Customer data platforms are critical now, more than ever before, for companies to improve customer experiences, unlock business advantages, and provide operational efficiency and stability in a time of constant flux. Customer Data Platforms (CDPs) are being centered at the core of companies across the globe, with growing teams of customer data experts working to activate this critical asset right away. And for those organizations that already have experience leveraging customer data for improved customer experiences and business operations, there is always room for continued optimization to your data governance and ongoing strategy!
This is an excerpt from our recent eBook, “The Organization of the Future: A Blueprint for Structuring Your Optimal Customer Data Team (+ Sample Org Charts!).
6 Reasons Customer Data Platforms are Critical Now
1. Increased online activity requires real-time agility and richer knowledge of your buyers
The COVID-19 pandemic drove years of change in mere months and many of the impacts are here to stay.
Online activity is either replacing or strongly complementing the traditional in-store, face-to-face experience, Organizations will need to be able to collect, unify, and activate that data — preferably in real time. With so much changing so quickly — store closures, travel restrictions, health advisories — being able to communicate to the right customers quickly requires a customer data platform that works in real time.
A real-time CDP feeds the most up-to-date customer profile to every channel. Most companies have more customer data than they’ve ever had before, and if they’re not unifying every channel into that single view in real-time, critical information about individual customers may be left out as important communications are deployed.
2. Data privacy regulations are expanding, so understanding what types of data your company uses and how it’s collected is critical
The EU’s General Data Protection Regulation (GDPR) kicked off the trend of privacy regulations aimed squarely at the way companies collect consumer data. With the promise of steep fines and changes to the definition of privacy as a right, companies have been working ever since to change how they handle customer data.
Other countries and many US states have followed suit, most notably California’s Consumer Privacy Act (CCPA), which was the first state in the US to provide consumers the right to know and delete the information companies collect on them as individuals as well as the right to sue for data misuse.
As more global privacy regulations are enacted, organizations will be challenged with managing varying regional requirements. In order to remain compliant, organizations will require the ability to properly segment and manage data permissions throughout the customer lifecycle – which can be enabled by a CDP.
3. Third-party cookies are slowly being eaten up, driving organizations to look towards evaluating first-party data strategies
Google announced they’re phasing out third-party cookies in their popular web browser Chrome by 2024. The loss of third-party cookie data will have significant impacts from reduced insights on Return on Ad Spend (ROAS), resulting in reductions in marketing budgets and ultimately revenue. Knowing this, companies are turning towards adopting a first-party data strategy powered by a CDP. This will enable organizations to collect customer data directly from the buyer and create more trusted and relevant customer experiences.
What are the benefits of first-party data?
4. The new CX standard – consumers demand relevant experiences
Today’s consumers expect and demand experiences that are highly personalized to them. From our 2022 State of the CDP Report, two of the top three priorities respondents said became more important this past year were creating more personalized communication with customers and presenting an improved unified customer experience across channels. With so many companies competing for limited consumer attention on social media, digital, and email, delivering relevant messages or offers to the right person at the right time is how companies will stand out.
Yet, executing personalized strategies can be tricky if customer data is incomplete or outdated and more importantly you do not have a CDP to help you to collect, enrich, and activate your data in real-time. A CDP will enable you to personalize at scale creating experiences your customers crave.
5. Machine learning can drive significant impact, but is highly dependent on data quality
Machine Learning (ML) is changing the way many people work, especially data-driven marketers, analytics teams, and data scientists. ML can help anticipate churn, identify a segment that is most likely to buy, or even help recommend a preventative action to a patient.
Yet, according to research from Dimensional Research and Aiegion, many ML projects are struggling to get off the ground. 80% of companies engaged in ML projects have reported them as stalled, while 96% of the projects have “run into problems with data quality, data labeling required to train AI, and building model confidence.” Companies developing their own ML algorithms are finding it difficult to get clean data into the models.
That’s where the benefits of a CDP come into play.
For ML projects focused on using customer data, a CDP can help ensure data is clean and correlated, providing assurance that the AI is being trained with consistent sets of data from model to model.
6. Companies need to efficiently market during an economic downturn
In the best of times, marketers have an increasingly difficult job of justifying costs, proving their programs’ impact, and ultimately driving revenue with a solid ROI. But what happens when you add economic uncertainty or downturns to the equation? Budget cuts, hiring freezes, layoffs/reduced headcount, and increased stress and pressure are the norm.
In times like these, marketers have to be more efficient in everything they do through a combination of cost-effectiveness and proven impact. Marketers need to understand the changing patterns in how people buy, where to focus their critical budget and resources and how to fine-tune their strategies accordingly.
A real-time CDP feeds the most up-to-date customer profile to every channel. It provides the insight and connections across your most valuable channels to take action and optimize your results. Investing in and utilizing a CDP to drive your strategy and execution builds customer trust, increases loyalty and sales, and delivers the impact needed when market conditions are challenging and require more efficiency from fewer resources.
For more information on why Customer Data Platforms are critical now and how to get the most out of you CDP, download our recent eBook, “The Organization of the Future: A Blueprint for Structuring Your Optimal Customer Data Team (+ Sample Org Charts!). In this in-depth report, you will discover five reasons why customer data and CDPs are critical now, 10 org chart examples for how to structure your teams around customer data, how to get started building your team, tips for finding top talent, three steps for selecting the CDP use cases, and much much more!