Has your customer data platform (CDP) failed to live up to the hype? A marketing tool like a CDP can reap incredible benefits for your business—but a CDP is just that: a tool. You need to use the CDP to generate insight and take action to achieve results.
The CDP industry is one of the fastest-growing in MarTech. In fact, it grew 65 percent in 2018 and is expected to exceed $1 billion in revenue by the end of 2019.
This explosive growth is understandable, given a CDP’s potential for meeting a wide variety of marketing challenges. Between regulatory acts like the General Data Protection Regulation (GDPR) and tumultuous consumer attitudes about personal data collection, marketers have begun to rethink the way they collect, aggregate, and activate customer data.
Namely, retailers have started to reshape their businesses around the customer—and to do this, they need a centralized view of their customer data.
As omnichannel marketing and seamless customer experiences move to the top spot in retailers’ lists of priorities, CDPs seem to be the silver bullet for bridging data silos and empowering retailers to move from channel-centric to customer-centric business models. Today, roughly half (51 percent) of marketers report using a CDP to unify their customer data, and an additional 35 percent plan to adopt a CDP in the near future.
Many of those marketers, however, have failed to use their CDPs to their fullest potential. According to a 2019 Forrester report, marketers have struggled to make the most of their newly unified and easily accessible customer data.
What’s causing this disconnect?
CDPs: Dud or untapped data goldmine?
CDPs have become a logical investment for businesses that are serious about adopting customer-centric marketing strategies. However, Gartner’s 2019 Hype Cycle for Digital Marketing and Advertising placed CDPs just past the “Peak of Inflated Expectations,” predicting that they’ll hit the “Trough of Disillusionment” within the next two to five years.
Why has such a high-promise solution failed to live up to its expectations? There are a few different reasons:
1. Confusion in the market: The first challenge businesses run into when evaluating CDP solutions is the sheer volume of options out there. Many vendors espouse CDP capabilities, but don’t actually function like a true CDP. Some are designed to solve IT problems, while others are built specifically for marketers. If you’ve hit this stage and you’re struggling to find the best solution for your business, you might find our “Navigating Martech: The Complete Guide” helpful.
2. Improper use: As stated in the Gartner article, many marketers who’ve adopted CDPs have admitted that they use it as their CRM system—which means that many of the CDPs core benefits are not being realized. This misuse could be due to the confusion in the market mentioned above, as well as a lack of training or guidance provided by vendors during the onboarding and implementation period.
3. Lack of expertise: Finally, businesses that adopt CDPs don’t always have the domain knowledge and soft skills needed to use a CDP and effectively follow up on the insights they gain from the platform. In fact, only 13 percent of surveyed executives express a high degree of confidence that they’re making the most of their customer data.
In the same survey, both CDP users and initiative leaders cited the following skills and areas of expertise as the most essential for maximizing a CDP’s impact:
- Presentation and sales skills.
- Experience in statistical analytics languages.
- Data management and analysis skills.
- Openness to innovation.
In other words, although CDPs can facilitate a company-wide shift to unified, customer-centric data management, the tool itself needs to be augmented by training and education to ensure success. CDP users need to be both data literate and data-driven—but that kind of cultural change cannot occur with a CDP investment alone. Along with choosing the right vendor to meet internal needs and fill gaps in their MarTech stack, leaders are responsible for encouraging a data-loving culture across their organizations.
Your CDP is not just a data warehouse—it’s a hub for customer insights and marketing activation
At the end of the day, CDPs don’t have to be a wasted marketing investment. In fact, countless retailers have already seen and surpassed the results they expected from their CDPs.
For example, global outdoor industry leader Black Diamond used the Lexer CDP to cut their cost-per-acquisition (CPA) in half and more than double their return-on-ad-spend (ROAS) in the first 100 days of their engagement. Similarly, Village Entertainment, a leader in the cinema exhibition industry, achieved record-breaking results when they used the Lexer CDP to inform and support their customer-led strategies. The PAS Group, one of Australia’s largest apparel businesses, even used the Lexer CDP to drive an 18 times return-on-investment (ROI) on a personalized email campaign.
Clearly, outstanding results are possible—and proven.
But those results require deeper thinking and more strategic planning than many marketers are prepared for. If you’re still confused about what a CDP really is, or if you view it only as a data integration tool, then you’re not going to see the level of impact that others have seen with their CDPs. Without the soft skills and strategic direction you need to capitalize on your customer insights, your CDP will become another complicated tool that your marketers must grapple with—or worse, ignore entirely.
When you set out to select a CDP vendor, you need to have a clear vision of the problems you’re trying to solve and the particular use cases you’d like to see from the platform. Additionally, if you’re still uncertain about your team’s ability to navigate the new platform and translate the customer insights it provides into concrete initiatives, then it’s important that you find a vendor who acts like a true partner and provides you with the training and strategic guidance you need to use the platform effectively.
Lexer’s professional services will help you align your business around your customer data
The Lexer CDP was built to help retailers unify and enrich their data, predict what their customers are likely to do next, and activate specific customer journeys to drive improvements in sales and engagement. From personalized, audience-based marketing to guided customer service interactions, Lexer’s core capabilities help retailers acquire new customers and boost the value of their existing customer bases.
But we won’t make you go at it alone. The Lexer team understands the specific challenges retailers run into that prevent them from making the most of their CDPs. Our onboarding, implementation, and strategic consulting services help you fill the gaps in your team’s skill set and processes to ensure a smooth, successful CDP adoption.
Your CDP can live up to its expectations. If you’re interested in partnering with a CDP vendor that can guide you on your way toward data-driven, tech-enabled marketing, schedule a demo below.