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Deep Dive

Rise of the customer data platform: 'CDPs' are hot on everyone's list - are they doing what CRM, martech was meant to?

By Paul McIntyre - Executive Editor

8 December 2019 6min read

Cables

Tech spaghetti - now its customer data platforms [CDPs] that will help deliver data-led, customer-first programs. Deja vu anyone?

By Paul McIntyre - Executive Editor

8 December 2019 6min read

CDP is the hot new acronym blazing a path into tech stacks, promising the Holy Grail of a single customer view and enabling highly efficient customer experience management across all channels at scale. Those that remember the CRM pitches of ten years ago and martech's promise five years ago would be forgiven for feeling a sense of deja vu. But today's proponents claim CDPs actually deliver on the promise - at least where businesses are structuring themselves to be genuinely data-driven. Listen to the full fat version via the Mi-3 podcast.
What the hell is a CDP?

In its simplest form, a customer data platform, or CDP, enables business to do two things: “Understand their customers and engage with them in a personalised way,” says Dave Whittle, CEO at Lexer, a martech firm that specialises in CDPs for retailers.

“There are a lot of genres or different types of businesses that label themselves CDPs.  There are email businesses that have decided to call themselves a CDP; there are ‘plumbing’ businesses, or integration businesses,” he says. “There’s tech management businesses that are calling themselves CDPs and that’s all okay.  I think they’ve all just made it a bit more complex for the most important person in the ecosystem, which is the client.”

 

Why do companies want a CDP?

News Corp started looking at CDPs about six months ago in a bid to pull together and better harness all of its data, according to general manager of data and ad products solutions, Suzie Cardwell.

“We have multiple pools of consumer data and multiple types of consumer data sitting all over the organisation. We have CRM data for our subscribers and for people who are registered with us and interact with us on a personalised basis. We also collect pools of anonymised data from the way that they interact with us across all of the sites on our network,” explains Cardwell.

“And then, we have various other types of data that kind of sit around the organisation as well.  So in looking at something like a CDP, we’re trying to answer the question of how we best unify all of those sources of data. And then to be able to talk to our customers in a seamless way, to understand their likes and their dislikes; to give them the sorts of content that they expect to see on our sites; to enhance their subscriber experience by giving them more and better articles and videos that they like to see,” she says, “and to ensure that they stay with us on a longer-term basis.”

 

“Organisations are just sick of the SaaS spaghetti that exists in their business. The best of breed and the massive overhead that exists [with all that tech] is just huge and businesses just don’t want that anymore. It’s too complex and they’re all wanting to enable this customer-first approach.“

- Dave Whittle, CEO, Lexer

Tech firms peddling another silver bullet?

All of the above – pulling together data and personalising messages across platforms - sounds suspiciously similar to conversations people were having ten years ago. Isn’t that what CRM and marketing automation and data management platforms were supposed to do?

“I think the short answer is that those things don’t present a unified view for us,” says Cardwell.

“This is a simplification, but CRM effectively is the place where we can store our identified customer data, those people who have provided us with name, email address, etc.  A DMP is where we store that anonymised data about content consumption and what they’re doing with us across the network.  Bringing the two together is possible, but it’s not necessarily straightforward and it’s not seamless.”

Lexer’s Dave Whittle says the key difference is that CRM was originally a sales-driven business-to-business tool. “It actually wasn’t about customer data, it was about the customer relationship,” he says, suggesting that CDP could be referred to as ‘CRM 2.0’.

Whittle says a simple way to think about CMP is that it encompasses all customer data - past, present and future - from every accessible and compliant source.

“So it is zero-party data that the actual customer has provided; it is first-party data through all of the internal systems and transactions and membership sign up; it is second-party data and also augmenting with third-party data,” says Whittle. “So, it’s all of those four dimensions of data together and deterministically linked in one place,” he says, “And that’s what is very different to a CRM.”

 

“We wouldn’t necessarily put third-party data into a CDP simply because we think consent will become a more important part of the data supply chain. Consumer awareness of how much data is collected is actually going to impact our ability to make use of that data within something like a CDP.”

