Customer Data Platform€¦ · Chief Commercial Officer. 4 THECUSTOMER ATA TFORM / . 3 / 2017 For...

Don’t leave your marketing communications to chance

Spend Less, Achieve More

Customer DataPlatform

Introduction from the author

Tableof

Contents

The marketing data-base is dead, long live

the Customer Data Platform

How do I achieve more?

The history of the Customer Data

Platform

Summary

Achieving more with a Customer Data

Platform

Achieving more while spending less

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3THE CUSTOMER DATA PLATFORM / ISSUE NO. 3 / JUNE 2017

From theAuthor When I ask marketers what their biggest pain point is,

one answer always comes up top: the lack of easy access to accurate customer data. They tell me that they can’t make the most of their marketing initiatives and great ideas because the data is just not available to carry out their plans. And this lack of availability comes in different forms: data in silos, no single customer view, data held by IT and unavailable due to a backlog of more important projects, data not collected in the right format. The list goes on. It’s no wonder that it’s the number one bane of marketers’ lives.

The customer data platform (CDP) is the answer to the marketer’s prayer for a single, accessible repository for all customer data. It is the connection point for customer data across all platforms and channels, giving a consolidated view of customers as they engage with brands across channels and devices. It creates a platform to power omni-channel marketing and marketing analytics.

In this paper, however, we want to take an alternative view of the CDP. While some see the CDP as a new development, RedEye’s view is that it’s simply the natural evolution of the marketing database. We see it as the final step in the creation of a new era where the approaches of traditional direct marketing are finally applied to omni-channel marketing.

Matthew KelleherChief Commercial Officer

4 THECUSTOMER DATA PLATFORM / ISSUE NO. 3 / JUNE 2017

For years, online marketers forged ahead with technological developments that did not initially prioritise the collection and storage of data. Databases were nasty, seedy things best left behind in the 1980s and 1990s, and the domain of direct mail. At the same time, database marketing technologies from this boom period for direct marketing did not keep up with the speed of development. Critically, they did not meet the requirement of marketers to store all their multi-channel data in a single database. They were unable to cope with both the volumes and structure of data generated by an individual’s online activity. Offline marketers were faced with archaic data structures unable to cope with the depth and breadth of online data.

So, what has changed? Well, history, which has a habit of repeating itself, will tell us that this is a wholly predictable occurrence. Just as in the 1980s and 1990s, catalogue and direct mail marketers looked for competitive advantage in data and databases, so the multi-channel marketers of the 2000s and 2010s are increasingly focusing on data to give them competitive advantage. The CDP represents a coming together of marketing practices around data. For the digital marketer, this is a major change; for the database marketer, this is an evolution bringing both groups onto a single landscape.

The marketing database is dead, long live the customer data platform.

THE MARKETING DATABASE IS DEAD, LONG LIVE

THE CUSTOMER DATA PLATFORM


The data pain

Pain and need are the drivers of innovation. There is nothing different in this. The market requirement for the CDP is born of the marketer’s pain, which comes in many forms. Top of the pile is a single customer view covering all customer engagements. But underneath this are other critical questions the marketer is asking:

• Is my data accurate enough to deliver multi- channel personalisation?

• Can I target customers who browse on a mobile device?

• How can I maximise the potential of marketing automation without the right data?

These and many more questions are explored in greater detail below.

The marketing database—no longer fit for purpose

The customer data platform is just a database at heart, albeit a much smarter version that better meets the needs of today’s digital marketer.

62% OF ORGANISATIONS RELY ON MARKETING DATA THAT IS 20-40% INCOMPLETE OR INACCURATE.” SMART INSIGHTS

As the natural successor of the marketing database, it has the same basic function: storing customer data in one place to drive relevant communications and enable profiling and analytics.

The 1970s gave rise to the marketing database to meet the needs of direct marketers to store and interrogate customer data and support the burgeoning direct mail and catalogue markets. But the marketing database was developed to serve a direct mail world and is still working on outmoded technologies that lead to duplicate records and inaccurate data. They were designed for one channel only—direct mail—and as the number of channels grew, the databases had additional channels bolted on without the underlying ability to merge across databases and channels. The CDP, on the other hand, enables the marketer to merge all forms of data, providing a quicker and more cost-effective way to get a clear view of customer behaviour.

Whereas the traditional marketing database served the world of direct marketing before the internet, so a CDP serves a multi-channel world. They both have the same objective, but they’re the product of different eras.


