Enabling Personalization at Scale with Your CDP

Great customer experience (CX) requires a holistic approach spanning marketing, product, commerce, and service.? Data and technology are enablers of better CX, but driving great business outcomes requires a focus on insights, human-centered design, and culture.? Recently, I had Martin Kihn , head of Strategy at Salesforce , on my podcast, The CX & Culture Connection to discuss these topics (see episode 43 here).? I promised to do a review of his latest book, Customer 360, which Martin co-authored with Andrea Chen Lin.? I hope you enjoy this book review, and that you’ll take the time to read the book, which is a great guide on how to unlock the value of data across your organization and embrace AI to deliver better CX.

What is Customer 360

Customer 360 is shorthand for a “constellation of technologies, processes, and people that are all directed at building a coherent end-to-end customer experience.? It encompasses Data + AI + Trust.? The purpose of Customer 360 is to serve the total customer journey from the customer’s point of view, regardless of internal departments, siloes, structures, or habits.”? Realizing the promise of Customer 360 requires leaders to pick CX up holistically and act as change agents within their organizations to do more than chase survey scores and pain points.

One of the biggest hurdles to overcome is the fragmentation of data and technology within companies.? According to research from Salesforce, the typical company has 450 different applications and dozens of sources of customer data (more than 150+ apps for SMBs and 5x as many for larger enterprises).? The applications that use this data are often disconnected from one another.? As the book lays out, investment in a customer data platform (CDP), helps solve the trapped data problem.

CDPs combine a suite of tools to ingest customer data, harmonize it so its interoperable, put in place identity management, enable analytics, and power use cases across marketing, product, commerce, and service.? CDPs are a complement to a company’s holistic efforts to invest in experience management.? CDPs enable more effective integration of your operational data, which serve as signals for where and how to act. ?Bringing your operational data signals together enables real-time, data-driven journey orchestration.? CDPs go together with other elements within your marketing-technology stack (mar-tech).? Your CDP becomes the core enabler of how to turn operational data signals into the right personalized actions and is a complement to customer listening platforms that focus on generating insights about what your customers are thinking, feeling, and saying (operational data signals capture what they are doing).? While the book evangelizes the adoption of CDPs within the mar-tech stack, the authors also call out the importance of addressing people and process issues, not just data and technology investments.? Indeed, the authors call out the importance of focusing on customer experience and culture together, which is something that Martin and I talk about on my podcast.

The book addresses how the CDP is different than data warehouses and data lakes.? We’ll get to that in a moment.? But first, let’s dive into the business case for investment in Customer 360.

Benefits of Customer 360

Customers’ expectations are set by their best memories, regardless of product or service category.? A recent Salesforce survey of 14,300 customers globally found that 80% of respondents value CX as much as the functional benefits of the company’s products or services.? The stakes are going up for better experience as companies like Apple, Tesla, Amazon, and others raise the bar for what good looks like.? Yet nearly two-thirds of consumers also said that the average company “treats them like a number” and nearly three-quarters reported facing a significant product or service problem in the past year.? This is more than double the level of a previous survey in the early 2000s.? Most likely we’re seeing a combination of rising expectations and falling service levels, as too many companies focus on expense reduction without improving experience.

The authors focus on several benefits from investing in Customer 360, including higher revenues and lower costs.? Revenue benefits from better CX include more frequent purchases with higher basket size.? Salesforce research estimates a 33% improvement in marketing metrics like response to campaigns, engagement rates on websites and apps, and conversion rates for promotional offers.? Cost savings include savings from improvement to workflows and automating manual steps, which can yield approximately 15-20% cost savings for addressable costs across business functions.? I’ve seen similar benefits for both revenues and costs in my own client work across industries.

How CDPs are Different from Data Warehouses and Data Lakes

Unlocking the value of trapped data is key to realizing the value of Customer 360 use cases.???So, what’s new and different about the CDP vs. prior investments companies have made in data warehouses and data lakes?

Salesforce has been investing in cloud-based solutions across the mar-tech stack for decades.? It started on the sales side with customer relationship management (CRM).? Then it expanded to the service side with Service Cloud, and became the fastest growing call-center software provide because it used the same metadata model as Sales Cloud.? It later expanded beyond its center-of-gravity with BtoB companies, entering the BtoC world through the launch of Marketing Cloud, which included Customer 360 Data Manager to link data to a common ID.? With the launch of Customer 360 Audiences (later renamed Salesforce Customer Data Platform), Salesforce introduced tools to ingest external data sources, conduct segmentation and analytics, and activate audiences through advertising and email marketing.? In the last few years, Salesforce moved the CDP out from under the Marketing Cloud umbrella and renamed it Salesforce Data Cloud to reflect the more holistic approach for Customer 360 beyond marketing.?

