What we love, what interests us, and what we need was not so easy to find out just a decade ago, but today it is different. Internet browsing and the use of social media leave data useful for companies’ marketing campaigns, allowing brands to target their consumers and offer them (as always) what they didn’t even know they needed. Since we leave our digital footprints everywhere, someone needs to collect that treasure.
After customer relationship management (CRM), customer data platforms (CDP) are stepping into the spotlight, providing companies with a unique overview of everything they need to know about their consumers. CDP takes everything to a higher level and allows for the collection of a wealth of data from more sources than CRM, but data collection will no longer be a ‘game without borders’. Namely, data will not be obtained from third parties; instead, companies as the first party will directly own consumer data, which consumers will consent to use.
Rules and Storage
Verified Market Research, a market research and consulting firm, expects demand for CDPs to grow by 19.67 percent annually by 2027. The flourishing of CDP platforms has been further fueled by the expansion of the corona crisis, as all interactions with users and companies have shifted to the digital world. By unifying this data through software, insights are provided for possible directions in campaigns and customer relations, and this is where CDP platforms come into play.
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Based on the collected data, a profile of each customer is created, and their data is permanently stored. System integration is thus simplified as CDP includes the data systems of all company departments, from marketing and customer service to call centers or billing. Repetitions, data accumulation, and errors are minimized, and data flows faster between the marketing automation platform, email service providers, or CRMs.
Marketing effectiveness increases as CDP unifies individual data into larger groups, and since tasks that were previously performed manually are now automated, marketers can turn to more creative and analytical tasks. Furthermore, CDP reduces the workload for developers and IT departments, shortens the time for extracting and encompassing users, as well as executing campaigns and considering outcomes. Customer data oversight is also increased along with data management in accordance with regulations in individual countries.
For example, in the European Union, the General Data Protection Regulation (General Data Protection Regulation, GDPR) must be respected, or in the United States, the California Consumer Privacy Act (California Consumer Privacy Act, CCPA).
Data Paradise and Hell
But a CDP alone does not make companies successful. Strategy and appropriate technological solutions are key to long-term success, but it is not enough to access data at the right time; it must be processed using scientific techniques. For now, most companies are still not ready for this, so they must determine what their goals are and whether their technological and business strategies are aligned. Moreover, the more the existing state of the company is understood, the clearer the requirements for the CDP will be, and the more investment in the CDP and knowledge of its capabilities, the more will be gained from it.
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CDPs are used by large global companies like Microsoft and Oracle, while developers such as data platforms Segment, Klaviyo, Bloomreach, and Insider help brands collect that data, master it, and utilize it for multi-channel advertising. One such company is Treasure Data, which has developed its platform over the past decade and achieved over one hundred million dollars in annual revenue from clients like Subaru and InBev.
Its co-founder Kazuki Ohta states that it is clear that companies must understand customer data. According to the consulting firm McKinsey, 60 percent of companies’ interactions with clients occur in the digital world, with the percentage even higher for consumers from Generation Z (born from 1995 to 2011). However, in the digital data paradise, not everything is rosy for companies as they cannot use data exactly as they wish.
Overloaded Warehouses
Ohta points out that 150 out of 200 countries have introduced consumer data privacy laws, so consumer consent is required for their use. However, he explains that such rules actually mean that customer data must be managed centrally. He predicts that these trends will continue over the next five to twenty-nine years and that consumer privacy regulations will become increasingly stringent.
– In the next two years, 75 percent of online users will become anonymous due to third-party cookie regulations. As a result, Facebook recently lost 200 billion dollars in company value. Companies are therefore changing their strategy, wanting to own that data and no longer rely on user data obtained from third parties. They will manage that data themselves to improve advertising, customer service, and support – explains Ohta.
In every company, there are data warehouses in many systems such as product data, CRM, and marketing customer support, and multiple channels must be used as consumers use multiple devices. Customer data is scattered everywhere, across various geographical areas and advertising platforms, Ohta said, so companies like Treasure Data enable data from multiple sources to be gathered on a single central platform.
