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CDP Early Days

By Denis Pombriant CRM Buyer ECT News Network
Mar 26, 2019 12:50 PM PT

Here we go again, right down the hype cycle and into new product land. In the last week, two major enterprise software companies, Oracle and Salesforce, announced customer data platform products.

Oracle announced its product last week in Las Vegas at its Modern Customer Experience (MCX) event. This week, Salesforce announced that it is building a customer data platform. Given the company's history of making products and deadlines, you can take this announcement to the bank, but still, it's better to have product when you announce.

It's always a good sign for a new market when the big guys arrive bearing product -- or at least minimally acceptable jargon -- and the bigs join a growing list of emerging companies that want to fill the space, like BlueConic, Simon Data, and Segment, which I found in a simple search.

However, as Salesforce Chief Analytics Officer Bob Stutz happily acknowledged in a blog post, "Last October, Forrester released a report warning, For B2C Marketers, Customer Data Platforms Overpromise and Underdeliver. And a recent Winterberry Group analysis 2 claimed that only about one in five of the 100+ vendors calling themselves a CDP actually qualify."

With definitions so loose, it's clear this is an early market. The function of the bigs as later entrants in such situations is usually to take away some of the ambiguity and set a floor under things. So as long as we're into floor leveling, lets play an armchair analysis game.

First, What Is CDP?

Good question. It's also the question that drives every other part of the discussion -- like do we even need this? The answer is maybe -- but first, what is it?

Based on simple definitions, CDP is a tool for corralling customer data in a B2C setting. A company heavily engaged in B2C selling needs lots of data to drive its algorithms so that it can automagically sell without expensive humans. So the data it uses has to be complete, clean, integrated, and easily slurped up (a technical term for sure) by other marketing technologies aimed at the customer.

Issues arise because nobody has all of the data one might need. Vendors have customer records, but they typically must be supplemented by third-party data that might complete a demographic picture of customers, for instance. There's also real-time data from the customer in an interaction, and all of it feeds the calculations of what to offer/do/recommend next, also in real time.

So, data is a big deal. Still, I fret that by focusing on data we jump right to speeds and feeds and miss out on the benefits craved by the businesses that use the CDP systems -- another sure sign of an early market. Specifically, the benefits aren't about data unless you're only selling to data wranglers, the people historically responsible for aggregating and cleaning.

The higher value stuff, and the stuff that drives purchase decisions is, or at least ought to be, about the information value that is derived from all that data. By itself, data is pretty useless. Both a ZIP code and a phone number are numeric, but only in a qualitative way; you can't do math on them, for instance. However, you can derive important information about location when you put them together in this cellphone crazed, roaming area code age.

So How Do We Use It?

To me, CDP's greatest strength can be found in the information it delivers, not in the data it captures and stores. This is an obvious point but one that so far has been missed by virtually all of the entrants. No worries though, it's just another sign of an early market.

This notwithstanding, I wish the players would look a little further downstream to the end game. If they did, I think they'd be talking a bit more about information and what marketers want to do with it than about the gymnastics they can perform with data.

At one point, many of us thought that CRM, especially when combined with AI and machine learning, would do what we now look to CDP to do. Perhaps that was wishful thinking, given the complexity of the task and the chaos inherent in managing data.

For example, it's only recently that we've been teasing apart needs for insight into customer needs and the need for better engagement -- two things that the nascent CDP industry espouses in an "either/or" context when, as Salesforce puts it, it's really an "and" situation.

Finally, extra points to whichever vendor gives a nod to the importance of CDP working within the constraints of GDPR, the European regulations that insist that customers have a right to control vendors' awareness of their data. You'd think this would be a no-brainer, but the industry so far looks like a bronze statue of "see no evil, hear no evil, speak no evil" when it comes to GDPR.

My Two Bits

CDP is here, dudes. It's important, and if you're in marketing you can't ignore it. Of course, you still need to sniff around the industry to find a vendor with a definition of CDP that fits your need. It's an early market, but it's an important outgrowth of CRM and a logical extension of the AI/ML changes around us. CDP's influence may even go beyond marketing.

My advice is to begin playing with CDP and possibly multiple different designs. They're all available as cloud solutions, and some are free for a couple of users, which means virtually every marketing department can afford to test some ideas, perhaps in an A/B setting.

There will be some stumbles, but given this configuration, I suspect the early experimenters will reap the rewards -- and importantly, this market will congeal relatively quickly.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.


Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.


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