The Customer Data Platform (CDP) Emerges as the Unlikely Champion of Consumer Data Privacy

Data privacy is an increasing concern for customers and a potential liability for brands. The Customer Data Platform (CDP)—a tool used to fuel personalized marketing—has emerged to become an unlikely ally in the fight to protect consumers’ privacy, says Jake Bennett, Solution Principal, Slalom.

The days of blissful ignorance about how brands use our personal data are over. After the 2016 presidential election, the issue of data privacy has gone from an abstract IT topic to a deeply heated, personal concern. As revelations about Facebook’s lax controls around personal data have surfaced, people are starting to demand more transparency and accountability. In response, state governments are introducing tighter privacy legislation, with California passing the California Consumer Privacy Act (CCPA) in 2018. And that’s just the beginning. Similar legislation is being considered in Washington, New York, North Dakota and Utah.

Yet in the midst of this debate, companies continue to focus on collecting customer dataOpens a new window to harness it for personalized marketing. In fact, this trend is accelerating.  According to a surveyOpens a new window conducted by eMarketer, 70% of marketers now believe that generating a single view of the customer is very important or extremely important, and CMO.comOpens a new window identified data-driven personalization as one of the top five trends for 2019, citing its potential to increase ROI as a key motivator for businesses.

Also Read: How to Get Your CDP to Work with Your MarTech StackOpens a new window

The Go-to Tool for Unifying Customer Data

As a result of this insatiable thirst for data, a new marketing Opens a new window technologyOpens a new window Customer Data Platform or Opens a new window CDPOpens a new window risen rapidly to become the go-to tool for marketers for accumulating digital breadcrumbs and targeting customers. A CDP is a marketing-focused technology that serves three primary functions:

1. Unifying customer data from multiple sources (e.g. point of sale, loyalty, CRM, website, etc.) to create a single view of the customer
2. Providing access to clean, consolidated data for marketers to create hyper-personalized, audience segments (e.g. identifying all customers who have purchased particular products in-store recently, but not on the website)
3. Exposing these segments for activation across marketing channels (e.g. sending hyper-targeted emails and personalizing the website)
    

And while the CDP may seem at odds with current trends in data privacy, ironically, it is fast becoming an indispensable tool for protecting people’s data. As it turns out, the challenges that companies face when trying to target customers for marketing, are the same challenges they face when trying to protect their privacy: namely, finding the same person across a sea of different data sources and systems. Just as marketers want to create a single view of the customer to improve the customer experience, so do privacy officers want a single view of the customer’s data, so they can more easily comply with emerging privacy regulations. By collecting and unifying customer data from across disparate sources, CDPs help ensure that customers’ privacy preferences are enforced across all marketing channels, and that privacy officers are able respond to customer privacy inquiries swiftly by giving them one system of record to work with.  

For example, GDPR, a European privacy regulation, gives people the right to be forgotten. CCPA has similar requirements. This means that companies have a legal obligation to erase a customer’s personal data if they request it. However, most companies have no way of even finding that customer in all the data they are collecting, making compliance nearly impossible. With a CDP, companies can create a single source of truth for customer data, which makes data erasure a trivial task. And though GDPR regulations may not have been a major concern for U.S.-only business in the past, CCPA is making privacy management an absolute must-do for all companies doing business in the U.S.

How to Leverage CDPs for Privacy

But deploying a CDP alone won’t ensure compliance—the platform also has to be used correctly to promote privacy. Since CDPs aren’t natively designed as privacy platforms, you don’t get compliance out-of-the-box. Below are three strategies for leveraging a Customer Data Platform to help brands stay on the right side of evolving legislation:

• Disclosure Requests and the Right to be Forgotten: Both GDPR and CCPA have provisions that grant consumers the right to ask for the information a company is storing about them. Without a CDP, the administrative time required to gather all the customer data stored across multiple systems is significant and the chance of missing something is high. A CDP simplifies this by providing a single source of truth for all customer data. This also helps compliance with “Right to be Forgotten” regulations, making it easier for companies to purge non-essential customer data.
• First-Party Data for Identity Resolution: Some marketers rely on third-party data providers to create a unified customer identifier across different data sets, a process known as identity resolution. These third-party data companies leverage their ability to match customer lists with third-party data (e.g. to append demographic data) and extended it by sending back a unifying customer ID to the brand. However, in an increasingly privacy-focused world, relying on the intermingling of first-party customer data with third-party sources is problematic, as it can violate privacy best-practices and policies. CDPs are able to perform this same identity resolution process by using first-party data only, thereby side-stepping potentially thorny privacy issues.
• Enforce Cross-channel Preferences: By consolidating customer records across data sources to create a unified profile, CDPs are able to create a cross-channel, gold master for customer preferences. Additionally, once this gold master has been created, it can be used in segmentation rules across different channels, ensuring that customers who have opted-out for specific communications, never appear in lists that would have otherwise targeted them.

Also Read: How Veteran Marketers Can Reinvent Themselves in a Data-Driven WorldOpens a new window

Although it might appear at first blush that the CDP—a platform designed to track customer data—is the cause of data privacy problems, in truth it’s quickly becoming an indispensable part of the solution. By consolidating customer data into single data platform, it is much easier for brands to manage their customers’ privacy wishes. In fact, this is a natural extension of a CDP’s capability. A CDP is built to improve the customer experience across channels by understanding the needs of each individual and tailoring the experience to match their interests. Increasingly, the experience customers want is an anonymous one. A CDP provides this by simply making it easy for marketers to hit the delete button on their data.