In Today’s Experience Economy Your Customer Data Solution is Critical

The economy of the 21st century has been dubbed “the experience economy.” Enterprises must capture, manage, and make sense of huge volumes of data to fully understand customers. This is commonly called “Customer 360.” Customer 360 profiles are the foundation for delivering customer experiences that set companies apart from the competition and meet ever-increasing customer expectations. In this article, Reltio founder and CEO, Manish Sood, covers the two dominant solutions used to manage customer data: Master Data Management (MDM) and Customer Data Platforms (CDP). Readers will get guidance about when and how each should be used. And how they can be used together.

The success of digital transformation will not be measured by how much companies invest in innovative technologies, but in how well they use those technologies to elevate and maintain the customer experience.  Since the earliest transaction between buyer and seller, the dynamic hasn’t changed: the quality of the interaction, the level of personalization, and the commitment to building trust through transparency is what makes the experience a success and one that creates the potential for a repeat engagement – or not. 

In the experience economy, transactions that used to occur face to face are being rapidly replaced by digitally-enabled interactions, person-to-machine engagements or, even, machine-to-machine experiences across a diverse and dynamic spectrum of digital gateways or digitally-aided, in-person situations.  We’ve all encountered these: Tablet-equipped sales reps with customer purchase history in their hands; ATMs that deliver foreign currencies miles away from a hometown bank; voice-controlled Alexa ordering groceries direct from Amazon or high-speed faceless checkout at Amazon Go. 

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Data is the New Currency

In all these encounters, customer experience is the baseline metric of successOpens a new window . The unit of exchange is data – the behavioral, financial, relationship, location, and personal identity information that gets exchanged – knowingly or not – in return for an ever-improving, loyalty-building customer experience. 

The majority of brands – 82 percent according to one study – realize that their ability to meet consumer expectations for personalized experiences is tied directly to how well they capture and analyze interaction data in real-time.¹ More “data” supports this:  

• Companies that invested in customer experience best practices across people, process and technology have been rewarded with improved average revenue growth of 15 percent in comparison to non-investor returns of 11 percent.
• Customer experience has become the deciding factor in where a customer does business: 73 percent of consumers say a good experience is key to influencing their brand loyalties; 63 percent are willing to share more information with a company that offers a great experience; and one in three say they’ll disconnect from a brand they love after one bad experience.
• A majority of buyers (64 percent) say customer experience is more important than price when making purchase decisions.
   

But while 88 percent of consumers like the improved customer experiences that result from sharing their data, it’s no small feat for companies to actually deliver on that proposition.  The dynamics of collecting data, making it insight-ready, and gaining actionable insights to drive personalized offers in real-time is complicated. And for organizations with legacy systems, it may be impossible. 

Companies that realize their existing tech stack isn’t up to the task are turning to newer technologies including customer data platforms (CDPs) and cloud-native, modern data platforms which are designed specifically to address the digital transformation and customer data needs required in today’s experience economy. Sometimes implemented alone, these platforms can deliver better results together – especially for organizations who see improved customer experience as a path to long-term investment value as well as short term gains.  

CDPs: Customer Data Solutions for Marketers

First appearing in 2013, CDPs have become a popular go-to technology for marketersOpens a new window . Demand has turned the CDP market into a $1 billion business with more than 100 vendors today. Last year Gartner reported that the need for CDP capabilities was so acute that spending on CDP technology became the least likely to be postponed during an economic downturn.  

Underlying the need for CDPs was the exponential number of ways customers interacted with companies and with each other. In the ever-expanding digital ecosystem, customers engage across multiple channels at any time of day or night from virtually any location or device and expect a brand to respond with an immediate personalized response.      

But while the customer’s view is one of dealing with a single entity, brands face the problem of stitching together fragmented data from interactions that stretch across email, web, mobile apps, call centers, chatbots, in-store transactions and more. To meet customer expectations for contextually appropriate responses, companies need unified, actionable data for which legacy technologies like data warehouses, data lakes, and customer relationship management systems (CRMs) are just not up to the task.    

Over the years CDP capabilities have morphed. Some now include analytics like predictive modeling or machine learning; others integrate channel delivery applications. There are pure-play and purpose-built CDPs as well as late-to-market products from vendors who are just now adding CDP capabilities to their marketing suites. Even with all that, CDPs may not deliver everything marketers or their organizations need to fully capitalize on the customer data that exists across the enterprise.  

CDPs May Not Deliver Everything You Need for Customer Engagement in the Experience Economy

According to David Raab, founder of the CDP InstituteOpens a new window , CDPs were introduced to address the customer engagement problems companies face because of siloed data. “CDPs deliver a comprehensive view of each customer through data captured and linked together from multiple systems. They persist the data and make it available to other systems for analysis and for activating customer interactions. CDPs enable marketers and other business users to build unified profiles and deliver personalized interactions at scale,” said Raab. 

Data innovators across industries, however, are starting to realize that CDP technology alone may not be enough. For example, according to the CDP Institute’s definition, not all CDPs handle identity resolution. Raab points out that, “It’s possible, depending on the use case requirements of a particular organization, that a CDP might need to be supplemented by a master data management (MDM) solution. In fact, that’s pretty common. A lot of CDPs can only handle deterministic matching: Exact matches on first name, last name, email address, and so forth. But just as with CDPs, MDM is a broad category and lots of different systems call themselves MDMs.”  