THE HISTORY OF THE

CUSTOMER DATA PLATFORM

The term was first coined around 2011 by David Raab, Head of Raab Associates, who stated that, “A customer data platform provides marketers with an integrated customer database that can support coordinated programmes across multiple channels.” In other words, it’s a multi-channel customer database that can integrate data as a core asset throughout the user’s business.

In his seminal work on the subject, David Raab states three clear features that define a CDP:

• It is controlled by the marketer. The CDP must reside in the hands of the marketer, not IT or a third party that restricts access to the data. The data within the marketing applications belongs to the marketer, and the CDP works to free up that data.

• It supports external marketing. The CDP can be used for campaign management, either via in-built tools or by efficiently integrating with other tools, to provide data for external communication.

• It contains persistent, cross-channel customer data. The CDP must contain a single record per customer, encompassing all activities across all channels.

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Single customer view (SCV)

This is the beating heart of the CDP. It is, after all, the solution to the largest part of the marketer’s pain, giving the marketer a single view of each customer across devices and channels, including not just direct mail and email, but social, app, push, and SMS. It contains

ACHIEVING MORE WITHTHE CDP

Having outlined what a CDP is, it’s time to explain how its features work in more detail.

transactional data, just like a traditional marketing database, but also stores behavioural, web and mobile data too. The SCV lets the marketer identify and action sales opportunities quickly and easily. The average customer will use seven different channels during each

purchase—how many of them can you identify now? Not just identify, but pin the activity to a specific customer so you can make your next communications relevant, accurate and effortless?

ONLY 20% OF MARKETERS BELIEVE THEY HAVE AN ACTIONABLE SINGLE CUSTOMER VIEW THAT COMBINES

DATA SOURCES ABOUT EACH INDIVIDUAL" ECONSULTANCY & ADOBE

Customer identification

A single customer view relies on the assumption that you always know who is buying your products, using your website or app, and receiving your emails. It’s built around a customer identification solution that links all the data together. In a previous world with only a single channel, a name/address/postcode de-duplication tool sufficed. These were built on six to eight identifiers such as first name, house number or postcode. But today there are many more identifiers tied to a customer, including email addresses, mobile numbers and tags.

To put it into perspective, RedEye uses 24 separate identifiers to build the customer identification solution that forms part of our own CDP. And it is the interaction of multiple identifiers that delivers accuracy. Old ways of customer de-duplication were easily confused by customers using, for instance, shortened names or misspelling their postcode in various interactions with a brand, each time creating a new record. But now there are many other points we can use to verify if that is, in fact, the same person or just two people with similar names and addresses.

At RedEye, new clients often come to us bringing customer data files that they swear are accurate (“we’ve just had it cleansed!”), and it’s a difficult conversation when we have to tell them that the real number of customers is around 30% lower than they believed. With the CDP, that conversation need not be so difficult, because the combination of greater data accuracy and the deeper knowledge created from a multi-channel view of the customer provides an opportunity to increase the lifetime value of a customer.


Cross-device identification

Your customer marketing will only be a success if you know who the person behind the device is. It’s particularly crucial to identify mobile browsers as individual customers, considering that in the UK, 61% of time spent browsing is via a mobile phone. Cross-device identification allows you to recognise previously anonymous mobile browsers as customers or prospects no matter what device they’re using, so you have a single, unique record of that individual’s behaviour. RedEye’s own research shows that up to 55% larger segments, more sales opportunities, increased conversion and income.

Reporting and analytics

Of course, if all your customer data is in one place then it’s easier to generate insight from it. A CDP is not simply the point from which you can launch multi-channel marketing campaigns. It becomes a source of knowledge and understanding. CDP providers are developing analytical and data visualisation capabilities aimed at a variety of requirements:

• Campaign reporting takes on a new meaning if all your campaigns and customer engagements are in one place. Answers to questions such as, ‘what is the value of my catalogue to my business?’, can be addressed with all customer engagements across all channels collated.

• Attribution modelling has never been fully resolved as either an issue or a marketing tool. To understand attribution requires a full view of the data, and here you get it. The CDP provide their own analysis, or you can also run your own analysis on the data.

• Cohort analysis involves creating groups of customers with common characteristics and compare how they behave over time. You can understand the impact of changes in, for instance, your marketing strategy, giving you a view on whether things are improving or not.

