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How to choose a CDP

May 13, 2022

Organizations collect data from a wide range of sources and store it in any number of solutions, which can be spread across the business. For marketing departments trying to deliver personalized customer experiences, those silos present a problem, and a customer data platform (CDP) can seem like an easy answer. That could be the right conclusion, but it also might be premature. If you’re wondering how to choose a CDP, it makes sense to start with the basics. How to choose a CDP: 1. Understand the benefits and limitations of CDP solutions 2. Get internal alignment around the need and timing for a CDP 3. Surface your requirements, and prioritize your top 3-5 4. Map your core requirements to functionality you need in a CDP 5. Get stakeholder buy-in and secure a budget 6. Create a CDP selection matrix 7. Get external help if you need it 1. Understand the benefits and limitations of CDP solutions The CDP Institute defines a customer data platform as “packaged software that creates a persistent, unified customer database that is accessible to other systems.” This simple definition goes a long way toward unpacking the pros and cons of CDPs. A CDP is packaged software. PRO: A CDP is prebuilt and doesn’t require as much help from IT to implement and maintain as other solutions like custom platforms and data warehouses. CON: Because it’s packaged software and not a platform, a CDP will be less customizable and less efficient than adding customized functionality to an existing architecture. A CDP must create a persistent, unified customer database. PRO: A CDP ingests data from multiple sources across the business, standardizes it, and uses it to build an identity graph to enable real-time customer identification that fuels targeted multi-channel marketing efforts. CON: A CDP overcomes some of the difficulty of identity resolution but obscures the methodology. You get a unified customer view, but not a lot of certainty that it’s accurate. A CDP must be accessible to other systems. PRO: You can use the aggregated data and outputs from a CDP with your downstream systems. CON: The CDP you select must either come with the API connections you need for the rest of your martech and enterprise tech stacks or you’ll need to factor in costs for custom APIs. 2. Get internal alignment around the need and timing for a CDP Today’s martech stacks are growing fast, and it’s not always clear whether the functionality your marketing team needs already exists in the broader enterprise architecture. Overlapping features and blindspots are a problem — but also an opportunity. Gathering a cross-functional group that includes marketing, IT, data, and product teams can help you figure out how to get the most from your technology investments across the business. If you’re wondering how to choose a CDP, you might be surprised to find that many of the core functions you’re looking for in a CDP are already available in your CRM, MDM, data warehouse, analytics, and BI solutions. For example: Some analytical CRMs can track real-time online events like website browsing, adding to cart, and the like, much like CDPs. Your data warehouse may allow for an identity graph overlay and machine learning algorithms that can play a key role in enterprise-wide customer identity resolution. Your IT and data teams may already have identity and access management processes in place, and that single source of customer data truth could be integrated with your existing martech stack. So, how do you know if your organization needs a CDP? Your cross-functional group can explore potential use cases in light of departmental needs, budget, and existing functionality. While every organization is different, here are some ways to frame the conversation. You might need a CDP if: Your organization has a large volume of customer data stored in multiple places, and you either can’t or haven’t been able to integrate it into a single, real-time view Your marketing team can’t access customer data or perform data tasks without help from data and IT teams You can’t unify your online metrics, CRM data, and offline touchpoint and transactional data, making it hard to build a 360-degree view of your customer You’re moving to a first-party data strategy, but you don’t have systems in place to use your data to inform audience segmentation and personalized campaigns You have functionality gaps in your current martech stack that match up to CDP features You might NOT need a CDP if: You have a minimal and well architected martech stack Your customer data is simple or straightforward enough to analyze easily