Your Key to Customer Engagement: A Customer Data Platform

Today’s sophisticated consumers are tired of being advertised to. They want interpersonal interactions with brands — across all channels, through the entire customer lifecycle. In fact, Google has found that 98% of Americans switch between platforms and devices in the same day, and 90% of all consumers expect consistency in their interactions no matter where they are. That means building trust through customer centricity and thoughtful personalization, empathy and transparency across your website and/or physical location, social media accounts, emails, text messages, digital ads and customer service communications. So, how do you ensure your customers and prospects feel understood and valued? Demonstrate your value proposition — and your core values — by creating intimate experiences anywhere and everywhere your target audiences are active. Of course, the only way to know who to target, and when, where and how to target them, is data, and data can be overwhelming for less technical marketing and customer service teams. The solution: a CDP, or customer data platform.

What is CDP?

A customer data platform is a marketing and CX technology designed to unify your data across online and offline sources; it allows marketers and CX professionals to use data for modeling, segmentation, targeting, testing and more, improving the performance and efficiency of your lead generation, nurturing and conversion efforts.

CDPs have four core functions:

1. Data collection and unification: gathering, standardizing, validating, deduplicating and consolidating data from all sources
2. Profiling: producing and updating a single profile for each and every customer and prospect
3. Segmentation: creating custom groupings of customers/prospects to enable smarter targeting and personalization
4. Implementation and optimization: integrating CDP data with end channels, like email marketing or digital advertising platforms, and developing and deploying the best experiences online and off

The best customer data platform will allow you to combine these capabilities within a single, easily accessible digital hub for marketers and CX professionals, expediting progress from idea to execution, from execution to measurement, from measurement to iteration and optimization, and from one successful campaign to even more successful future campaigns.

Even today, some top marketers and customer experience experts remain uncertain about the merits of and differences between multichannel and omnichannel strategies, and the customer data platform ends the debate once and for all.

Multichannel vs. Omnichannel

Both multichannel and omnichannel refer to using more than one channel to target your audience, but multichannel emphasizes engaging customers while omnichannel focuses on improving customer experience. With multichannel marketing, the goal is to cast your net as wide as possible to reach more consumers and build brand awareness. Omnichannel marketing, on the other hand, allows you to create a consistent customer experience across channels. And it works.

Although marketers using three or more channels in any one campaign report a 287% higher purchase rate than those using only one, organizations with strong omnichannel customer engagement retain nearly nine of 10 customers while companies without an omnichannel strategy retain only 33% of theirs.

Fundamentally, data drives both omnichannel and multichannel strategies; the key to graduating from merely engaging customers to truly enhancing the customer experience lies in how you use your data.

Why Data is So Important

As recently as the early to mid 2000s, the typical consumer used only two touchpoints when purchasing an item; today, consumers use an average of nearly six. To optimize your marketing and CX efforts across them all, you need data. Clean, unified, segmented data. But why is data so important?

Maintaining Compliance

The only way to remain compliant with ever-changing privacy laws is to ensure complete knowledge of all your data, as well as your data sources, and how you use that data. Without a customer data platform, a prospect or customer changing their account preferences may not be reflected in all of your siloed channels; with a CDP, however, you can be certain that any modification, deletion or verification is reflected in the customer/prospect profile. 

Multiplying ROI

If you don’t know who to target, and when, where and how to target them, you’ll waste a lot of money marketing to — and alienating — entire audiences. Even when you communicate correctly to the right consumers, you can expect a lot of unsubscribes, abandoned carts and customer churn if you’re not equipped to translate each conversion event into personalized messaging through dynamic segmentation. On the other hand, the unified and segmented data made possible by a CDP allows you to easily measure campaign- and channel-specific return on investment so you can optimize your spend and maximize your overall profitability. According to Google, omnichannel shoppers have a 30% higher lifetime value than those who shop using only one channel, and the best way to facilitate an omnichannel strategy is through a customer data platform.

Meeting (and Exceeding) Consumer Expectations

Zappos used data to take the lead in customer service. Amazon used data to shift the paradigm with its shipping speeds and price transparency. Netflix and Spotify used data to outpace their competitors through personalization. And every other brand must now meet or exceed these higher standards — or risk losing customers and revenue.

Maintaining Emotional Connections and Customer Relationships

When a consumer clicks on an ad, tags you on social media, messages your chat, calls customer service or follows a link from an email or text, the consumer is acting on an emotional connection, often to the solution you’re proposing to address their pain point(s). And with today’s increasingly complex customer lifecycle, it’s more important than ever to develop a complete understanding of your customer and incorporate creative techniques to engage them.

