Customer data platforms (CDPs) have grown in prominence over the past few years, with more organizations realizing that their traditional IT-led data management processes and solutions are unable to keep pace with changing styles of customer engagement, including customers that are now always-on and demand a seamless experience across touchpoints.
At their most basic, CDPs are designed to overcome functional silos by providing a single customer view that is always on and always processing data, whether it is coming from traditional batch sources or real-time streaming sources. Companies find the most value from CDPs when they are leveraged to deliver hyper-personalized engagement with individual customers, and/or advanced analytic models that enable a business to achieve segment-of-one scale while growing revenue and profits. To do this, robust CDPs need to bridge anonymous to known customers, integrate and match 1st-, 2nd-, and 3rd-party data, and be accessible in real time. By integrating this data at a precise and detailed level, including individual behaviors and preferences, enterprises are able to deliver their brand promise with high contextual relevance no matter where the customer next shows up.
Industry is taking notice and, according to a recent Customer Data Platform Institute report, more than 27 vendors now offer CDP solutions with capabilities ranging from basic to advanced. The 27 vendors had combined revenues of $320 million in 2016 and a majority experienced growth of more than 75 percent in the last year. The growth in the CDP market is only going to accelerate, with the CDP Institute predicting in its new report that total CDP revenue will reach $1 billion by 2019. This market size is likely underestimated given the priorities business executives are placing on digital transformation, personalized customer engagement, big data and analytics, and other strategic initiatives that require a CDP as a foundational capability. The high growth rates and broadened market coverage indicate that companies of all sizes have started to recognize that they need CDPs – or something like them – to remain competitive in a world full of empowered customers.
The Competitive Advantage of a Customer Data Platform
Combining customer records into a unified, 360-degree view of the customer that provides a Golden Record to drive engagement has been an elusive goal. Marketers especially have struggled for years to blend data from multiple channels into a single record so they can provide the most effective messaging through the customers’ preferred channel. The problem with this approach in the past is that the instances of interaction channels and marketing technologies have grown faster than they could be integrated, resulting in a fragmented customer experience full of friction. Today, there are thousands of possible consumer touchpoints, each with different data collection methods. The possibilities will grow into the billions with the take-up of IoT devices available to consumers, with each device potentially viewed as a channel.
Each channel creates a new data silo, which further complicates customer engagement. Customer data platforms break down these data silos, enabling a cross-functional view of customer data, including behaviors and preferences, that can become part of the operational connectivity to customers. This allows marketers and other business functions to interact with customers across channels and provide the next-best action effectively and at the speed of the customer. Brands that employ CDPs can make such decisions confidently, assured that they are delivering messages, offers, content and other actions in the right cadence, moment and channel in a way that carries high contextual relevance for a customer at any given time, creating value for the customer and the enterprise in return.
The Future of Customer Data Platforms
Customer data platforms have a bright future ahead of them. The fragmentation in customer interactions is unlikely to abate, and each new channel brings a data silo along with it. Consumer expectations continue to rise along with the demand for a frictionless experience across touchpoints. As more brands realize they need a deep level of customer understanding that counters this fragmentation and friction, interest in CDPs will grow over time. Marketers and other business users understand the challenge of interacting across channels, and once they’re more aware of CDPs (as many currently are not), aware that this technology resolves many of the past challenges in creating a single customer view, and aware of the value that CDPs create, there will then be significant acceleration in the market beyond the CDP Institute’s estimates.
Customer engagement is only going to become more dynamic and complex, driven by increases in customer expectations, interactions channels, data sources and the speed of business. CDPs provide the critical capability required to overcome today’s fragmented customer experience, allowing brands to promote a coherent cross-channel engagement strategy and meet consumers wherever, however and whenever they appear. The brands that are able to engage with customers in a highly personalized way that meets their expectations, through their use of a customer data platform, will be the ones to succeed in the modern world.