without additional tools Your marketing plan doesn’t require a lot of personalization, either because your products and services don’t require it, or because your roadmap doesn’t call for it in the short term Your customer data strategy has already mapped your needs to existing solutions and your roadmap doesn’t include a CDP Your budget doesn’t allow for duplicating storage costs, building and operating data ingestion processes, or keeping up with the steep total cost of CDP ownership Your security requirements don’t allow for third-party customer data storage Your internal IT and data teams find more affordable and secure means to implement identity and access management, democratize data access, and connect data storage with martech tools 3. Surface requirements, and prioritize your top 3-5 As you meet with your cross-functional team and discuss your need for a CDP, you can also surface requirements and use cases for a CDP solution. From your larger list, choose 3-5 top priorities to help you choose a CDP. Some common examples of CDP use cases include: Streamlining identity resolution, and making those outputs more accessible and actionable Combining online and offline data Creating more personalized content experiences on your website Using more strategic targeting in your multichannel campaigns Integrating and standardizing data across systems and making it easier to use those outputs in omnichannel marketing efforts 4. Map your core requirements to features you need in a CDP After you identify your top 3-5 use cases, map those core requirements to features you need in a CDP. For example, if one of your core requirements is enabling more targeted multichannel marketing campaigns in the EU, you might need to look for a CDP that offers GDPR-compliant identity resolution processes. Be sure to note which systems and solutions you’ll need to connect to your CDP both in terms of data ingestion and output sharing with downstream systems. Your CDP will need integrations and APIs to enable those connections. Common CDP integrations include CRMs, analytics tools and dashboards, advertising platforms, BI tools, data warehouses, and data lakes. Meet with your cross-functional group again to confirm your conclusions and assumptions. This meeting is a good time to clarify any security and data governance implications for your CDP selection as well. 5. Get stakeholder buy-in and secure a budget Your next step is to get stakeholders on board for the CDP acquisition and to establish funding to make the purchase. Leadership needs to know the full report from your cross-functional team, but they’ll also have questions about what kind of return the organization can expect from the investment As you frame up the value story, consider thinking about what not having a CDP costs your company: Is your marketing team using a significant amount of IT or data team hours looking for information? If you were to solve your data connectivity issues with custom-built APIs, how much would that cost? How much are you losing in customer value by not providing a customized experience? How much time is your marketing team spending manually moving data from one system to another? 6. Create a CDP selection matrix The vendor selection process doesn’t have to be painful. Your team can feel more confident about choosing a CDP because you’re going into the process with defined use cases and requirements, as well as support from the organization. That said, with an ever-growing CDP vendor landscape, it helps to have a process for narrowing down your choices. To accomplish that task, many companies use an internally framed selection matrix or decision tree, customized to fit CDP-specific needs and requirements. These tools can help you think through solution options using your own criteria. However you handle the vendor review, plan to bring a short list of possibilities back to your cross-functional team for a final discussion before making a purchasing decision. 7. Get external help if you need it. Figuring out how to choose a CDP and where the solution fits into your larger customer data strategy isn’t easy. Fusion Alliance helps companies navigate changing customer data environments with a unique methodology that fosters collaboration, transparency, and shared ownership of digital transformations.   Whether you’re just getting started or stuck in the messy middle of a CDP selection process, we help you unpack your processes and partnerships to identify risks and opportunities so you can take the right next steps toward a future-focused customer data strategy.   Let’s talk. Keep reading: The Ultimate Guide to Creating Your Customer Data Strategy

