The Customer Data Platform (CDP) market is booming, projected to grow at a compound annual growth rate (CAGR) of 34% until 2026. Yet, despite such popularity, most CDPs (primarily first-generation CDPs) haven’t fulfilled their promises. A study conducted by Forrester revealed that whilst 66% of respondents believe CDP adoption is a strategic priority for their business, only 10% of CDP users feel their existing solution meets today’s needs. Recurring gaps between CDP functionality and user requirements confirm it’s time for an upgrade as we enter the second generation of CDPs.
Only 10% of CDP owners today feel their CDP meets all needs. That number drops to 1% who believe their CDP answers future requirements.
Forrester Opportunity Snapshot | April 2022
The ballooned popularity over CDPs is understandable. The legitimate challenges CDPs promise to solve are what makes them so attractive. What isn’t appealing about leveraging all the data you have at your fingertips to achieve a rich view of each customer, allowing you to better personalise your communications across all touchpoints in real time? The issue is that these lofty claims haven’t always materialised.
Where have CDPs fallen short?
One of the biggest reasons for CDP failure is the lack of clarity on requirements. It seems amongst the hype, there’s widespread confusion in the CDP space. Vendors are offering a range of varying capabilities, which has led to misunderstanding over what actually constitutes a CDP. Many solutions specialise on specific use cases, meaning brands looking for an end-to-end solution are often forced to compromise during the selection process. Moreover, vendors in adjacent sectors have repurposed and relabelled their existing solutions as CDPs in an attempt to stay relevant despite lacking true CDP functionality.
Forrester’s study found that half of respondents see personalisation, campaign execution across channels, and data activation as primary functions of their CDP solution. Yet, beyond data ingestion and data management, few respondents were satisfied with the core functionality of their current solutions. Data unification and analysis are valueless unless their insights are activated in real time. Brands need more than a data management tool – they need a strategic asset that operationalises that data at an individual level. This means using predictive analytics and AI to predict behaviour and deliver the best next interaction, without the need to invest in a separate solution beyond the CDP.
The developing complexities of today’s marketing landscape require a forward-thinking, future-proofed CDP. Businesses’ accelerated digital efforts post-pandemic combined with increased consumer privacy laws and the decline in third-party cookies mean a first-party data strategy is no longer a competitive advantage, it’s necessary for survival. Teams need more from their CDP, such as predictive personalisation strategies and privacy-complaint capabilities to power the first-party future. Growing demand has spurred even more CDP vendors to the surface again with more competition after a piece of the pie, many of whom haven’t taken these capabilities into consideration.
So, how can CDPs get it right now?
Marketers need clarity on what CDPs do, how to select the right CDP and how to optimise the technology, or they risk missing out on the immense benefits such a solution can offer. Both vendors and businesses must define their key use cases and ensure they align to avoid missed expectations. Brands who complete a Pre-RFP Assessment can sharpen their requirements and effectively compare vendors to find the solution that fits their business goals.
CDPs must meet the needs of today and the future by extending their value beyond data management. CDP Institute’s David Raab has consistently emphasised the need for CDPs to not only unify customer data but have the ability to act on it.
Despite the unsettled market, implementing the right CDP will help businesses elevate their customer-centric marketing strategies, reaching tailored audiences and building brand loyalty with every communication.
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