Has your organization invested in a customer data platform (CDP) only to find that it's not living up to its promise?
You're not alone. In fact, Digiday reports that only 10% of marketers who have a CDP believe it’s fit for purpose, while an even smaller amount (1%) feel certain their CDP will stand up to the requirements of tomorrow. And MarTech.org highlights that 45% of marketers report that their CDP has underperformed against business expectations.
Despite these disappointing statistics, a well-functioning CDP is still essential for marketing success. Respondents in the Harvard Business Review Analytic Services report Optimizing the Use of Marketing Technology to Build Customer Trust were asked which factors pose the greatest threat to enabling customer trust for their organization. The top four factors revolved around customer communications and included responding to changing customer needs, inconsistent messaging across channels, messaging and content not aligned to customer needs, and inadequate customer service. Rounding out the top six were silos of customer data, data breaches and other security threats.
Actual business performance mirrored these results, with low maturity rates reported for critical customer experience capabilities that make up key CDP use cases. When asked how effective their organization is in the following two capabilities used to foster customer trust, only 19% rated themselves very effective at reacting in real time with personalized interactions; and the same number (19%) rated themselves very effective at turning customer insights into actionable outcomes.
So, why is there such a gap and disconnect between the CDP’s promise and performance? One of the main reasons is the disjointed MarTech landscape.
A disjointed MarTech landscape
I have talked about the complexity of the CDP marketplace before. But it’s important to reiterate that there are currently more than 170 vendors, 60-plus different use cases and at least four different types of CDPs in play today. Delving deeper into the makeup of these vendors illuminates some of the issues marketers are experiencing with their CDPs.
CDP vendors can be roughly classified into two categories: large marketing cloud vendors and standalone CDP vendors. Each type of vendor may be either a good or bad fit for an organization depending on a variety of factors, including required use cases, existing MarTech capabilities, architecture and original purpose.
Let’s explore the two types of CDP vendors in more detail.
Large marketing cloud vendors
The CDPs included in these vendor offerings fall into the CDP Institute classification types of Campaign or Delivery. They provide a full set of multichannel marketing capabilities that go beyond basic CDP requirements of data ingestion, profile unification, audience segmentation and data provisioning.
These vendors are worth considering when marketers want to satisfy a wide variety of use cases, including more sophisticated analytics, journey orchestration and activation, which includes the ability to deliver marketing campaigns and communications directly to owned channels and third parties.
The downside of large marketing cloud vendors
However, there are several potential gotchas with many of these vendors that bear investigating before purchase. Many large marketing clouds have grown not through native product design, but instead through acquisition. Therefore, they use a “layer approach” where multiple clouds for various purposes are all required, where integration between clouds or acquired products is scanty, and where data must be duplicated into the CDP and sometimes also across clouds.
These applications can struggle with execution, particularly where capabilities such as real-time updates of segments, profiles or communications are required.
MarTech costs are higher due to data duplication, and feature overlap – both within the CDP/marketing cloud and across your MarTech stack – can be a significant issue.
Limited execution and higher costs are especially detrimental considering that Forrester has indicated that the primary CDP challenge is that marketers routinely struggle to get full value from their CDP investments. And while the core value proposition of CDPs continues to resonate, Joe Stanhope of Forrester notes that there are lingering issues, such as “immature functionality, confusing product marketing from too many vendors and disappointing solution results.”
Also throw in the fact that Gartner positioned CDPs squarely in the “trough of disillusionment” in a recent CDP Hype Cycle. It’s no surprise that CDPs are in this phase especially when factoring in low utilization and market consolidation. “The challenge for buyers is to predict how these different currents are going to lead to value in a three- to five-year strategic planning cycle,” says Lizzie Foo Kune, VP and analyst at Gartner.
With overall MarTech utilization rates down, recent market consolidations and standalone CDP acquisitions present a cloudier future for the CDP.
So it’s important to consider that you may be paying for similar features across different applications (due to feature overlap) or have difficulty incorporating emerging technologies such as generative AI into your marketing stack. Plus, it might be harder to react to changing customer demands or perform critical CX capabilities.
Another consideration is that these applications are often licensed due to incumbency rather than by doing a detailed fit analysis. They’re bought simply because other solutions from the vendor are present – as opposed to being sold on the solution’s actual merits or unique needs of the company. As a result, there’s great potential for the CDP to drastically underperform against business expectations.