- Catherine Ballantyne, director for solutions consulting in APAC, Tealium

Third party data warning

Catherine Ballantyne, director for solutions consulting in APAC for martech firm Tealium, agrees with Whittle’s definition though diverges when it comes adding third party data into a CDP. She thinks that could pose problems.

“We wouldn’t necessarily put third-party data into a CDP simply because we think consent will become a more important part of the data supply chain,” says Ballantyne.

“If you’ve got third-party data, how you manage consent is probably going to become more challenging.  We see that as something that’s coming over the horizon, as ultimately the things like governance and consent and consumer awareness of how much data is collected is actually going to impact our ability to make use of that data within something like a CDP,” she continues.

“So, we think that’s something that businesses need to start to consider in terms of keeping the pipe open.”

 

“Here’s a radical thought: Not everybody needs a CDP, because the use cases are specific to an organisation. We have to make sure we’re asking the right questions to ensure businesses are solving problems, not just buying more technology.”

- Raj Kumar, co-founder, The Lumery

Who needs a CDP?

“Here’s a radical thought: Not everybody needs a CDP,” says Raj Kumar, co-founder at Melbourne-based martech advisory firm, The Lumery.

“Why not? Because the use cases are specific to an organisation: A mid-tier retailer compared to a large enterprise like a News Corp are totally different. The data management requirements are completely different,” says Kumar.

“So you have to be really clear on what it is you’re trying to solve in your organisation from a data perspective, how that’s going to drive growth and then does a CDP enable that to either accelerate your success or fundamentally change how you’re going to go to market?”

Otherwise, there is a risk that CDP becomes just another “shiny new toy”, says Kumar. “We have to make sure we’re asking the right questions on behalf of the customer to ensure they are solving problems, not just buying more technology.”

 

THE PULSE

Quick question: Will CDPs make a difference?

Choices
‘Everybody needs a CDP’…

Lexer’s Dave Whittle, however, thinks every business, large or small, needs the functionality promised by a CDP.

“No doubt the implementation and operationalisation of technology in a business like News Corp is quite different to a mid-market retailer,” says Whittle.

“But when you kind of raise up at a really high level, it doesn’t matter whether you’re big or small, whether you’re in publishing or whether you’re in FMCG, an enriched view of your customer is critical and that is at the core of what a CDP enables.  So I think at a high level, actually requirements are the same.  And I haven’t met a board member or a CEO in the last three or four years that does not have a customer-first or a customer-led or a customer-focused strategy in their top three,” he states. “They all do and so therefore, operationalising an enriched view of customer is critical to all of the businesses.”

Whittle cites large and smaller clients by way of example.

“Optus at the super enterprise level, online and offline; The Iconic, an online pure play, very modern business, no incumbent old technology there. Rip Curl, a traditional business going through transformation; all the way through to a smaller business like Kikki.K – and we work with even smaller businesses than that.”

The one thing they all have in common is a desire to simplify their tech stack, says Whittle.

“They are just sick of the SaaS spaghetti that exists in their business.  The best of breed and the massive overhead that exists - in the procurement, the renewal, the management of that [disparate technology] - is just huge and businesses just don’t want that anymore,” he suggests. “It’s too complex and they’re all wanting to enable this customer-first approach - and that is consistent across the board.”

 

… provided they are ‘organisationally aligned’

Tealium’s Catherine Ballantyne believes organisations using a wide number of comms channels will get best bang for buck from a CDP. But she underlines that organisations must be structurally aligned in order to unlock that benefit.

“Some of our customers would definitely agree that the change in [business as usual] that comes along with using a CDP and the centralisation of some of the discussions that previously happened in isolation in different parts of the business is a big part of making a CDP implementation successful,” she says.

“So actually bringing the organisation together and agreeing how to talk about the customer data and how to actually activate across the many channels is really important to achieving a successful implementation.”

 

“Kayo is using its CDP to acquire customers. But importantly, they’re also using it to retain customers, to understand the trigger points for people to start to drop off or to start to churn and to try to turn those arounds.”

- Suzie Cardwell, general manager of data and ad products solutions, News Corp

Kayo: Going its own way

As News Corp pushes towards a CDP implementation, Suzie Cardwell says it plans to learn from companies within the group that are already forging their own path, namely sports streaming service, Kayo.

