes data to business application across an organisation’s customer data stack.

While Segment has labelled the platform ‘customer data infrastructure’, it’s clear the technology offering is one in a number of approaches that can be generally grouped under the header of customer data platforms (CDP).

CDP as a category emerged several years ago as the missing technology piece within the martech stack that could unify customer records into a single source of truth. Often compared with but distinctive to a media-based data management platform (DMP), CDPs are a repository of first-party customer data based on personally identifiable information that can be activated quickly for segmentation and personalisation across marketing and engagement activities.

In many cases, CDPs are working in addition to a DMP, general IT data warehouse and CRM system, sitting very much within the marketing and customer experience management function as a means to building out a single customer view internally.

And as marketers increasingly realise the importance of having customer touchpoint and interaction information in one place, and importantly, stored a way that can be used in near or real-time, CDP popularity has been heating up.

While several of the first CDP packaged offerings were spun up by tag management vendors like Tealium and Signal, the concept of a first-party customer data repository is quickly becoming a must-have within the broader enterprise-grade martech suites. Adobe, for example, announced its own version of a CDP last week in the form of the ‘Adobe Experience Platform’.

Described as an open and extensible platform for stitching data sets across the enterprise, Adobe’s aim is to bring together all forms of customer interaction and touchpoint data within a centralised engine to then be used to drive decisions and activities across customer experience management.

Alongside these efforts, Adobe has also been building out an Open Data Initiative, a commitment with both Microsoft and SAP to a common and interoperable approach and set of resources that ensure behavioural and operational data from all three platforms can be unified and shared in real time.  

It’s not the only one. Rival martech and CRM player, Salesforce, is also reportedly building out a new CDP offering, off the back of its Salesforce Customer 360 capabilities. More details are expected in June.

Meanwhile this week, challenger vendor, Blueshift, took the wrappers off what it claims is a ‘customer data activation platform’ that unifies and integrates customer together so it can be used in customer engagement applications.

What clear from the Segment’s statement announcing the new investment funding is that the company has its sights on taking on CRM software giants straight up. Segment co-founder and CEO, Peter Reinhardt, claimed historic efforts to manage customer relationship data are no longer adequate to modern engagement.

“CRMs and their associated suites are no longer able to deliver great customer experiences,” Reinhardt said. “With the rapid proliferation of new digital tools and customer touchpoints, the global market opportunity for customer data infrastructure is huge.

“We are excited about this latest milestone, which will allow us to accelerate international growth and help even more businesses across the world put their customers first.”

Commenting on the investment, industry analyst, Charles King of Pund-IT, said it's hard to parse whether Segment is doing something especially new and different, but agreed the company was saying all the right things to investors and the market.

"Segment is clearly saying the right things - that traditional CRM is no longer adequate when competitors are leveraging powerful tools that deliver granular views of customer data and behavior that provide the means for highly personalised interactions and relationship management," King told CMO.

"Segment's focus on first-party data should help it keep personal privacy concerns front and center and help it and its clients sidestep the PR flare-ups that have burned companies selling and buying second- and third-party data. Finally, Segment enjoys having some bluechip companies on its customer rolls, including IBM, Intuit and Levi's. It's not a huge list but nothing to sneeze at."

King anticipated that over time, the company could either become just another overly-hyped San Francisco unicorn or an organisation that's fully capable of helping clients develop unique insights that make them measurably better at engaging with customers.

"Right now, Segment looks like a company moving up on a combination of its own vision, the substantial backing or others and the trust of some very large and trustworthy enterprise clients. With hard work and luck, it will continue in that direction," he added.

Meanwhile, Accel’s Vas Natarajan saw Segment transforming the way businesses collect and manage first-party customer data. Among existing Segment customers are Atlassian, Levi’s, Bonobos and Meredith.

“Combined with powerful governance and audience management tools, Segment is the backbone for how great companies sell, market, and support their customers,” Natarajan said. “We are so excited to have led the original Series A as well as this latest round, and to support their continued growth.”

General Partner at GV, Dave Munichiello, said the company’s traction in Fortune 5000 companies along with strong international growth and solid product offering made Segment a growth machine, while Meritech Capital founder, Rob Ward, added the vendor was a pioneer.   

“Today’s consumers see compelling, consistent, and personalised customer experiences as the new standard," Ward said. "By pioneering customer data infrastructure, Segment is empowering businesses to meet these rising expectations in a way that is fast, efficient and scalable.”

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