Iain Moss
Iain Moss
Posted 28 January 2022

5 reasons why a standalone CDP might not be the right solution for retailers

Topics: CDPs

A CDP, or customer data platform, has long been a consideration for the modern retail marketer’s technology stack. The reason is implicit in the name: if we want data to be at the foundation of any marketing decision we make, then having all customer data in one place seems to be a no-brainer. 

The logic of a CDP is clear. Having a centralized store of customer data that pulls in data from all the different data sources available to you, which you can then examine and query to find customer insights makes a lot of sense. From this central store, you could then pass data back and forth to your marketing platforms and channel-specific solutions. That certainly is why CDPs became a popular option over the past decade or more. 

But if your aim today is to create a truly personalized customer experience that keeps customers coming back time and time again, then a CDP is not enough. Customer data and marketing execution need to be brought together in order to achieve these kinds of experiences. With this in mind, a separate CDP may not be the right approach for retail marketers. Let’s examine some of the reasons why. 

1 – Your goal is to create great customer experiences, not create a database of customer data

To create a great customer experience it is true that you need to understand each customer. That means bringing together every single data point you could have on them, and connecting that into a customer data infrastructure. In recent times this has led to marketers choosing a standalone CDP with multiple integrations pulling in data. 

However, all that means is that you now have a big store of data with varying degrees of relevance. It may not even be necessary to collect all of this data – are you going to act on all of it? You need to be able to sift through the relevant data, connect the dots and then find insights about those customers.

Marketers have spent so long trying to get a unified view of their customers that many have become fixated on the idea of bringing the data all together first, before thinking about the experience you will provide. For that goal, a CDP is perfect because it effectively tidies everything up. But, to drive any meaningful outcomes with that data requires extra capabilities to find the insights required, and to execute on them. So you have the data, now what?

2 – Most CDPs are not built with retail or marketers in mind

Retail marketers have very specific needs for their marketing platforms that are unlike other marketers in other industries. There is generally a wider selection of channels that consumers use, a wider range of products and product ranges, and a variety of retail-specific scenarios.  Some of these scenarios include basket abandonment campaigns, replenishment campaigns, and broadcast campaigns targeted based on category affinity. 

The problem most CDPs have is that they are built to be the last-mile for tech-owned data ecosystems, which means marketer use cases are retrofitted to the platforms and still require engineering and effort to drive marketing outcomes. Often this retrofitting process creates a disjoint between the original intentions of the platform and the retail application that is required. This means that configuring the CDP to work with complex customer journeys required for personalized customer experiences requires a lot of custom changes, if they’re possible at all! 

In fact, Gartner® found that, “marketers with a CDP deploy 2.3 CDP vendors, on average. This indicates a likelihood that marketers rely on multiple vendors to support complex use cases, and that there is still confusion around CDP capabilities.”

This suggests that many marketers are struggling to find a CDP that suits their specific needs, and are looking to stitch together multiple suppliers to create a complex tech stack. This drives up the costs that marketers face. On top of that, many CDP providers will charge for custom configurations to get these complex stacks working for retail-specific scenarios and marketing-specific outcomes, reducing operational efficiency and increasing CAC.

3 – You could create a disconnect between your CDP and marketing platforms

If your goal is to create better customer experiences then you need to have customer data accessible in your marketing platforms. In order to trigger automated campaigns, and to tailor customer journeys to individual customers you will need to segment your customer base within your marketing platforms. 

Having a CDP that is separate from your marketing platforms creates a natural disconnect between the different platforms. It can make building the  customer journeys required for growth nearly impossible. Let’s go through an example. 

Let’s imagine that you want to build out a simple retail use case such as a basket abandonment campaign. If you have a separate CDP, this will involve creating a filter within your CDP in order to create an audience (if your CDP is not retail-specific this will be particularly complex). Once you have this audience, you will then need to sync this audience into your marketing platforms in order to execute the campaign.

From there you would create your campaign, triggered when someone matches those filters and gets added to that CDP audience. At this point, you then have no data within the marketing platform to sub-segment the campaign and send different versions of the campaigns based on their history, tastes or interests. 

This situation would make true personalization impossible, because there would need to be hundreds or thousands of these audiences required to do all the campaigns required with all the combinations and permutations that come with customer behavior. On top of that, creating exceptions or exclusions for customers across multiple campaigns is incredibly fiddly. 

4 – You may need a separate platform to manage all of your channels

Having a CDP separate from your marketing channels means that you need some sort of orchestration capability to bridge the gap. Think about it: the modern customer journey involves multiple channels, which all need to work in harmony to create the best possible experiences. This requires coordinating which combination of channels are used for different use cases, as well as the specific order that different messages are deployed. All of this on top of balancing the quantity of communications sent so that customers are not overwhelmed.

For CDPs that aren’t built for retail, any degree of orchestration they have is often cursory or built for different use cases in different industries. For more complex orchestration, another separate platform, such as an email service provider (ESP) or marketing cloud, is required to work across the various channels you use. 

On top of everything else, this separation creates an operational inefficiency as users have to constantly switch between different platforms, and wait for data to sync in order to build the right experience. Without central visibility and control over channels, and with data and functionality sitting in different solutions, this creates a disjointed experience for the marketer, which is likely to lead to a disjointed experience for the customer. 

5 – A Customer Data and Marketing Platform unites the CDP with the marketing capabilities

The good news is that retailers don’t have to choose a CDP set up that may be sub-optimal. There is an alternative solution: a customer data and marketing platform (CDMP). A CDMP combines the customer data capabilities of a CDP with the cross-channel orchestration capabilities of an ESP or marketing cloud. 

These platforms give marketers the ability to easily use customer data to personalize the customer experience across every marketing channel within the same solution. 

In practical terms this means that the relevant data is at the marketer’s fingertips when they look to build out different customer journeys, meaning that segments are easy to build and then action. With central control of both the data and the marketing channels, as well as how different channels interact, retailers should be better positioned to deliver personalized 1:1 experiences for their customers with a CDMP. 

Not sure about next steps?

Having a separate CDP may be the right solution for your business. But if you are struggling to bridge the gap between data and executing customer experience that differentiates your brand, then you may want to consider an alternative. 

If you’re not sure about the best combination of technologies for your business, or you want to find out more about the pros and cons of different options, schedule a call with one of our team. We’d be more than happy to walk you through the best approach to finding the use cases most relevant to your business and the solutions that will best deliver them. 

The most important question to ask yourself if you’re in the market for a solution is “What goals am I looking to achieve?” and then to examine every solution with that framework in mind. If you go in with a fixed idea of what type of platform you want, you can end up making compromises without even realizing it.

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