CDP vs CRM: 5 key questions to inform your decision

Apr 22, 2022

The difference between a customer data platform (CDP) and customer relationship management (CRM) solution may be difficult to determine at first, because both options collect, store, and put customer data to use in support of business goals. While their functions may overlap, the CDP vs CRM debate becomes easier when you get clarity about the people, processes, and use cases for each option. How to make the CRM vs CDP decision 1. What is a CDP? 2. What is a CRM? 3. What data is collected by a CRM vs CDP? 4. Who uses a CDP vs CRM and for what purpose? 5. What do we need: a CDP, CRM, or both? 1. What is a CDP? A CDP unifies and standardizes large and detailed data sets from a wide variety of sources, resulting in robust customer profiles that enable real-time personalization. The CDP Institute defines a CDP as “packaged software that creates a persistent, unified customer database that is accessible to other systems.” Additionally, a CDP must have the following capabilities: Ingest data from any source Capture full detail of ingested data Store ingested data indefinitely (subject to privacy constraints) Create unified profiles of identified individuals Share data with any system that needs it Through the process of identity resolution, the CDP can match, merge, and deduplicate data into a single customer view that can be segmented and analyzed — by human analysts or with the assistance of machine learning. 2. What is a CRM? A CRM and a CDP are both software solutions that handle customer data, but they differ in how, why, and who for. The difference came about organically, as organizations adopted different use cases for their customer data over time. “CRM solutions were often proposed to tackle customer data management problems. The idea was that you could get ‘all of your data in one place’ to use for sales, marketing, and customer service. The promise was they’d break down silos in enterprises and design a view of the customer that wasn’t specific to sales or marketing or customer service. That sounds familiar to the promise of CDPs, doesn’t it?” — Lizzy Foo Kune, senior director analyst at Gartner A CRM helps organizations manage customer relationships by consolidating what is known about customers from one-to-one touchpoints and transactional details into a single database, giving sales and service teams personal and actionable insights. According to the Microsoft Dynamics 365 website “CRM systems help you manage and maintain customer relationships, track sales leads, marketing, and pipeline, and deliver actionable data.” Sound similar to a CDP? There’s a key difference: CRMs only apply to known customers and contacts. Moreover, they don’t cleanse, combine, standardize, or deduplicate the customer records, so they can’t give a business a “single customer view” across channels. 3. What data is collected in a CRM vs CDP? That key difference reflects the two business silos that CRMs were developed to unite: marketing and sales. Marketing needs a high volume of customer data across touchpoints in a single, unified view to understand your customers and their behavior. CDPs collect digital data automatically using integrations and code snippets embedded in digital touchpoints, gathering customer data from websites, laptops, mobile devices, apps, and even CRMs into one place. The CDP then cleans it, and produces consolidated customer. Sales needs customer data to help manage the customer relationship. CRMs store historical data about customer interactions in order to inform future interactions. The data CRMs collect is usually entered manually and its purpose is tightly focused on logging an interpersonal or transactional interaction — for example, notes from the latest sales call – to inform future interactions. The data inputs are simple, although difficult to standardize or automate, and are usually done manually by sales (and service) people to track the progress of the relationship. 4. Who uses a CDP vs CRM and for what purpose? Your organization’s CDP vs CRM discussions may come down to who needs to use the system to accomplish critical business tasks. As we’ve said above, marketers need a unified view of the customer’s entire experience of the brand over time. A CDP’s ability to ingest, cleanse, manage, and analyze large volumes of data from many digital sources makes that task easier. But for sales and support teams, the key driver is managing customer relationships. In these customer-facing roles, contact management is critical, so a CRM’s ability to capture notes and manual inputs about one-to-one interactions facilitates that function. 5. What do we need: a CRM, CDP, or both? While choosing between solutions isn’t easy, it’s not necessarily an either/or decision. You might find a both/and solution serves your business better. How do you make the call? If your business primarily needs to manage customer relationships in a more detailed, efficient, and personalized way, you might choose a CRM. In fact, over the last few years, CRMs have been innovating and evolving to function more and more like CDPs so it might be prudent to wait and/or choose vendors carefully. Gartner predicts that 70% of independent CDP vendors will be acquired by larger technology vendors or will diversify by 2023.  “CRM systems have seen the competitive threat that CDPs brought to the table,” Gartner’s Foo Kune said. “As CRM technologies recognize that they need to update their aging databases to meet the needs of modern business functions, including marketing, augmenting your CRM with a CDP may be unnecessary.” If your business primarily needs to have a broad view of who your customers are and how they engage with your business, you may opt for a CDP. “Companies seeking a new strategy to form personalized customer experiences through data will need a CDP as it offers the resources to create a comprehensive view of the customer across each platform they interact with in real-time — whether it’s social media, apps or mobile,” says Heidi Bullock of Tealium, a CDP provider. “CRMs, on the other hand, help manage sales-focused customer data rather than collecting data across different channels.” And, if your business is broad you can choose both a CDP and a CRM.  While CDPs and CRMs offer two different marketing and sales data management solutions with differing strengths, you don’t necessarily have to choose between them. “CDPs and CRMs can actually operate simultaneously, as they work to fulfill different business goals,” Tealium’s Bullock notes. It’s possible to use a CRM as an input and output channel to a CDP, and, in turn, use a CDP to provide a 360° customer view data set within the CRM. Choosing both a CDP and a CRM can deliver both an amazing customer experience and tremendous business value: achieving high marks in customer satisfaction and providing integrated tracking and engagement. The CDP vs CRM choice depends on your roadmap. Fusion works with clients to define a customer data strategy that fits each organization’s unique strategic objectives, operational needs, and timeline. From there, our team creates a tactical roadmap to define actionable steps toward those goals. Whether you’re just getting started or trying to get your digital transformation back on track, we can help. Ask a question >> Book a workshop >> Learn more about customer data strategy >>

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How to choose a CDP

CDP vs CRM: 5 key questions to inform your decision

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