“Kayo has a bespoke implementation of a CDP, which they effectively built themselves,” she says.

“As a subscription organisation, they have a requirement all the way through from first contact with a potential customer to actually making a sale and signing up a subscriber. Then understanding what that subscriber likes, what they are viewing, how frequently, time of day, time of week, all those things and then understanding their likelihood to stay based on all those kinds of signals,” Cardwell explains.

“They needed a place where they could bring all of that kind of information together to create that true single customer view. So they’re using it in multiple ways.  They’re using it to acquire customers.  But importantly, they’re also using it to retain customers, to understand the trigger points for people to start to drop off or to start to churn and to try to turn those around,” she says. “So Kayo actually is using CDP in a very successful kind of way at the moment.”

 

Online and offline: closing the loop

Lexer’s Dave Whittle says there are a bunch of other use cases that CDP can endow, not least connecting online and offline activity, which could be particularly powerful for retail. He claims Lexer can now “enable a retail sales associate to greet a customer, identify a customer in store and be presented with prescriptive tasks to perform with the customer and predictive insight about who the customer is - and also facilitate data collection.”

That kind of capability is what is attracting retailers to CDP in droves, Whittle suggests.

“Although these are all digital businesses, actually offline is where most transactions and most valuable interfacing with the customer occurs - and I think that’s going to be a really big area,” says Whittle. “It’s different to Kayo, they’re all online. But most of our clients are retail businesses with their bricks and mortar channel.  It’s still doing somewhere between on average probably 60 to 80 per cent of their sales and also a lot of their customer interaction.”

 

“In their first 12 months, insurance company NIB processed 50 million different events. They moved their campaign automation process from four weeks to four days. They developed 16 new different automated campaign processes. So, those are the kind of improvements that you see.”

- Catherine Ballantine, director for solutions consulting in APAC, Tealium

Better experience, less resource

Catherine Ballantyne cites the National Heart Foundation as an example of CDP as a driver of experience over sales.

“They have 52 different descriptions of a customer.  If you think about it, they have a life cycle of a customer that starts with Jump Rope for Heart and potentially finishes post death, if we’re being really honest.  And through that time, they are actually trying to have many different conversations based on need,” she explains.

“The other piece for National Heart Foundation is that they’re not about conversions. They are actually about encouraging lifestyle change, so it’s a great example of not necessarily using a CDP to just get more conversions.  In fact, what I use the CDP for is to improve customer experience, no matter where that is.”

Insurance firm NIB is another example. Ballantyne says the firm has a high level of technical capability and had already purchased “every marketing automation technology,” but wanted to bring it all together, “to do things smarter and faster”.

“In their first 12 months, they processed 50 million different events.  They moved their campaign automation process from four weeks to four days.  They developed 16 new different automated campaign processes.  So, those are the kind of improvements that you see,” says Ballantyne. “It’s not just about being able to have a more consistent personalised experience.  It is also about the efficiencies; it enables the business to actually do more with the data that they have - and not necessarily need more resource to achieve it.”

 

“You can have the best data and the best tech in the world but if you don’t operationalise it properly within a business, then, it’s all a waste of time and money.”

- Dave Whittle, CEO, Lexer

Get CDP right, “make your tech stack hum”

Provided companies can align themselves structurally to enable data to be managed across the organisation, “you can be super powerful and really make the rest of your stack hum”, says The Lumery’s Raj Kumar.

“It is that layer of technology that sits below everything else.  So if you’re able to really get that right, be able to plan for it and also drive the organisational change that’s required to be able to implement and manage something like a CDP, you could be on to a real winner.”

Lexer’s Dave Whittle agrees that organisational commitment is critical in making CDP work.

“This is a whole of business solution. It’s often led by the CMO or the marketing team, but [CDP] is a whole of business solution, because the customer is related to almost every area.  We’re seeing CFOs in first meetings with us now.  But really, all of these, it doesn’t matter which business you choose: the red one, the yellow one or the green one.  It’s about the operationalisation of it. It’s about the usage.

“You can have the best data and the best tech in the world but if you don’t operationalise it properly within a business, then, it’s all a waste of time and money.”

 

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