• Retention analysis looks at the measures that affect customer retention to help the marketer understand why customers do—or don’t—return.

• Lifetime value analysis helps the marketer track historical analysis, predict future value, and generate insights to help increase lifetime value.

• Business intelligence is often seen as outside the remit of the marketing team, but the information in your CDP isn’t just useful for marketing. From product trendlines to graphical store locations, a CDP can provide business-wide answers.

None of this analysis is new. The difference is that the CDP puts this capability in the hands of the marketer for the first time. Analytics tools give the marketer up-to-date (that is, in the last hour) information on anything from total number of current VIP customers to a 12-month projection on total lifetime value. And it’s all integral to the platform.


PREDICTIVE MARKETERS ARE 2.9 TIMES MORE LIKELY TO REPORT REVENUE

GROWTH AT RATES HIGHER THAN THE INDUSTRY AVERAGE AND 2.1 TIMES MORE

LIKELY TO OCCUPY A COMMANDING LEADERSHIP POSITION IN THEIR MARKET”

FORBES

Data deployment

Data is useless if it’s locked into one platform. Reporting and analytics is a key capability of the CDP, but we should not lose sight of the fact that a main requirement of a CDP is the ability to easily transfer data into other tools. We need to prevent history repeating itself, and avoid the CDP becoming yet another impenetrable and costly silo.

Predictive analytics and machine learning

The outstanding capabilities of the new CDP lies in predictive analytics and machine learning. This is in stark comparison with the capabilities of marketing databases. Limited to the analysis of historical transactional data, marketing databases could only carry out ‘propensity modelling’—that is, estimating how likely a customer is to do something based on how similar they are to other customers who’ve done the same thing. The quirk with this type of modelling was that recency was the most important factor—suggesting that the most recent thing you bought held the key to your future shopping

habits. But if my most recent purchase was a vacuum cleaner, I’d hope I wouldn’t need another one for quite some time.

But combine transactional and behavioural data with multi-channel engagement, and patterns begin to emerge. Let’s go back to our vacuum cleaner example. If we combined my vacuum cleaner purchase data with my website browsing of dog flaps, and multiple in-store purchases of sticky rollers, it would be safe to assume I have a pet. This opens a whole new marketing avenue. These logical assumptions you and I make when presented with this information happen automatically through predictive modelling. Bearing all this in

mind, you can market specifically to that customer to try to get the best outcome.

Underpinning all of this is the power of machine learning. Predictive models are never flat and outdated, but constantly updated with the latest behaviour and engagement. Patterns change. Most likely outcomes change. And, in the world of marketing automation, your response can change too.

In the same way that the CDP is the natural successor to the marketing database, so predictive modelling is succeeding propensity modelling.


Marketing automation

Marketing automation lives and dies on its ability to accurately target audiences. Well, the CDP provides more accurate data that feeds accurate targeting.

Plus, as predictive models develop based on machine learning, so the CDP can make automated decisions on the best action for each customer. Lifecycle journeys can be built for every outcome and personalised to that individual, based on their engagement with the brand.

People often talk about 1:1 marketing being the Holy Grail of B2C brands. The CDP is moving us a big step closer to that.

50% OF THOSE WHO HAVE A MARKETING AUTOMATION PLATFORM RANK DATA HYGIENE AS THEIR TOP DATA CHALLENGE”CMO.COM


HOW DO I ACHIEVE MORE?

Target campaigns more accurately with greater relevance

When we were reliant on name/address/postcode de-duplication methods, simple typos or initials instead of first names could create duplicate records. But in the CDP, with increasing numbers of identifiers pulling together increasing numbers of channels and data types, accuracy is vastly improved.

There are few marketers out there who would dispute that accurate data improves targeting and reduces waste. I certainly hope so, or we at RedEye would have gone home a long time ago.

The primary outcome of the single customer view at the heart of the CDP is better targeting. Overlaying behavioural data onto transactional data allows the marketer to

personalise emails with the last product a customer viewed on the website, making the email more relevant. This can be expanded with other insight—for example, if I know which store they shop in, I can personalise emails with store information. The variations are endless, and the highly individual, targeted nature of the strategy means a higher likelihood of converting a customer or prospect.

