In a world ruled by data, the quality of customer data is set to grow in importance as the main source of marketing intelligence and competitive advantage for brands. Be that as it may, some 76% of large and medium-sized enterprises in 2020 still struggle when it comes to extracting value from their data, with the biggest hurdle being data relevance. Employees have been reported to spend 17% of their time merely looking for relevant data, potentially incurring $8.5 million of unnecessary costs annually.
Customer Data Platforms (CDP) have emerged as one viable marketing technology (MarTech) solution to those challenges. Marketers rely on CDPs to unify siloed datasets from across multiple sources, ultimately creating a single view of customers and a single source of truth. The advent of MarTech solutions such as CDPs makes it possible to connect with unknown customers based on data collected from known customers – essentially building a bridge between first and third party data. For brands that have achieved a certain level of digital marketing maturity, integrating CDPs into their MarTech stack may be the key to unlocking a higher return on marketing investments (ROMI). Despite that, only 29% of companies have CDPs as part of their marketing strategy.
A few issues have held back marketers from embracing CDPs. In the first instance, most brands lack awareness of the benefits. CDPs are often confused with customer relationship management (CRM) tools. But unlike CDPs, CRMs neither track anonymous users nor integrate offline with online data. The choice, however, is not a binary one: CDPs and CRMs do complement each other when used strategically. While CRM facilitates the front-end customer interaction, CDPs work behind the scenes to identify specific customer interests that trigger those interactions.
Second, like all investments in technology, the path to automation and digital transformation is paved with good intentions – and a hefty price tag. Without a clear understanding of what CDPs can do or a clear roadmap for implementation, marketers may struggle to justify the cost and realise the benefits of incorporating a CDP into their stack.