These tools gather information from various disparate sources where customers interact with a company—including websites, social media, email, live chat, digital assistants, customer relationship management (CRM) systems, e-commerce solutions, and contact centers—align this information with transactional data (customer purchases, returns using information from e-commerce or purchase order systems, and so on) and with demographic data (such as name, address, gender, and age), while keeping it all compliant with customer privacy and data protection regulations.

In the Beginning

CDPs have grown out of personalization systems that have been around for more than 20 years. It all began with web content management systems (WCM) collecting data from website interactions such as clicks, page views, navigation through a website, and abandoned visits for both known and anonymous users. This data could be aggregated and analyzed to gain an overview of the popularity of specific pages or content, and to provide useful statistics such as the content with the most page views, least popular content, and the point during a transaction when visits were abandoned.

A/B testing was also available, which involved testing two or more versions of a web page, with visitors to the site being shown one version often selected randomly, and the most popular version being declared the winner (in terms of sales or further interaction with the website). The prize was: the winning content became the version viewed by all visitors.

The Rise of CDPs

While the bones of personalization have been there for many years, the technology has been evolving rapidly over the past few years, with the result that we now have dedicated solutions that manage various stages in the customer lifecycle, including:

• The ingestion of customer data used for profiles that comes from a wide range of sources that customers interact with.
• The ability to segment customers into smaller demographic, interest, and behavioral groups.
• The ability to build customer journeys that reflect the lifetime of the customer’s relationship with the organization.

While there is nothing new in using analytics to personalize experiences, it is a relatively new idea for a single platform to bring together customer data from disparate sources and provide many of the capabilities required to manage customer interactions, such as segmentation and personalization, A/B/multivariate testing, analytics and insights, and cross-channel orchestration.

CDPs are a Marketer’s Dream

A CDP should be seen as a marketer’s best friend. It was designed to be used by marketers and sales teams. Used appropriately, it is an extremely valuable tool for helping marketers to create engaging, personalized customer journeys that will keep a customer returning and buying, and to create marketing campaigns that are appropriate to the customers being targeted.

A CDP should include capabilities that help the marketer drive sales and reduce churn. It must integrate with a range of sources, both online and offline, that contain information about customers that is ingested into the CDP in real-time to build a 360-degree view of each customer. The more interactions the customer has with the organization, the more accurate the profile, and the more targeted the experiences become. The data should be cleaned to eliminate inaccuracies and duplicates. It can also be enriched with second and third-party data, which organizations can buy. The profile information is segmented according to pre-defined criteria and enables customer journeys to be built using dedicated customer journey tools.

Every Organization with a Marketing Department Should Consider a CDP

Any organization with a B2C marketing department should consider investing in a CDP. Simply put: the ability to aggregate data from multiple sources into a single system to provide a 360-degree view of the customer and a single source of truth can mean the difference between success and failure in the extremely competitive world of retail e-commerce. It allows marketing teams to create targeted campaigns and engaging, highly targeted customer journeys, which gives organizations a valuable competitive advantage.

Planning a CDP Deployment

Planning and selecting a CDP requires careful consideration and a number of steps should be followed:

• Make a list of must-haves: specific out-of-the-box integrations, particular dashboards, or reports that are required and quiz vendors on whether they provide those capabilities.
• Ensure that marketers can use at least most of the system without any IT input; after all, they are the main day-to-day users.
• Make certain that the solution supports the favored deployment model and, if it’s cloud, that the data can be stored in the appropriate region to ensure data sovereignty.
• Ensure that the vendor supplies migration tools to ingest legacy data that provides historical customer information.
• Examine what resources are available in-house for the implementation and which skills need to be brought in, then figure out how professional services from the vendor or a partner can supply them to meet these needs.
• Check out what is included with the CDP, what features are add-ons and are charged separately, and the way the solution is licensed – as it is likely that resources will need to scale up and down to cater to peaks and valleys in demand.

The CDP market is very much a buyer’s market right now, with a large selection of solutions to choose from and finding the optimum CDP can be a tricky process. Investigating the roadmap of a vendor, if available, is a good way to discover how innovative the vendor is and the direction in which the product is headed. Vendors increasing the AI capabilities in their solutions are likely to be among the most innovative.

Next Steps

To learn more, take a look at GigaOm’s CDP Key Criteria and Radar reports. These reports provide a comprehensive overview of the market, outline the criteria you’ll want to consider in a purchase decision, and evaluate how a number of vendors perform against those decision criteria.

• GigaOm Key Criteria for Evaluating CDP Solutions
• GigaOm Radar for CDP

If you’re not yet a GigaOm subscriber, you can access the research using a free trial.

The post Customer Data Platforms (CDPs): A Smart Tool for the Enlightened Marketer appeared first on Gigaom.