CONSUMERS, ON AVERAGE, OWN 7.2 DEVICES AND USE 3 OR MORE ON A

DAILY BASIS - MARKETERS TYPICALLY ONLY SEE 1”

ADOBE

Create deeper customer understanding

The act of putting all your customer data in a single database creates deeper customer records. Everything that an organisation knows about a customer is available to the marketer in a single platform. But the benefit does not lie simply in collecting and merging the data, it is in the

knowledge that this creates and then in the application of that knowledge. To create personalised communications across multiple channels, you need the insight and data provided by a multi-channel SCV.

Refine your segmentation

As data becomes more accurate so, therefore, does segmentation. More data on top

of greater data accuracy means better segmentation. And better segmentation is part of the better targeting strategy. More accurate strategic segments, such as recency frequency monetary models and smaller tactical segments, such as ‘All single buyers who browsed blue trousers in the last 10 days’ allow for much greater flexibility and relevance.


Reduce data latency

The CDP lets you access data more quickly to get your message out faster. It’s not so much about achieving more things as achieving things more quickly. Some organisations who use a database to coordinate their marketing campaigns are only able to deliver data to an email service provider once a week. Old-fashioned databases are often held by third parties, meaning you have to request data extracts. The CDP puts the power back in the hands of the marketer, which means no degraded data, and no extra time, effort and cost plugging systems together to achieve an SCV.

Predict future customer behaviour

Predictive modelling and machine learning have been touted as the saviour of every

industry—from healthcare to marketing—but, like all analysis, they rely on having relevant data that’s correctly tied together to present the most accurate rep-resentation of the truth. That’s exactly what the CDP provides. Now it can help you make decisions about customers. For instance, is this customer more likely to lapse or buy? More likely to be a single buyer or a VIP?

Maximise the value of marketing automation

Many organisations buy into the benefits of marketing automation, but struggle to realise them. One of the ways to maximise the benefits is to employ a CDP integrated with predictive modelling and machine learning. Predictive models define the next best action for the customer, and the marketer can build automated lifecycles to meet that likely end

state. If behaviours change then treatment changes to an alterna-tive lifecycle. All lifecycles can be built to personalise the message to the individual from the data held in the CDP. The outcome is a situation where most of your customers are in a highly personalised and automated lifecycle optimised to meet the marketer’s preferred outcome.

Grow lifetime value

Ask ten analysts for a definition of customer lifetime value and you will get nine different answers—the tenth analyst will claim there isn’t one. But they would all agree that any calcula-tion has two key variables: value of sale and regularity of sale. To put it simply, the solution to increasing lifetime value is to sell more to your customer, more often. By increasing the accuracy and relevance of marketing using the CDP, improvements in customer lifetime value are inevitable.

AGORA FINANCIAL, A LEADING DIGITAL MEDIA COMPANY, ADOPTED A CUSTOMER DATA PLATFORM TO EXECUTE PERSONALISED WEB CAMPAIGNS AND SAW A 167% BUMP IN WEBSITE-SPECIFIC REVENUECDP INSTITUTE


ACHIEVING MORE

WHILE SPENDING LESS

Not only will a CDP bring a greater return on your marketing investment, it can also save you money. We estimate that an organisation could be using up to eight separate platforms to achieve what a CDP achieves with one.

The benefits of consolidating your marketing technology into one platform doesn’t just include licensing costs. One of the goals of a CDP is to make the data more readily available to the marketers, providing answers to questions that would previously have cost hundreds of pounds and taken weeks to arrive at. For organisations that are short of resources, the ability to, for instance, more quickly make decisions or implement campaigns frees up resources for other tasks, allowing them to do more.


The advent of the CDP is a major shift in marketing. It is the point at which offline and online finally come together, giving the marketer an accurate view of every customer and a springboard for the tasks that matter most: targeting, campaign management, reporting, insight and analytics.

Data becomes more accurate, broader and deeper. Analysis becomes immediate, insights more readily available, and data can be moved at greater speed, avoiding issues around data latency.

As marketing transitions into an omni-channel world, the CDP

SUMMARY

will be the key to delivering more relevant, personal and automated marketing. This will remove the barriers between marketing teams that have existed for decades. There will no longer be a distinction between online and offline, web and direct—single teams will deliver unified experiences as one.

ONLY 20% OF MARKETERS FEEL VERY CONFIDENT THAT THEY ARE SERVING THE RIGHT MESSAGE ON THE RIGHT DEVICE”ATLAS BY FACEBOOK


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Customer Data Platform€¦ · Chief Commercial Officer. 4 THECUSTOMER ATA TFORM / . 3 / 2017 For...

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