Customer Data Platforms are one of the top technologies being implemented by Enterprise companies today. Yet, 87% of marketers say data is still their company’s most underutilized asset. Why? According to Lytics CEO James McDermott, there are three core reasons.Â
This comes as no surprise, as CDPs and other data solutions are the number one tech being implemented by Enterprise companies right nowOpens a new window . But while they may be at the top of Enterprise wish-lists, recent research says CDPs are failing to live up to marketing executives’ expectationsâ€”big time.
One research projectOpens a new window found that almost 75% of marketers think tech has made personalization harderâ€”not easier. Another surveyOpens a new window found that data represents about 20% of all US marketing spend, with 63% of marketers saying their data-driven marketing budgets grew last year. And yet, 87% of marketers still say data is their company’s most underutilized asset.
Have CDPs been lying to us all along? Is data the answerâ€”or not? Why are CDP projects failing? And is there anything we can do about it?
The answer starts with understanding the three primary reasons CDPs are failing today’s marketing leaders:Â
1. CDPs are in their infancy.
As a relatively young technology, CDPs are still finding their footing. This means the CDP market can be hard to understand. Does a CDP solve an IT data problem or a marketing campaign problem? Is buying a CDP all about centralizing your dataâ€”or do you need more than that?
Ask 10 different CDP vendors and you’ll get 10 different answers. Every vendor in the space seems to frame the challenges they’re solving differently. Some are designed to solve IT problems, while others began as IT solutions and have evolved to serve marketers. And as the market continues to shift, the line between who a CDP is suppose to serve begins to blur.
This is where the confusion comes in. If a marketing executive ends up with a CDP designed to solve an IT problemâ€”not marketing problemsâ€”that partnership is already set up to fail.
2. CDPs are not solving the most pressing problems.
Here’s an uncomfortable truth about the market: CDPs have been so focused on tech that they’ve left marketingâ€”the very people they were built forâ€”wanting more.
This is because we’re having the wrong conversations. We’re all talking about data: getting more of it, cleaning it, resolving it, simplifying it. But data isn’t what’s keeping marketers up at night. It’s not the problem marketers are trying to solve.
Marketers are concerned with conversions, ROI, customer attraction and retention, engagement, loyalty, funnel optimization, and customer experience. And while many already have plenty of data at their fingertips (too much, in fact) most don’t have the right data to drive actionable insights and run targeted campaigns. A best-in-breed CDP should not only give you access to your data, but also empower you to target your customers when, where, and how they prefer.
This is especially relevant to marketing executives, whose goals are high-level and conversion-focused. Their success isn’t measured by number and completeness of customer profiles or data repositories. Success is measured against high-level business metrics like customer acquisition, upselling, cross-selling, win-backs, engagement, and, ultimately, tangible ROI.
Having more data doesn’t automatically mean more conversions, higher customer engagement, or even 1:1 personalization. A centralized data repository on its own doesn’t solve marketing problems. Without insights, more data means more complication.
Knowing Customer X purchased a hardcover copy of A Game of Thrones doesn’t tell you what you should do to move them toward another purchase. But, if you also know that people who purchase that book are 75% more likely to purchase The Hobbit, now you have insightâ€”information you can act on.
This is often the missing piece in conversations about what problems a CDP can and should solve for marketers. It’s also vital to the success of those same marketers’ goals.
3. CDPs are more than what meets the eye.
Because CDPs are often viewed as data platforms, it’s easy to make platform purchase decisions based entirely on technology and data considerations like integration and profile unification.
But while those features do matter (a good CDP should solve your data problem), they aren’t enough. To solve marketing goals, a CDP needs to be able to match individual users with the content that’s most relevant to them and most likely to move them along the sales funnelâ€”and do so within the channel that works best for each individual.
Too often, because of this misunderstanding, marketers leave CDP selection to IT. And while IT should be involved in the process (they do, after all, have to integrate and support your new platform), they can’t vet your CDP for marketing use cases. They can’t ensure that its interface is marketer-friendly. And leaving the marketing team out of the decision process could mean purchasing a platform that doesn’t meet marketing goals or isn’t usable by the team.
CDPs don’t have to fail.
Companies like Airbnb, Netflix, and Amazon are using customer dataOpens a new window and data-science insights to drive significant results.
In fact, Airbnb reported a 10% lift in conversions in Asia due to data science insights. Amazon says their personalization engine (driven by customer data) is responsible for 35% of their sales. And overall, companies that are data-driven experience 30% more growth than their competitors.
The key to achieving those kinds of results with a CDP is to stay grounded in the problems you set out to solveâ€”understanding individual prospects and customers better, truly personalizing their experiences, and driving real ROI with increased revenue, customer loyalty, higher customer lifetime values, and more.
This means when researching a CDP, marketers should be asking: Is it built to serve marketers and solve marketing problemsâ€”or is this CDP built for IT and to solely wrangle my data? Does it fit my specific use cases? How does it support my business goals? What do I need to change about my processes, training, and marketing strategy to make it work? And is it smart enoughâ€”does it have built-in data science and machine learningâ€”to provide real insights into my prospects and customers and enable me to automate 1:1 personalization?
Without those marketing-focused questions, it’s likely marketers will end up with a solution that wasn’t designed for them. And that’s how we end up with 87% of marketers saying data is still their company’s most underutilized asset.Â Â