Understand Modern Customer Data Management
After completing this unit, you’ll be able to:
- Explain what problems modern customer data management technologies solve for the marketer.
- Understand the core capabilities and benefits of these technologies like the customer data platform (CDP).
Like many jobs, the role of the modern marketer, whether CMO of a Fortune 500 company or a mid-level marketer at a small or midsize firm, has undergone a fundamental change in the last decade or so. Marketing used to be seen as more of an art than a science. In the past, marketers were always on a quest to find a new creative idea for their campaigns that would capture the imagination of their current and potential consumers.
While creative ideas play a critical role in marketing and will continue to do so for the foreseeable future, data is becoming more crucial to the modern marketer than head-turning creative ideas. That’s because data is helping marketers meet customers’ growing desire for more personalized experiences from the brands they interact with.
Companies and online services like Netflix, Amazon, and Google use data to create more and more personalized engagement and experiences. These experiences can include a movie, product, or a news story recommendation that seems exactly tailored to an individual consumer’s experiences or interests.
And now consumers are expecting premium experiences from the brands that engage them, and they say it is as important as the product or service they are looking to buy.
This major shift in consumer expectations is causing marketers to try to use their customer data to drive more of these personalized experiences. They want a 360-degree view of each customer. And they want to understand how their brand engages with that customer across every touchpoint, including sales, commerce service, web and mobile, email, and others. Once the marketer has this view, they can begin to drive more of the personalized 1:1 type of experience consumers expect. They also want this data to offer critical insights about their target customers that can help them understand how to make their overall marketing more efficient and effective.
However, marketers are running into major challenges on the way to true data-driven marketing. The biggest challenge of all may be data unification. Many marketers are challenged by the fact that the systems that store and process their customer data were originally built for purposes other than marketing. Marketers are often separated from each other and controlled by a company’s IT department. For example, an in-store point-of-sale system is probably separated from the company’s email database, which may be separated from the ecommerce system. A recent survey of marketers shows that the average marketer has about 15 sources of consumer information within their organization.
High-performing marketers are 1.7x more likely than underperforming marketers to consider solving for identity as a critical marketing technology requirement.
(Salesforce State of Marketing, Fifth Edition)
CDP: Modern Marketing CRM
The pressure on marketers to wrangle their data together to drive better customer experiences and deeper marketing and customer insights has led to the birth of new marketing technology category: the customer data platform or CDP.
To many, it can feel as if CDPs are a natural evolution of marketing technology and of customer relationship management for the marketer. CDPs are the next generation of systems designed to manage customer relationships, which arguably began in the 1990s when Salesforce launched the first cloud-based, business-user-focused CRM system designed to provide a single view of the customer. In many ways, CDPs can be thought of as CRM 5.0, designed for the needs of today’s marketer.
Here’s what CDPs can do.
Acquire data: Ingest customer-level data from many sources
The ability to acquire data from many different systems and sources is core to the promise of CDP. Data unification is the fundamental challenge the CDP solves for, and it all starts here.
Process data: Clean and dedupe the data
To get to a single view of the customer, the data needs to be cleaned and deduplicated. This means matching identities for customers who have multiple identities within a company’s various data systems (different emails, nicknames, loyalty rewards numbers, and so on). This is crucial for making a CDP’s promise come to life.
Store: Persistent data storage
Marketers need to store and access customer data over longer periods of time. This allows them to understand how their relationship with a customer has evolved over time and also uncover trends in the data they’ve collected. It lets them build a true data asset that can be a focal point of their data-driven marketing strategy.
Analytics and decisions: Predict and personalize
Perhaps the biggest promise of the CDP is its ability to provide deep insights and even AI-fueled predictions about your customers. Once a CDP is up and running, the goal of many marketers is to use it to understand their customers, and use that understanding to build more durable relationships.
A System of Engagement and Insights
CDPs are fundamentally designed to be a system of real-time engagement and deep insights. Marketers want a system to help them drive real-time personalization across channels (website, mobile, in-store, and so forth) and personalization of offers and content. Once implemented, a CDP should help marketers get closer to the 1:1 relationship their customers now want.
Today’s marketer is also looking for a marketing database they can own within their organization that can help enable real-time personalization and offer deep insights about their customer base, their target customer, and their overall marketing.
This system of insight can help them navigate thorny problems like calculating marketing ROI and the potential lifetime value (LTV) of a customer. They can even help uncover new buyer personas within their customer base (for example, they have more foodies among their customers than in the general population). Gathering these types of insights will be critical in determining the success of marketing departments going forward.