Standalone CDP vendors
These vendors generally offer less extensive capabilities than marketing cloud applications, falling mainly into the CDP Institute classifications of Data and Analytics CDPs. They are typically focused on specific use cases (such as data processing) or business segments (such as small to medium businesses, aka SMBs). Organizations that don’t have consolidated customer information or do not need the extensive capabilities offered by a multichannel marketing hub may benefit from this type of CDP. However, as with the large marketing cloud vendors, these CDPs also have gotchas to look out for.
The downside of standalone CDP vendors
Many started out not as a CDP, but as a different type of application – such as tag management, identity resolution or a data management application. The problem here is that many of those applications didn’t have the basic four CDP capabilities (ingestion, unification, segmentation, provisioning) and some still don’t. Where those capabilities have been added, the same type of integration issues can arise as with the marketing clouds.
Most, if not all, of these solutions also require all the data to be loaded into the CDP to use them. This can introduce significant security, privacy, risk and cost concerns as data is duplicated numerous times. Additionally, the time to load each new data source can be extensive, dependent on IT time and resources, and can significantly lengthen the marketer's journey.
Last but definitely not least, the CDP market space itself is changing radically – with a wave of acquisitions and consolidations occurring on what seems like a weekly basis. And the vendors being acquired are mostly small standalone vendors that focus on the data aspects of the CDP. David Raab of the CDP Institute says this is something that we can expect to continue to see, “There’s nothing radical about a CDP being embedded in a customer-facing system. The truth is, the market long ago decided it preferred a CDP that was part of a larger product. So the latest round of acquisitions reflect a continuation of that situation, not a radical departure.”
The CDP Institute also predicts that in 2025 CDPs “will continue to evolve from data aggregation tools to orchestrators of real-time, predictive experiences.”
Marketing teams looking for a CDP would be well advised to carefully consider thoughts from influencer Chris Marriott, who notes, “The biggest challenge for standalone CDPs isn’t just competition – it’s the growing realization that standalone platforms may not be the answer for many marketing functions. Several CDPs are struggling to stay afloat, and buyers continue to question their ROI. In five years, will standalone CDPs still exist, or will their functionality simply become an embedded feature of ESPs, CX platforms and other MarTech systems?”
The only way to cultivate ROI from your CDP is to ensure that it’s not only still around but thriving into the future.
There’s no downside when it comes to SAS
We can truly help you future-proof your CDP because SAS Customer Intelligence 360 is a data-driven customer engagement platform that provides organizations with the customer data platform, journey creation and activation capabilities that enterprise marketing cloud and standalone CDP vendors can't provide.
“Being able to activate data in SAS Customer Intelligence 360 while applying AI and machine learning techniques, such as customer journey optimization, allows us to continue as customer engagement leaders. It’s truly an exciting time.”
– Melissa Berscheid, Senior Director of Member Marketing and Technology, Ulta Beauty
Native architecture
Unlike cloud vendors who added CDP capabilities by acquisition, SAS has built a native architecture from the ground up – so there are no integration issues across the platform. It’s easy to connect to existing MarTech stacks because SAS provides out-of-the-box connections to cloud-based data sources, an extensive API connector framework, and bidirectional connectors to applications across and beyond the MarTech environment.
True composability
SAS offers true composability in both data and capabilities. Our native hybrid data architecture does not require organizations to move all the data into the CDP or marketing cloud to use it. Choose only the analytics, decisioning and channel activation capabilities that make sense for your use cases.
Real-time capabilities
Organizations will get real time that’s truly real time – including a dynamic, unified customer view that synchronizes known and unknown identities, real-time, two-way interaction between digital properties and on-site applications, and journeys and decisions that can be triggered by behavioral data.
Any data, any source, any time – Create and activate audiences from any source (cloud or on-premises) on your time frame and dynamically update with digital behavior.
Open and extensible – Prebuilt connections into many vendor/proprietary protocols. Analytics and insights are available across the entire organization.
SAS delivers real success
With SAS, The Nature Conservancy no longer needs to outsource to various marketing technology vendors. All data sources are organized in SAS’ customer data platform, which further enhances The Nature Conservancy’s ability to prioritize its supporters’ data privacy and security. With SAS Customer Intelligence 360 in place, The Nature Conservancy has seen its donor retention rate improve 10% and its year-over-year giving increase 30%.
Ulta Beauty turned to SAS to aid in transforming its abundant data sources into easily activated and comprehensive customer journeys with SAS Customer Intelligence 360. Automating and personalizing its marketing efforts has helped Ulta Beauty achieve an impressive 95% sales penetration, meaning 95% of sales come from returning guests.
