Don't be fooled: Most CDPs are not enterprise-ready

2020 has been the year of the customer data platform (CDP), and it’s easy to see why.

The CDP market is projected to grow to over $10 billion by 2025, and according to Gartner, CDP technology companies have received more than $1.8 billion in VC funding. Why does this category have such big money behind it? CDPs are attempting to tackle a big and growing problem in marketing: unifying customer data to power personalized experiences.

Marketers for mid-size brands have turned to CDPs as the primary tool for driving personalization. The idea has naturally trickled up to enterprise brands looking to solve similar, but more complex, challenges. In fact, Epsilon’s new research indicates that Fortune 1,000 marketers ranked CDPs as the No. 1 way they plan to mitigate the uncertainty from third-party cookie deprecation.

Clearly, there is a lot of buzz around CDPs. But can they solve the needs of the enterprise marketer?

While mid-size brands have seen some early successes with CDPs, the experience has been different for large enterprise brands, who are quickly realizing that CDPs alone cannot solve their unique needs. Some are exploring the more difficult path of building custom internal solutions to address identity resolution and personalization. In general, this path will be a much slower trek towards the goal, whereas looking at enterprise CDP packages could accelerate progress.

To understand if a CDP could be an enterprise-ready solution, you must know the history of the category. CDP vendors had decisions to make early on. They could target the mid-market, where technology can solve less complex matching, segmentation and orchestration needs. Or they could solve more complex enterprise needs, like managing online and offline data across business units and making that data available in real-time without sacrificing scale and security (which inherently requires a mix of technology and know-how).

Not surprisingly, Forrester Research wrote in a 2018 report and again in a 2020 report that CDPs were not built to solve enterprise problems. The CDPs that started as mid-market solutions and moved upmarket were not designed with a fundamental capability that enterprise marketers need: the ability to unify online and offline data across multiple business units and brands to drive personalized marketing at scale. A traditional CDP is a foundational part of the solution. But a CDP is not—by itself—the solution. Let’s explore why.

The 2 missing links to the enterprise-ready CDP

There are two major gaps in a traditional CDP offering that will make or break an enterprise marketer’s success:

1. Identity management and resolution

Identity management, in and of itself, is hard. It’s not been made easier by the ongoing deprecation of third-party cookies and disruption to mobile ad IDs like IDFA.

It’s not uncommon for a brand to have four or more profiles for the same customer. For multi-brand companies, errors from multiple profiles are compounded and create a foundation of fragmented identities. In this scenario, accurately linking digital engagements and in-person transactions to the same individual can seem impossible.

Most CDPs and marketing clouds are not built to manage person-level identity. They can combine and link the profiles you tell them to, but the ability to link online and offline profiles back to a single individual will be superficial at best. This disconnect disrupts the customer experience and makes true 1:1 personalization attempts futile.

2. Quality data to enable advanced personalization

Determining which data supports your use cases, curating it and making it accessible in the exact moments you need is required to drive meaningful customer experiences. Augmenting your consumer profiles with unique insights around browsing history, demographics, lifestyles and propensity to purchase, for example, can help you further differentiate that experience. Distinctive third-party data—that is not rooted in third-party cookies or device IDs—is required to create an enriched profile. That, combined with a robust intelligence layer for personalized activation across channels at-scale, are the necessary components of an enterprise-ready CDP.

For example, when you identify customers who visit your website, you can leverage their browsing history combined with prior transactions and information about their lifestyle and preferences to optimize their website experience in real time. Instead of prompting them to register, you can show them products and offers that enhance their loyal customer experience.

Technology must be combined with relevant insights about the consumer to activate personalization at-scale across complex enterprise businesses. Without unique data that’s aligned to a bulletproof customer profile, you will have another point solution, unable to deliver the differentiated and personalized experiences customers have come to expect.

It’s not too late for an enterprise-ready CDP

The right enterprise-ready CDP partner will decrease time to value from years to a few months. In business, that’s a lifetime.

If your company has not yet solved the CDP challenge, rest assured you are not alone. On a scale of 1 to 10, most companies rate themselves a 6 out of 10 in terms of their ability to successfully deliver a consistent omnichannel customer experience. Many organizations have a long way to go and plenty of room for improvement.

CDPs are a foundational component of a mar-tech stack. But it’s the know-how and technology supporting customer identity, data enhancement, real-time decisioning, and omnichannel activation that makes them enterprise-ready and able to power more valuable experiences. Filling these gaps will ensure that the data platform you invest in is a bedrock solution, rather than a passing fad.

**This article was originally published on Adweek, November 2020.