Prior to and in parallel to the growth of the CDP category, companies have been investing in data warehouses and data lakes.? Enterprise Data Warehouses (EDWs) support the stability of data but not real-time, trigger-based analytics.? Data lakes emerged to handle vast amount of unstructured data, in contrast to structured data that are stored in rows and columns.? As data volumes grew and unstructured data grew to make up more than 80% of the total (and are growing exponentially still), relational databases couldn’t handle the complexity., and data lakes emerged as a solution.

Snowflake, launched in 2015, is the market leader for cloud-based data solutions.? Designed from the ground-up for the cloud and agnostic across ecosystems like Google, Microsoft, and Amazon, Snowflake democratized access to data for analytics.? Multiple compute nodes can be applied to the same data, providing more flexibility to democratize access to data across an expanding set of use cases.? Data Clean Rooms (DCRs) have also emerged as a way for companies to collaborate and are typically purpose-built on platforms like Snowflake.

So again, why do you need a CDP if you have already made investments in a data platform like Snowflake?? The CDP provides access to capabilities you would otherwise have to build or integrate from other siloed analytics applications, across areas like change detection, triggered actions, identity management, segmentation analytics, and other use cases powered by AI.? The CDP you choose also opens access to a partner ecosystem for apps, features, and agile development of use cases.

Customer 360 Allows You to Tailor Your Approach Across Use Cases

Enterprise mar-tech stacks typically include components across dozens, or even hundreds, of different vendors, sometimes combined with solutions built by agencies or consultants or developed in house.? The emergence of low/no-code solutions makes it easier to build on top of one or more of these platforms, which Martin and Andrea refer to in their book as data and business gravity.? Rationalizing and integrating platforms is one way to create a self-funding flywheel where savings help fund investment in new capabilities.? In most cases, however, the biggest saving to make your growth flywheel self-funding is not vendor savings – as significant as those can be – but savings from research and testing from having a regular stream of customer insights.? Implementing a CDP while also reinforcing a culture of experimentation helps you to maximize your growth flywheel with less incremental investment.

In their book, Martin and Andrea also talk about the value of taking a more modular approach to pursuing use cases that take advantage of not only low/no-code capabilities, but adoption of AI to power decision making and customization of your CX use cases.? I won’t get into the details here about the trade-offs between a full-feature and composable CDP here.? The book does a great job of that.? The key insight to take away before reading the book is to embark on a learning journey where you foster new ways of working that tackle Customer 360 holistically, and that unlock that value of your data through implementation of a CDP.

CDPs and AI Enable New Ways to Reinforce a Culture of Experimentation

Rapid advances in data analytics and AI are changing the game for how we unlock value from investments in customer experience.? Rather than send requests to IT, you can now interact directly with AI to build insights, engage customers, and monitor the impact of changes to the customer experience.? AI is lowering the barriers to entry for user engagement, democratizing decision making through better access to your trapped data.? Analytics is shifting from just generating insights to enabling action.

One way you can leverage your CDP and AI is as part of journey orchestration, constructing micro-segments to test and learn across advertising, email, your website, mobile app, or other content-based experiences.

At JourneySpark, we are also helping clients to better map their customers to personas which tie more closely to the drivers of customer lifetime value.? These personas provide deeper insights into how to build a stronger emotionally engaging experience with customers.?? We’ve been able to mine unstructured data to match customers to personas.? Then we also use AI to generate content through the eyes of personas.? This enables a continuous learning loop, where your teams work in agile ways to drive value quickly.? For more on this approach, check out my podcast episode #44 with Nitzan Shaer , the CEO of Wevo , here.

How You Can Get Started to Apply These Ideas?

If you’d like to learn more about CDPs, Martin and Andrea’s book is a great place to start.? You can also check out content from the CDP Institute, which was founded by David Raab, who first coined the term CDP in a blog post more than ten years ago.? In addition to Martin, I’ve also had Rony Vexelman on my podcast, who is the head of marketing at Optimove another CDP that focuses on enabling AI-driven journey orchestration (see episode 4 of my podcast here).

Another way to get moving applying these ideas is to take a course JourneySpark has partnered on with the Customer Experience Professionals Association (CXPA) , called Making Personas and Journeys Data-Driven and Actionable.? You can find more information about the course on the CXPA’s website here.

If you have questions about where to get started and how to implement the ideas shared here, please don’t hesitate to connect with me at https://www.dhirubhai.net/in/matthewegol/ to have a conversation.

If you’d like to check out other book reviews, you can find them on JourneySpark’s website.?

I hope this sparked some great ideas for you and energy to take action!