Rethinking the Customer Data Platform

In Search of the Elusive 360° Customer View

The CDP market is fraught with confusion and misrepresentation. It’s no wonder CDPs don’t live up to the hype. So how do you fix the mess the CDP market has become? First, we must start by fixing the definition. Here’s Elana Anderson, Allant’s Technology Review Board Chair, on how to do that.

It has been a minute or two since I spent time focused on the customer data management and Martech space after diverting my focus ten years ago to build my skills as a Chief Marketing Officer. Of course, as a CMO, leveraging data to do my job effectively was a key part of the gig! Nonetheless, looking back, I have spent more than two-thirds of my career focused on helping marketing organizations make the most out of their customer data and I am thrilled to be back! While I still have more catching up to do, I can say with confidence that while some things have changed, some things haven’t.

by Elana Anderson

What’s changed? No doubt, there’s been major evolution in cloud computing, machine learning, and AI. Similarly, the volume of customer data has grown exponentially as has the number of technology providers professing to help organize, integrate, and mine the data. I remember the days when all the Martech provider logos were still readable on a single slide. Today, the number of software providers in the market is overwhelming. 

What hasn’t changed? While the emergence of generative AI brings creates the opportunity to bring data mining to the masses, mining bad or incomplete data will still lead to sub-optimal results. And, despite the emergence of so many technologies claiming to eliminate data silos, democratize data insights, and personalize every customer moment, I continue to hear the same issues from companies that I heard 20+ years ago when I was a consultant to leading retailers, telecom companies, and financial services firms. Data is more siloed than ever, copies of data are all over the place, data quality is atrocious, access to great customer insights in a timely manner creates major headaches, and costs are through the roof.

CDP’s Don’t Live Up to the Hype

Theoretically, Customer Data Platforms evolved to solve these challenges. But, like many market segments, there has been incredible bloat as virtually every Martech provider seems to have adopted the moniker. Forrester’s recent report “The B2C Customer Data Platform Landscape, Q1 2024” notes, “B2C CDPs have resisted a monolithic definition in favor of subdividing into several categories that reflect a broad span of buyer needs and vendor solution focus.” 

As stated in the above-referenced document, the Forrester definition is:

A platform that centralizes customer data from multiple sources and makes it available through a persistent store of customer profiles to systems of insight and engagement.

Well, it’s no wonder that so many companies say they are a CDP. Every Martech app that performs some form of customer or audience engagement has data APIs and stores a persistent set of customer data. I don’t mean to pick solely on my former employer. Gartner’s definition from its February 2024 “Magic Quadrant for Customer Data Platforms” is no better:

Software applications that support marketing and customer experience use cases by unifying a company’s customer data from marketing and other channels.

Thus, if we are to go with the definition from either leading analyst firm, pretty much any Martech or data management software vendor can claim to be a CDP!

Gartner further complicates the situation with its February 2024 “Magic Quadrant for Digital Experience Platforms” (DXPs) by stating that a “must-have” capability for the DXP market includes, among other things, “Customer data management for understanding the customers, managing disparate customer data silos in a 360-degree view, and creating customer segments based on attributes from multiple data sources.” Do the analysts not collaborate?! 

Arguably, a CDP and a DXP should both be part of a cohesive solution that helps marketers engage with customers more effectively in today’s complex world. However, with so much functional overlap, how is a potential buyer supposed to identify what makes sense for them? Sadly, I’m just getting started here on the complexity because there are also DMPs and DAPs to add to the mix not to mention all the variations of bodies of water and astronomical objects! For the sake of this note, I will continue to pick at the CDP segment.      

It’s Time to Rethink the Definition of the CDP

To fix the mess that the CDP market has become, we must start by fixing the definition.

Forrester identifies three primary customer objectives behind a CDP and then goes on to identify a subsegment of vendors for each objective.

Forrester Defined ObjectiveForrester Vendor Category
Assemble actionable customer profilesData Management CDP
Orchestrate a range of customer interactionsOrchestration CDP
Deliver data to analytics and engagement toolsAutomation CDP

These objectives generally make sense to me. That said, I don’t agree with the sub-segmentation. I believe that businesses have the right to expect that a CDP is going to help them achieve ALL these objectives. Here’s my take:

ObjectiveWhat it Means
Assemble actionable customer profilesMarketers want to get as close as possible to that ever-elusive 360-degree customer view. This means cleaning, standardizing, matching, deduping, and householding all the data your company has about your customers AND integrating it with all the amazing relevant third-party data available in the market so that you have as complete an understanding of your customer or prospect audience as possible     . 
Orchestrate a range of customer interactionsOnce comprehensive and actionable customer profiles have been established, marketers need the ability to derive insight from those profiles, identify or better understand customer segments, and inform more holistic customer journey mapping. The job of the CDP is NOT to be a channel-specific execution engine or marketing automation tool but rather to support develop of the insight that orchestrates how those downstream execution engines behave and interact with one another.
Deliver data to analytics and engagement toolsThere are really three steps here:The CDP must interact with analytic tools, and data scientists must      leverage subsets of the data to build predictive algorithms and scoring models.The CDP must have the ability to ingest models developed in external analytics tools to score customer profiles in the CDP.Both tasks above really fall under deriving insights that drive orchestration (above). The CDP must be able to activate insights by interacting with any downstream engagement platform.

So, let’s get back to what the definition of a CDP should be. Given those customer objectives and the additional context, I propose that the definition of the CDP should be:

 A platform that seamlessly ingests, unifies, and integrates customer data from diverse sources, enabling businesses to create a comprehensive single customer view, facilitate data-driven segmentation, and enhance systems of engagement for personalized interactions and improved customer experiences.

This revised definition alone is enough to winnow down the list of vendors calling themselves a CDP by at least 80 percent. 

If you believe a CDP is the right path forward for your business, focus first on the outcomes you expect to achieve. Ultimately, the objective of a CDP is to empower organizations to derive actionable insights that enhance customer engagement and drive business growth. Consolidating, managing, analyzing, and activating customer data efficiently is a means to that end. The CDP market is fraught with confusion and misrepresentation. As you assess your options, focus relentlessly on the strategic needs of your business to cut through the market clutter and find the best solution for your needs because by simply selecting a vendor in the upper right quadrant, you will likely miss the mark.

Elana Anderson is Chair of Allant’s Technology Review Board

Photo by One Zen on Unsplash

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