Retailers trading online need a CDP if they are to meet challenges ahead

By Gita Samani, Consultancy Practice Lead, Astound Commerce

During the Covid-19 crisis, our clients collaborated in ways that they would never have imagined in the past.

Marketing and operations worked together almost as one to meet the needs of customers who were concerned about product suitability, delivery times, safety and returns. The extent to which they were able to do this successfully depended on all departments having a shared view of data about the customer.

This close collaboration has turned out to be a template for online trading, one that we have been calling for some time, but has now been accelerated by the recent crisis.

What is now very clear is that existing CRMs alone, which only record transactional and interactional information, simply cannot handle the needs of the business or the customer. There are many reasons for this, all of which point to a better data strategy and tools to manage and exploit it.

Brands are now facing more competition than ever; while the crisis has given some online categories a huge bounce, the cost of doing business online continues to rise in every area, all the way from customer acquisition through to fulfilment.

Brands are having to manage a fragmentation of customer segments as these customers become more and more demanding and no longer fit into the cosy stereotypes that the marketing department had previously laid out for them.

They are having to manage more channels than ever. Already stretched across primary websites, affiliates and marketplaces, they are having to embrace the rise of social media adopting commerce, including Facebook and Instagram, but possibly in the future TikTok.

An unintended consequence of all these activities, and one that brands want to embrace but are finding their current tools make it difficult, is an explosion in the volume of data created. This is way beyond the capabilities of the CRM to either contain it or make use of it.

And lastly, with marketing fragmenting in terms of the types of users and the tools they use, this data may be sitting in as many as 20 different systems, preventing them from performing to their full capacity because there is no central repository. Or, there may indeed be a central data repository but the data is not structured to enable individual marketing systems to take advantage of it.

“Brands are now facing more competition than ever; while the coronavirus crisis has given some online categories a huge bounce, the cost of doing business online continues to rise in every area, all the way from customer acquisition through to fulfilment”

It’s all about the customer

All these challenges are met by the customer data platform (CDP), a tool with the capacity to embrace multiple internal and external data sources, as well as the structures to make it campaign ready.

Defined as, “a marketeer-controlled system that supports external marketing execution based on persistent, cross-channel customer data,” the CDP recognises a fundamental truth about online retail today - it’s all about the customer. Their many needs simply cannot be met without a tool that supports a unified customer management strategy.

Brands now need to monitor customer behaviour in real-time, whereas CRMs are largely all about history, so they can only understand what needs to be done in the future. But they do not know what is happening now and therefore are a poor judge of what may be about to happen, and therefore what to do about it.

Brands need to know about customer behaviour - what they are saying on social, how they are reacting to promotions, how they are reacting with the brand via apps and devices. And this explains why marketing and operations need to collaborate around shared views of the same data, so they can adjust continuously to events.

This data, combined with transactional data in the CRM, then gives brands a complete customer view so that they can drive campaigns for acquisition, re-marketing, engagement and up-selling. And because data is centralised, the CDP automatically reduces redundancy, inconsistency and inaccuracy.

This combination of both transactional and behavioural data also enables brands to be more experimental, testing new ideas based on a deeper insight into customers.

Build or buy

The question for those planning to build a CDP is whether to build or buy. While we appreciate that some brands want build because this is a capability that lies at the very heart of their business, the fact is that it is cheaper and quicker to use one of the tools already available.

Because they are competing with each other, they are adding functionality daily, to the extent that some are now using AI to extract even greater value from data.

And don’t underestimate the merging job; third-party tools have hundreds of connectors to other applications and can unify raw data into a single customer view. Lastly, these third-parties have very robust security because the CDP is arguably the most valuable asset an online brand possesses.