CDPs - Emerging Challenges & Realising Value

A few weeks ago, I flagged that operations was becoming the Achilles heel of marketing, in particular that outdated data ops is negatively impacting our decision making and killing our ability to take advantage of new technology such as Customer Data Platforms (CDPs).

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Today, let’s talk about CDPs and unpack some of the emerging challenges and what can be done.

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As Brendan Coyne at MI-3 recently observed, the demand for CDPs is running hot , and will likely get hotter as businesses grasp the full implications of the government's sweeping privacy reforms.

However, from what I am seeing, for some buying a CDP is proving a lot easier than realising value from one.

In fact, implementing a CDP can raise a range of issues for marketing and result in a whole new set of potential challenges. Take these four:?

1. Legacy data

Bill Gates is credited with observing two rules pertaining to automation,

"The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency."

If there are gaps and inefficiencies in your data processes, a CDP is only likely to magnify them. For example, many local organisations are now racing to collect clean first-party data with all the right consents – but then mixing it with old ‘bundled consent’ data, with no way of differentiating between the two.

As keen observers, such as Chris Brinkworth from Civic Data, rightly point out , in this head long rush to collect and comply, instead of a clear and clean data lake, the result of marketing’s most recent investment could instead be a “brackish brine” of 'unsure if safe' data rendering compliant activation at scale near impossible.

2. The activation void

It’s one thing to identify a use case for your new CDP – and another to activate it in practice.

Here are two examples:

Example 1 > We know that while behavioral and interaction data is richest at the point of interaction, its value is quickly lost. Being able to identify and act on data in a meaningful timeframe may mean responding within a day or days instead of weeks.

For incumbent businesses, whose existing data and decision-making processes center on transactional vs behavioral cues, this is unsettling; not only for our understanding of what’s actually going on in the business, but for the re-wiring implications of how our teams work and interact with others across the business.

Example 2 > The use case activation gap that occurs between the high-level estimations and overviews of those pitched for the business case (x-sell, personalisation, retention, etc), and the eventual activation of those use cases in practice – once the platform and its data are in place and available to use.

The activation challenges I see manifest two ways:

First, unforeseen operational dependencies such as team bandwidth or downstream platform stability / limitations in digital touch points (website / apps).?

Second, is our ability to identify and act on the use case interaction as it occurs (can we see it happening? is the interaction data produced rich enough for us to act on? can we change anything to influence the outcome? what channels can we activate?)

Both these examples take time to resolve – time (and cost) you may not have factored into your CDP implementation.

3. Marketing’s remit

CDPs are being pitched to organisations as a marketing platform – but in truth, they’re bigger than that. Their ingestion and application go beyond marketing and digital channels and extend to enterprise product systems, sales and service systems.

Are we as marketers ready for this? Is our internal influence sufficient to align the priorities and operations of other teams?

For example, I see competing voices in the debate for how best to solve for 1st party data readiness; Technology advocating enterprise data lake solutions on one side and marketing advocating CDPs on the other, often leading to political tension – stalling progress.

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4. The growth gap

I am finding that the use cases peddled by the industry in response to the demise of 3rd party cookies uninspiring: I seriously doubt ideas like generating zero party data through competitions and quizzes are going to fill the growth gap being created – yet these are amongst the use cases being suggested for CPDs, along with cross-selling and increased customer retention.

My fear is that they will fail to address the major problem, which is acquisition: acquisition volume and performance, on which the other use cases ultimately depend.

?No doubt these use cases will be richer and better performing, but will they be enough to fill the gap, and if not, where will the volume come from?

Organisations that are not prepared for this shift could lose up to 23 per cent of their marketing attributable revenue over the next three years, according to Publicis Sapient.

We can’t risk marketing ending up in a situation where we need to go back to the business and say we can’t deliver on the growth deliverables assigned to us.

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So, what can we do?

I see there are 4 things we can consider, 2 tactical, and 2 strategic:

Tactical 1 > Expand our thinking to include enterprise system solutions. Don’t compete with IT, collaborate.

Tactical 2 > Assess and factor in adoption and activation dependency efforts post implementation.

Strategic 3 > Develop marketing analytical capabilities beyond customer insight to encompass marketing performance and commercial contribution. (i.e. A dollar more / a dollar less marketing investment has this impact on the business bottom line)

Strategic 4 > Consider reconfiguring your marketing engine to thrive and drive compliant growth in this new environment (think business alignment, operating model, ways of working, mindset, and enabling capabilities)

If not, I fear legacy marketing functions will be faced with the very real prospect of delivering bad news to the business on their future contributions.

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So, if you’re like me and are interested in addressing operational improvements that ensure marketing’s position as a growth engine in your business,?let’s talk .?