A great tool for delivering real-time and memorable customer experiences is a Customer Data Platform. It’s also the only way to beat out the competition: 63% of marketers have already adopted CDP, so it’s likely that one or more of your competitors are raising their customer experience game to woo their customers—and maybe yours!
But getting a CDP deployed can be a -going struggle for marketing teams. The IT team often insists upon an in-house build of a custom CDP solution for a perceived portion of the price, or they suggest there’s already CDP functionality implemented in multiple systems. And even when the CMO escalates the issue all the way up to the CIO, the same answer comes back, something along the lines of, “IT can simply adapt one of our existing technology systems to do the job of the CDP.”
Though, not necessarily true, this is a natural reaction. IT wants to keep your technology infrastructure simple. Problem is, the systems that IT tells you can do the job—the data management platform, an enterprise data lake, the marketing database, or the CRM platform—are not built for dynamic content optimization or orchestration of real-time customer experiences.
They may ask, “Why do you need real-time capabilities anyway?” Your simple answer should be: “The competition is doing it and our customers expect it!”
While each of the systems IT points to performs their individual operations very well, when trying to adapt them to provide the capabilities of a CDP, the end result is usually frustration. Marketing might get a small slice of what they need, but it’s a challenge in reaching their full potential in driving customer experiences.
One of the reasons why marketing tends to lose out in these arguments with IT is that the difference between a CDP and other technology systems takes a little bit of technical know-how. But no need to worry…this blog is here to make sure you are prepared to challenge and to intellectually spar with your IT team. We provide a high-level look at what those four other systems can do and how they fall short in delivering the true CDP capabilities your marketing team requires.
Battle #1: Customer Data Platform vs. Data Management Platform
Many of our clients are not sure whether they need a Customer Data Platform (CDP) or a Data Management Platform (DMP). A DMP primarily brings in third-party anonymous data composed of cookie pools to drive audience acquisition and streamline audience segmentation. But a DMP is designed to manage and build anonymous audiences, not the first-party data in your CRM system. A DMP is also not built to pull in first-party data where you know who the customer targets are.
You can pull in the data and anonymize it to build like audiences; however, that’s a tiny piece of the overall capability of a CDP. DMPs are not the single source of customer truth and they do not present a unified customer view. A CDP provides both.
If you are conducting a lot of acquisition marketing as a top-of-the-funnel activity, you most likely will need both a DMP and a CDP. The DMP creates a large audience for your campaigns, and when prospects turn into known entities, you need the CDP to drive real-time experiences. This will enable you to complete the acquisition process and then follow-up with cross-selling, up-selling, and loyalty campaigns.
Battle #2: Customer Data Platform vs. Data Lake
Data lakes can combine information to create customer profiles, but they are not suited to operate dynamically in real time to move customers into and out of segments. IT may be able to build this capability into a data lake, but the project may take a long time to complete. That’s a problem because if you don’t move fast in segmenting customers, a competitor might beat you to the punch.
Customizing data lakes to deliver CDP capabilities is also a risky project to undertake. For one of our clients, we demonstrated how it wasn’t feasible to spend $15M and take 2-3 years to build a real-time data lake with campaign orchestration capabilities. Instead, they deployed a CDP right away with those same capabilities—for only $3M. The data lake customization was simply a waste of time and money that our client could get out of the box with a CDP.
CDPs also feature standardized data schemas, so when new data sources show up, all you have to do is rationalize that source to the schema. A data lake, in contrast, usually has a boutique schema created from scratch to run extract-transform-load (ETL) processes on the initial data sources.
When you get a new data source, the data lake schema won’t work without a lot of work and strain on the IT team. The schema is too rigid to accept new sources, whereas CDPs have a flexible schema to add new data sources quickly—and without help from technical resources. The result of the too rigid data lake schema is more time, effort, and cost spent to update the data lake. Whereas, with a CDP, that time, effort, and budget could be used on other revenue-producing activities.
Battle #3: Customer Data Platform vs. Marketing Database
The comparison between a CDP and a marketing database is similar to a data lake. Whereas data lakes tend to store enterprise data used by many departments, a marketing database only contains marketing data. Data lakes also tend to be built on more modern database technologies, while marketing databases tend to be built on older technologies.
One of our clients tried a marketing database but found the functionality to be too basic. They could run reports, but the information was not delivered in real time; it mainly helped them view historical data that was uploaded every 15 days in batch files. In today’s digital economy, where customers make buying decisions within a matter of seconds, that’s just too much time.
Marketing databases also can’t orchestrate customer experiences, and they are restricted by their data schema to easily bring in data from new source systems. In addition, you will often run into technical challenges with the underlying database platform. If it malfunctions, the front-end user-facing application will also fail.
Battle #4: Customer Data Platform vs. CRM
CRMs are probably the least capable of these other technology systems for handling CDP tasks. The data inside a CRM tends to get old quickly, so responding to new customer activity in real time is almost impossible. And the information stored by a CRM, even if up-to-date, is limited from a marketing standpoint. You can see who the customer is, but the transaction history and the details of purchases are not there.
There are also no orchestration capabilities inside a CRM that make it possible to kick off a marketing activity automatically. While some enterprise CRM platforms, such as Salesforce, have orchestration modules, if the data is old, fragmented, or being used for something other than its intended purpose, the orchestration output will be invalid and the customer experience poor. IT sometimes does not realize this shortcoming—they may get fooled by a salesperson who convinces them they can orchestrate based on CRM data with the addition of orchestration modules. This sounds good until you see the performance reports, and the invoice.
Bringing IT and Marketing Together Benefits the Business
Understanding each of the four systems discussed above and how they compare to a CDP is critical because an effective CDP can serve as the brain of your customer experience programs. The technology provides models that orchestrate the marketing muscles and tells them what to do to connect with customers—based on tracking customer activity and responding with experiences in real time. And with the agility to easily add new data sources, your customer profiles become richer, and your personalization becomes more accurate.
And all kidding aside, IT wants to help marketing just as much as they want to help the rest of the business. The key is to bring IT and marketing together to make effective decisions for the business and your customers.
Given that we are now operating in an “Experience Economy,” if you don’t have a CDP, you won’t keep your customers. It makes a massive difference when you can personalize at scale across millions of customers, driven automatically by machine learning.
For more information on how to win the “battle” against IT and how a Customer Data Platform can benefit your business, contact R2i today.
About the author: Dan Hixson
Dan Hixson leads R2integrated's Technology Solutions Engineering Practice. Hixson comes to R2i from Zeta Global, where he led the data-powered marketing technology company’s business solutions practice. He brings more than 10 years of experience developing actionable strategies for digital transformation to R2i as the agency deepens its investment in technology.