According to Gartner, CDPs have less governance functionality than MDMs and often focus on delivering a unified view by amalgamating data from digital interactions alone. Gartner points to the confusion that buyers experience when comparing solutions and recommends that buyers make sure that the vendor they choose meets the 360-degree insights required. Gartner also points to the data quality advantages MDMs provide and their ability to integrate data from a broad variety on internal systems including ERP, manufacturing, fulfillment systems and more. 

According to Robin Bloor, co-founder of the Bloor Group, and founder of Bloor Research: “Most legacy MDM systems weren’t designed to keep pace with the needs of users or the pace of change in the digital world. Their data definitions don’t accommodate for Twitter handles, new types of phone numbers – e.g., mobile, multiple email addresses, interactions. They don’t provide ontology – no linkages between definitions, no context. This raises the question of data quality. Poorly defined data is dirty data. If you want absolute accuracy in your data, you may need to upgrade your legacy MDM.” 

Let’s look at a real-life example of a company that’s addressed the MDM/CDP decision and has successfully moved ahead with implementing both:  

While many other retailers are floundering, a profitable premier luxury retailer with multiple brands, stores around the world, and multiple online points of presence depends on the excellent customer experiences it delivers both in-store and online to drive its bottom line. 

In order to maintain its ability to deliver the hyper-personalized experiences its customers expect, the retailer relies on Reltio Connected Customer 360, a cloud-native modern data platform, to help it transition from traditional department store to “luxury platform.” The company’s CEO operates the entire business on the notion that luxury retail is all about relationships. Customer engagements should be special and unique. 

The platform allows the retailer to identify and track transitory and permanent relationships customers have with a team of 5,000 associates and stylists who personally service them wherever they shop. The constantly-updated system makes customer information available to associates – in-store or online – via mobile phones or point-of-sales (POS) systems.  Having immediate knowledge of purchases made at various store locations or online, being instantly aware of returns or product preferences, recognizing easily where the customer resides are all valuable data points for the associates, enabling them to interact more meaningfully with individual customers, present relevant new merchandise, and drive purchases. It also shaves time for busy customers who are always on the go. 

To support this relationship dynamic, Reltio Connected Customer 360 collects, unifies, and makes available to downstream systems all the enterprise-wide data needed including: shoppers’ personal profile data, cross-brand and cross-store transactions and interactions, individual preferences, customer-associate and other types of relationships, contextual views, external Dun & Bradstreet data, analytic insights, and essential privacy and channel consent data.  

“It would be impossible to deliver on our personalization-at-scale initiative with a legacy MDM system. Reltio gives us powerful out-of-the box functionality to enable our teams to operate with speed and agility. And, it powers our enterprise systems with connected customer data to deliver personalized experiences across channels and brands,” said the retailer’s VP of marketing technology.

Having a modern data management platform in place also expedited the company’s onboarding of a new CDP for its marketing group. The platform delivered the unified customer data needed to get the CDP up and running in record time. It also feeds the brand’s loyalty platform and a data warehouse used by the retailer’s analytics team. As a result, there is data currency and consistency across marketing, reporting, loyalty and operations.

Using a CDP with a modern data platform creates a best-of-breed solution that combines the strengths of each and provides a hedge against changes needed in the future. 

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Privacy and Data Security: A New Component of Customer Engagement

Today’s customer journeys are multi-threaded and distinctly personal. But as new interaction channels emerge, more customers are resisting being tracked across their journeys.  

• 76 percent of consumers are concerned with the amount of data brands gather when they search for or purchase a product.
• 73 percent of consumers are concerned with how brands are using their personal data to the point where they feel it is out of control. 
   

In the experience economy protecting customer data and respecting the privacy rights of the individuals who’ve shared it is critical. Customer engagement that maintains the standard of transparency and trust customers demand, while delivering the personalized and consistent experiences they have come to expect, will win loyal customers. For example, 70 percent of consumers are willing to share more personal data online when they see a benefit such as greater online security and convenience. 

Directives like the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) are clear warnings to companies to get their data house in shape. They also make a good case for a modern data platform with or without a CDP. 

“GDPR and similar privacy directives make a case for MDM. A CDP may help but only as long as it’s captured every record of interaction with a company. That’s highly unlikely. An MDM that synchronizes and tracks data sources enterprise-wide can provide a better way to retrieve data for individuals who want to know what information a company stores about them or who want to be ‘forgotten,’” said Bloor. 

The most difficult part of compliance is identifying an individual across multiple systems and data sources. Finding records across email and eCommerce systems, loyalty programs, POS and clickstream is not easy. Unique identifiers – such as those used in MDM solutions – make finding and erasing data in source systems easier.  

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Disconnected Customer Data Creates Disconnected Experiences

Whatever your technology choice – CDP, MDM, or a combination of both – the solution needs to be flexible and scalable to enable your entire enterprise to have the connected customer data it needs to succeed in the experience economy. That means consistently updated data available enterprise-wide so it can empower your whole company – not just marketing – to engage as users see you: one consistent brand across all channels.  

Digital transformation is here to stay; the pace of change will only accelerate. In 2008 a start-up named Facebook was introduced. Today it has 2.3 billion users. Facebook’s YouTube and WhatsApp channels have a combined 2 billion users. Think of it: 4.4 billion social identities – many with cross-site overlaps – that companies may need to capture, match, merge, and track. And that’s not counting all the other social channels and other digital means of connection.  

Is your technology stack up to the task?