CDPs offer a number of capabilities to support marketing initiatives:

• Segmentation enables marketers to categorize customers according to a range of criteria such as age, gender, location, behavior, or buying history. Segments can then be used in marketing campaigns.
• Customer journeys consist of customer interactions with a company, allowing marketers to manage the entire lifecycle of a customer and ensure they receive content that will interest them and keep them returning through their preferred channel.
• Customer journey mapping enables marketers to track every interaction with a customer and determine what the next best step is.
• Analytics and insights enable users to analyze their customer data, which can be used to predict trends and likely buying patterns. If organizations are collecting data from backend systems such as enterprise resource planning (ERP), the CDP can be used to analyze sales and manufacturing data to ensure supply always matches demand. Analytics is also important for evaluating the success of marketing campaigns, and to assess the lifetime value of a customer, which is useful for determining which customers should be offered loyalty rewards.

A CDP mainly collects first-party data, although it can be enriched with third-party data. This is important because third-party cookies are largely disappearing, eliminating a data source many organizations collected as customer data to provide personalized content. Companies that are using a CDP to manage customer data to provide a single source of truth will run more successful marketing campaigns than those that are still using disparate systems to store customer data.

A CDP is most valuable to marketing and sales teams that need to deliver highly personalized, targeted marketing and advertising content, both to individuals and to more general segments to drive sales and increase profitability. This Radar report will therefore be of particular interest to the CMO.

This is our first year evaluating the CDP space in the context of our Key Criteria and Radar reports. This GigaOm Radar report examines 20 of the top CDP solutions and compares offerings against the capabilities (table stakes, key features, and emerging features) and nonfunctional requirements (business criteria) outlined in the companion Key Criteria report. Together, these reports provide an overview of the market, identify leading CDP offerings, and help decision-makers evaluate these solutions so they can make a more informed investment decision.

The post GigaOm Radar for Customer Data Platforms (CDPs) appeared first on Gigaom.

A CDP gathers information from a variety of sources that would not normally communicate with each other. These include systems through which the customer interacts with the company, including websites, social media, email, live chat, digital assistants, customer relationship management (CRM) systems, e-commerce solutions, and contact centers; transactional data, including customer purchases and returns using information from e-commerce or purchase order systems; and demographic data such as name, address, gender, and age.

This information is collated, standardized, transformed, and combined with data from each system to create an increasingly comprehensive customer profile of the customer. The data is reformatted to support marketing processes and systems such as CRM, analytics, marketing automation, A/B testing, content creation and personalization, and social media sites. As more data is collected, the content delivered becomes increasingly personalized. CDP supports lead scoring, product recommendations, optimizing content, and omnichannel automation.

A CDP must also manage data privacy and customers’ personal rights by controlling and managing the flow of data between marketing systems, and manage customer consent to comply with regulations such as the EU’s General Data Protection Regulation (GDPR) and California’s Consumer Privacy Act (CPRA). These laws give consumers the right to access their data as well as have it deleted by exercising their “right to be forgotten.”

Business Imperative
A CDP provides a single location to bring together and store all customer data, creating a single source of truth and potentially replacing multiple applications that store parts of a customer profile. This 360-degree view of the customer allows organizations to create the next best actions or customer offers to increase sales and reduce churn. This capability is tremendously valuable to marketers who need to create engaging, highly targeted content and campaigns that will keep customers returning and buying.

There is nothing new about using analytics to personalize retail experiences—this technology has been available for many years—but the idea of a single platform that brings together customer data from disparate sources and provides many of the capabilities required to manage customer interactions, such as segmentation and personalization, A/B/multivariate testing, analytics and insights, and cross-channel orchestration, is relatively new.

Two main types of vendors provide CDPs. The first is standalone specialist vendors that provide a single solution. These platforms need to integrate with digital experience platforms (DXP), which are the platforms used by marketers to create customer experiences. The second type of vendor sells CDPs as part of a DXP platform. An increasing number of DXP vendors have been adding CDPs to their portfolios. Because DXP is becoming increasingly modular, organizations can generally choose whether to implement the CDP that comes with the DXP, implement a standalone solution, or choose not to use a CDP at all. However, the third option will put organizations at a disadvantage and make it much more difficult to build coherent customer profiles and track customer journeys across multiple touchpoints.

Sector Adoption Score
To help executives and decision-makers assess the potential impact and value of a CDP deployment to the business, this GigaOm Key Criteria report provides a structured assessment of the sector across five factors: benefit, maturity, urgency, impact, and effort. By scoring each factor based on how strongly it compels or deters adoption of a CDP, we provide an overall Sector Adoption Score (Figure 1) of 4 out of 5, with 5 indicating the strongest possible recommendation to adopt. This indicates that a CDP is a credible candidate for deployment and worthy of thoughtful consideration.

The factors contributing to the Sector Adoption Score for CDPs are explained in more detail in the Sector Brief section that follows.