• IKEA Everyday Experiments use AR, AI and sound design to “take us beyond the home without leaving it”
• Extra, the gum brand, built an interactive website and social media campaign that encourages engagement, incorporates user-generated content, and celebrates life’s precious little moments by “turning them into art”

These types of interactions are critical to attracting new customers and developing long-term customer loyalty. But without the unified and segmented data made possible by a customer data platform, you may miss the mark with your messaging, target the wrong audience, or activate at the wrong time or on the wrong channel.

The Difference between a Customer Data Platform and Other Marketing and CX Tools

Not all marketing and customer experience tools are created equal, and before the advent of the customer data platform in 2015 many tech providers focused on serving one or even multiple channels or touchpoints but not all of them. With the right customer data platform, you can retire other systems and integrate the rest.

CDP vs. DMP

A DMP, or data management platform, centralizes and organizes primarily third-party customer data to aid in the management of paid digital advertising and marketing. A CDP, on the other hand, allows you to circumvent the end of third-party cookies by focusing on first-party and zero-party data that uses personally identifiable information for marketing and CX. Together, a CDP and DMP can work wonders: your DMP can leverage your customer data from your CDP for advertising initiatives, while the DMP sends back additional data for the CDP to use for enhanced analysis and further segmentation.

CDP vs. CRM

A CRM, or customer relationship management tool, tracks and reacts to direct customer interactions like new purchases and customer service communications. However, beyond basic automation, CRMs are limited in their effectiveness, leaving many marketers and CX professionals to perform time-consuming and costly manual outreach. With a CDP, all interactions with your customers and prospects are not only collected but analyzed and integrated.

CDP vs. MMH

An MMH, or multichannel marketing hub, allows you to orchestrate data as well as deploy marketing campaigns through email, social media and other end channels. It does not, however, enable the data aggregation and unification of a CDP that’s so essential to optimizing your personalized marketing campaigns. While your MMH can connect with your CDP, with your CDP informing your downstream messaging and your MMH providing additional data for audience segmentation and personalization, businesses that convert from an MMH to a CDP can cut costs and improve performance and efficiency.

Five Steps to Implementing the Right Customer Data Platform at Your Organization

As with any new technology investment, it can be tricky to convince your CTO, CMO and/or sales director to transform how you collect and use data for marketing, sales and CX. The following steps will help you make the case for a customer data platform:

1. Identify the primary stakeholders and form a working group

Though marketers and customer experience professionals are the end users of a customer data platform, implementing a CDP can impact employees across your organization and even kickstart a firmwide digital transformation. To fine tune and streamline the process, invite a diverse group of workers representing the most impacted areas of your business. This could include marketing, sales, procurement, IT, data science/analytics and legal, but should be unique to each organization.

2. Solicit input from each stakeholder on data usability issues

Employees across your organization leverage data for different reasons, and therefore face different obstacles resulting from inadequate data. Ask each member of your working group to create a list of the ways data limitations impact their effectiveness and efficiency. 

3. Create a master list of data usability issues from commonalities across job functions

Review each list, and document commonalities as well as disconnects. Analyze all the issues in terms of pain points, and how they’re impacted by data. Then, create a list stack ranked by business impact.

4. Review the benefits and weaknesses of your existing marketing and CX tools, and clearly outline how a CDP can address your pain points and advance your strategy

To summarize for your C-suite what a customer data platform could mean for your organization, first articulate how your existing investments are falling short, causing marketing and customer experience teams to underperform against critical KPIs. Then, be sure to address the following:

• The types of data your CDP would (and wouldn’t) collect
• The type of workflow your CDP would support
• The tools your CDP would replace, and why
• The tools with which your CDP would integrate, and how
• The ways your CDP would address each department’s data usability issues
• The ways your CDP will allow the marketing team to improve its strategy through data segmentation and personalization
• The ways your CDP will improve the customer experience by providing your agents with complete, up-to-date customer/prospect information
• The marketing and CX goals your CDP would help you achieve, such as better conversion rates, fewer abandoned carts, greater customer satisfaction (CSAT) and higher net promoter score (NPS)

5. Develop a list of priorities and questions to streamline your buying process

Before requesting demos, be sure you know exactly what you want your CDP to achieve. For your conversations with customer data platform companies, develop your list of must-have features and questions that you need answered. Then, request a demo only from the vendors who can meet your unique business needs.

Image Credits (in order of appearance)

1. Photo by Sincerely Media on Unsplash: https://unsplash.com/photos/_uuRwSS1hxQ
2. Photo by Clay Banks on Unsplash: https://unsplash.com/photos/Ox6SW103KtM
3. Photo by Carlos Muza on Unsplash: https://unsplash.com/photos/hpjSkU2UYSU
4. Photo by Thought Catalog on Unsplash: https://unsplash.com/photos/zDC552cHU4s
5. Photo by Riccardo Annandale on Unsplash: https://unsplash.com/photos/7e2pe9wjL9M