The customer data platform (CDP) market continues to run hot, with many customer deployments and a flurry of vendor activity. Â The estimated market growth from $2.4 billion in 2020 to $10.3 billion in 2025 appears in reach as the market continues to invest in these capabilities.
Fortunately, there are several external forces at work that are helping crystallize a CDP’s must-have features and functionalities for providing a differentiated customer experience (CX), enabling marketers to make smart choices. This is particularly relevant in light of the drastic changes in customer behaviors and flight to digital-first customer journeys that have taken root over the past year-plus, as brands need the right capabilities to keep up with consumer changes and current expectations.
Coping with Complexity: Requirements Evolve
Those behavior changes and digital-first journeys are responsible for the biggest spotlight on the CDP marketplace as far as underlining the requirements needed to deliver a seamless omnichannel experience. Over the past year customer journeys have become far more complex; curbside pick-up, digital returns and online comparison shopping are among some of the newer behaviors that together represent consumers taking more control over their journeys and solidifying their expectations for a seamless experience across channels. In healthcare, too, there has been an acceleration of the healthcare consumerism trend where the end consumer is taking greater control of a holistic journey with a growing digital component.
Along with the changing behaviors, consumers are raising their expectations for how a brand engages with them. Despite the growing complexity, consumers expect not only that a brand recognize them across every channel, but that every interaction is relevant to where they are in a customer journey.
Marketers grasp that more than just integrating all customer data sources, a CDP must now help guide comprehensive, multi-channel, multi-touch journeys to meet the needs and expectations of customers amid the growing complexity. To do this, there is a growing recognition that an accurate, real-time customer profile is essential for driving decisions across multiple channels at the cadence of the customer.
The Role of a CDP in Managing Compliance
Another force at play is the slate of worldwide data privacy laws that are either in effect or on the horizon. In addition to GDPR and CCPA, Brazil’s Lei Geral de Proteção de Dados (LGPD) took effect in September 2020, with administrative sanctions expected to be enforced beginning next month. The China Personal Information Protection Law (PIPL), drafted last year, is expected to roll out before the end of the year. In the US, even without a national data privacy law other states are following California’s lead, including Virginia with the Consumer Data Protection Act (CDPA), which will take effect in 2023.
While a CDP is not intended to be the go-to compliance platform, data privacy considerations do give CDPs in general a more prominent seat at the table as far as managing the implications on an individual customer basis. A CDP enables brands to implement the necessary compliance processes on behalf of its customers and have a way to handle those processes correctly. A customer may invoke the right to be forgotten, as an example. Rather than simply throw a record away, the process must recognize that certain data must be kept. Recent purchase history may be important for returns and warranties, for example. Or credit card transactions to handle a fraud claim.
First-Party Data Drives the Need for Perfection
Lastly, the phasing out of the third-party cookie is a big factor in driving the CDP marketplace. Certainly the most well-publicized, it is putting a premium on the importance of the accurate collection and unification of first-party customer data, accurate identity resolution and comprehensive data quality.
If easy access to unified customer data is the baseline requirement and expectation for a CDP, the growing importance of first-party data raises the bar for what a unified profile must look like. The need for perfect data and complete transparency become essential. Marketers can no longer tolerate imperfect or outdated records, or accept half measures for resolving a customer’s identity regardless of device, channel or other variables.
Perfect data is a common thread among the external forces that, together, shape the direction of the CDP marketplace. Growing complexity in digital-first customer journeys, rising expectations for a seamless customer experience, an increase in data privacy laws and the disappearance of the third-party cookie all make it essential that brands work with perfect customer profiles.
Data, Insight & Action: CDP Must-Haves
With perfect data the ultimate objective for the delivery of superior customer experiences, prospective CDP buyers should take careful note of vendor claims about the features and functionalities of their specific products. If the collection of data, data prep and identity resolution represent baseline expectations, within those categories there is a broad spectrum of competencies. A vendor may, for instance, cross ‘identity resolution’ off a checklist, but at what level? Is it using both heuristic and probabilistic matching, solving for any device or ID, householding?
Any cutting of corners for basic customer data platform requirements will have significant downstream implications; a real-time decisioning engine applied to an imperfect or outdated customer profile will produce imperfect or outdated actions.
A perfect, next-best action requires a real-time component to enable the business to operate at the cadence of the customer. Just as damaging as engaging with the wrong customer because you’re working with imperfect data is engaging with the right customer but at the wrong time or on the wrong channel, or otherwise not aligned perfectly with where the customer is on a customer journey. Prospective buyers need ensure that a CDP is capable of real-time decisions that meet the requirements of the business, whatever that definition of real time may be for specific business use cases.
Some Lead, Some Follow: Stay Ahead of the Market
With the need for perfect data rapidly becoming a requirement for meeting customer expectations for a seamless omnichannel experience, it’s a safe bet that we will see many vendors in the short term offer new features and functionalities that promise unified customer profiles. Marketers should look past the surface to make sure a customer data platform cdp satisfies their ambitions for the future, in ways that will deliver tangible ROI. For information on how Redpoint’s solutions provide a scalable, unified single point of control where all customer data is connected to form a golden record and every customer touchpoint is intelligently orchestrated, we welcome you to include a Redpoint demo as part of your evaluation process.
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