Success in today’s competitive retail landscape means putting the customer front and center.
Retailers must understand their customers’ every need and deliver relevant, personalized experiences at the right moment to meet those needs. This necessity is particularly strong across the diverse APAC region, where connected device use, commerce platform capabilities, and consumer buying behaviors vary so widely between markets.
This customer-centric approach relies on one key ingredient: data. Retailers are increasingly dependent on data to gain insight into the preferences and behaviors of shoppers, allowing them to deliver customized interactions. To do this they are turning to various tech platforms to help them make sense of data, correlating it across all customer interactions. Yet with so many different solutions available – and baffling acronyms such as CRM, DMP and CDP to understand – many are unsure what each technology does and which platform type is best suited to their unique needs, especially as different solutions include overlapping functionality. Let’s go behind the acronyms and take a closer look at these data platforms.
CRM systems store sales data
Retailers often confuse customer relationship management (CRM) systems with customer data platforms (CDPs), and they are far from alone. As reported in Gartner’s Hype Cycle for Digital Marketing and Advertising 2019, half the enterprise marketers that deploy a CDP say it is their ‘CRM system’ – indicating the confusion between the two, with definitions blurring.
A CRM system is designed predominantly to store transactional data, usually from a form fill or purchase. CRM systems contain valuable first-party information but, with this focus on sales data, they do not provide insight into anonymous user behavior, and often have limited integration with other technologies deployed throughout the customer journey.
DMPs create anonymous audience segments
Data management platforms (DMPs) collect data around online behavior, such as website interactions. This information is used to build audience segments, which are either employed in customer analysis or used to feed ad tech tools, such as demand-side platforms, that assist ad targeting.
While valuable in their own right, DMPs have a number of limitations. They are generally cookie based and work on probabilistic data, rather than creating persistent customer profiles. As they focus largely on advertising, they don’t necessarily provide insight into the entire customer journey. While DMPs may have some ability to integrate first-party information, they are mostly focused on third-party data.
CDPs deliver a 360-degree view of the consumer
CDP adoption is growing faster in APAC than in any other global region. However, despite rapid expansion, there is still confusion about what the technology does and how it differs from a CRM system or a DMP.
A CDP is a system that centralizes customer data from all sources, including existing CRM systems and DMPs, but also mobile apps, customer-service systems, and beacons or IoT devices that track in-store behavior. The CDP then makes this data available to be used by a huge variety of other tech tools associated with marketing, customer service, and any other area of the retail organization, effectively democratizing customer data.
CDPs can collect and collate first, second, and third-party data from multiple sources and use identity resolution to link all data snippets referring to one individual to a persistent profile. This focus on deterministic data enables retailers to build a comprehensive view of the customer – starting with their very first interaction – and to drive unified, personalized experiences.
CDPs are prebuilt platforms but can be tailored to the needs of individual retailers with minimal technical assistance and resource requirements. They can be easily integrated with other systems, using maintained turnkey integrations. This means retailers can use them to link up, rather than replace, their existing technologies, and can bridge the internal and external data siloes that currently result in fragmented retail experiences. Because data is stored and updated over time, CDPs continually adapt and update in response to new real-time information.
While a comprehensive view of the customer is invaluable across the entire retail organization, it is particularly beneficial in marketing, where it helps drive relevant, consistent messaging and avoid friction-generating blind spots. For instance, it can prevent a retailer emailing a customer with a special offer for a product they have already bought via the mobile app, or retargeting them with a display ad for an item they have just purchased in store.
Retail success depends on an in-depth knowledge of consumer needs, which can only be achieved by unifying data from all sources, linking it to a persistent identifier, and gaining a comprehensive view of the customer. While CRM systems and DMPs each have useful roles to play in storing transactional data or building audiences segments, a CDP provides the unique customer view, unifying data from all sources and allowing the resulting insights to be used to drive performance across retail organizations.
By Joseph Suriya, Senior Director Marketing APAC, Tealium