Customer data activation needs to be a top priority for future proof organizations. To be able to do this, marketing should have a Customer Data Platform (CDP) at its use.
Modern companies understand that to be competitive, their customer experience must be better than competitors. Many companies manage customer experience systematically, and customer understanding is collected from various sources, for instance by utilizing surveys. The role of customer data is also understood, but its use seems difficult, usually because there is a lot of data in many different systems. Most companies don’t have a real-time pulse on customer experience nor see a full 360-profile of the customer. The behavior of existing customers is not understood deeply enough to, for example, prevent customer churn. To serve customers as well as possible, business should try to know each customer individually, and be able to activate personalized marketing measures in real-time through digital channels. This may sound challenging to implement, although there are existing solutions available.
One of the reasons for the lack of customer understanding is the challenging data environment, or so-called data silos. Customer data exists in several different systems and there is no overall view to single customer. Each organization has their own systems made for their own purpose. The behavioral data collected by marketing is isolated in marketing systems, and not connected with other customer data. When marketing needs a more complex target group for its activities, target group selection and segmentation either remain at a very rough level or is done manually by data analysts. There is no capability for personalized real-time customer communication leading to generic targeting and modest results. Result is poor activation rates and, at worst, disengagement.
Data processing and compilation is usually IT-driven, with the emphasis on developing systems and data warehouses. Thinking about the use cases themselves on a larger scale is usually forgotten. One of the most important customer data user organizations in companies should be marketing, because together with sales and customer service, they interact directly with the customer. The difference of marketing from the others mentioned above is that its task should be to build continuous interaction in the digital channel with the entire identified customer base, throughout their customer relationship. Sales and customer service organizations only encounter a certain proportion of customers at a certain point in the customer's life cycle. In addition, business decision makers want to understand customer data, but for them it is often enough to have customer data visible through various reports and views that help understand business results.
Marketing organization is one of the most important organizations in companies in terms of customer data utilization, but it seems that the marketing teams have limited competence in this area. The responsibility of activating customer data is usually handed to the digital marketing team, where the use of data often revolves around marketing analytics and the target groups needed for email communication. Although both are part of the whole, they do not yet make marketing data driven. However, it is not the fault of digital teams, as they are often small, and the roles and tasks assigned to them guide their focus. The task of building a 360-customer view is not with marketing and for this reason they usually don’t have it available. The responsibility for developing customer data capabilities and data-driven marketing should have a higher mandate in organizations. Data-driven transformation should have an owner that can define marketing needs for IT, owns the budget for the subject area, and gets a mandate to develop capabilities to build a 360-view for activation use cases.
Fortunately, many organizations have woken up to the importance of managing own customer data. Big driver for this has been the upcoming elimination of third-party cookies and the increasingly specific laws related to privacy and data protection. As 3rd party data will not be available so easily anymore, the so-called 1st party data (customer data collected by the company) has become an important part of agenda for marketing organizations. How data utilization is taken forward in different organizations is much more nuanced. The responsibility for the big picture often lies with IT organizations, as the budgets of marketing organizations do not cover the acquisition and maintenance of this type of systems. The challenge is, that marketing needs don’t necessarily rise to the top of the agenda, even when they should. IT has the know-how for platform management and the requirements for privacy protection will certainly be considered, but it is not enough to support the company's growth agenda and activation of customer data. Growth can only be achieved when we have use cases for data as the starting point for the customer data platforms requirements. This is where marketing agenda should be prioritized.
When companies think about how customer data should be aggregated and managed, and how it can be activated to improve the customer experience and marketing, the focus is easily turned to existing systems, such as CRM. From technical perspective the discussion easily starts revolving around "data warehouse", "data lake", or "Master Data Management (MDM)" development. When it comes to CRM, the problem is that it is not intended to build a 360-view of customer data, but to help sales and customer service work be more efficient. Data warehouses, on the other hand, are too heavy entities to be utilized to activate real-time customer data. They also often lack the behavioral data collected by through marketing channels. All the above are part of the company's data environment, and they must be identified when building a competitive advantage from customer data. However, the so-called 360-customer view aggregation for business growth and marketing need its own capability, one that supports real-time activation of data and provides insights about customer behavior.
There has long been a solution for activating customer data called a "Customer Data Platform", or CDP. The idea of CDP is to create a single view of the customer from various sources within the organization under one persistent identifier. CDP then provides that ID to the systems that utilize the data in segments and in real time. , marketing can identify customer behavior, build segments, do personalization, and activate real-time marketing activities. For this reason, CDP is a tool that should be owned by marketing. When marketing use cases drive the acquisition and development of CDP, it is the fastest way to create value for the entire company.
At the same time CDP brings ease for the IT teams, as a properly selected CDP provides a wide range of out-of-the-box integrations to the company's data systems. This means that IT team don't have to put so much effort into building, developing, and maintaining the customer data platform. The challenge is, that that very few marketing organizations in Finland seem to have experience with CDP, and they do not know how to demand one. This means that the customer view development and the related tools are often left to the IT organization to choose and develop. This may be one of the reasons why the market in Finland seems reasonably underdeveloped for the business growth use cases and there is still a lot of untapped potential for business in activating their own customer data.
One challenge with the CDP field is that it is full of very different solutions. Depending on the source, it can be estimated that there are about 200 CDP providers worldwide. Each of these have different strengths and qualities, but of course there are also common denominators. The most important common denominators are that a CDP must be able to import customer data from other systems, compile one customer and persistent identifier, and then be able to activate that. How many ready-made integrations and functionalities are available is a completely different matter. Some provide very limited number of integrations, and some CDPs are part of a SaaS service package that focus on completely other features in their stack development. Others offer a very wide range of integrations and are built as standalone products, giving companies the freedom to choose which data sources to use and which marketing tools to use in activating the data. For marketing organizations to be able to choose the appropriate CDP, it is important to identify the needs with at least the near future in mind. In future, a correctly chosen solution will also support adding new data sources, increase customer understanding throughout the business and help marketing become more personalized as the company's requirements grow.
When customer data is compiled into a 360-view, it is easier to start developing the customer experience in all interfaces. Businesses no longer must rely only on small survey samples or outdated CRM data when looking for customer understanding. The customer's life cycle, the purchases made, interaction with marketing and websites, as well as the feedback to the company, can be monitored from a single view, and this information can be activated not only in marketing, but also for example to support customer service, sales, and product development. Activating customer data opens a lot of new opportunities that will be the lifeblood of improving the company's competitiveness in the future.
Would you like to discuss how customer data could be used to improve the customer experience and grow the business? Contact us and let's talk:
Head of Digital Growth
tel. +358 50 5662819
Senior Growth Advisor
tel. +358 40 8671617
Samuel works as a Senior Growth Advisor at Tietoevry Create´s Digital Growth team. He has a long career in marketing and sales, and he specialises in developing digital capabilities in business.