By David M. Raab, Principal, Raab Associates
My previous column described a trend toward predictive modeling systems in B2B marketing. I’ve since decided there’s more going on than that. What we’re seeing is an entirely new category of system: the Customer Data Platform (CDP).
By David M. Raab, Principal, Raab Associates
My previous column described a trend toward predictive modeling systems in B2B marketing. I’ve since decided there’s more going on than that. What we’re seeing is an entirely new category of system: the Customer Data Platform (CDP).
As my earlier piece stated, these new systems combine predictive analytics with database management. What I had missed is the significance of the data management piece. It’s not simply a way to simplify deployment by making it easier for marketers to assemble the data to build models. CDPs create a database that can be the primary platform for customer management throughout the company; supporting not just marketing, but also sales, service, and even operations.
The CDP creates an analytical database, so it won’t replace transaction systems to process orders and handle customer interactions. But it’s a comprehensive analytical database, combining internal and external sources including advertising, email, postal mail, web sites, sales, purchases, customer service, social networks, and third party compilers. This is vastly more information than a conventional B2B marketing automation database, or any other single system. This breadth is what makes these databases useful throughout the company. A B2C marketing database might have similar scope, but even those are traditionally used only by the marketing departments that build them.
And there’s more. These new databases also contain predictive model scores that customer-facing systems can use for segmentation, offer and content selection, lead scoring, risk assessment, and other purposes. Creating these scores in a central database eliminates separate modeling engines in each execution system and helps to coordinate customer treatments across all touch points. This makes the central database more valuable than if it were simply a shared repository of raw information.
My definition of the CDP also includes a third component: a decision engine that combines model scores with business rules to deliver recommendations to customer-facing systems. The distinguishing technical feature of this component is an Application Program Interface (API) that can accept an external system’s request for a recommendation and return a result in real time. The exact definition of “real time” differs for each channel: a recommendation to a call center can take more time than a bid for online ad impressions. The systems also vary in the sophistication of the rules that control the recommendation process. These can range from simply picking the highest ranked score to balancing multiple goals, applying qualification rules to each offer, and limiting the number of contacts per person.
In short, a CDP is an integrated system that:
- Combines information from multiple sources into a customer-level database, associating different identifiers (email address, browser cookies, customer account, etc.)that belong to the same person;
- Uses the combined data to build predictive models, in a nearly or fully automated fashion; and
- Connects with customer-facing systems to provide real-time decisions on request.
None of these functions is new, but each was previously provided by a separate system. Deploying and connecting those systems has been a major barrier to making effective use of the masses of customer data now available. The CDP removes that barrier by providing a single, pre-integrated solution.
It’s important to recognize that the CDP doesn’t replace marketing automation, Web content management, customer relationship management, or other customer-facing systems. Rather, it makes them more effective by providing a rich, central source of data and recommendations. This fills a critical gap in the information architecture of many companies. For that reason, I expect the CDP will be adopted quickly.
David Raab is Principal of Raab Associates, a consultancy specializing in marketing technology and analytics. He is author of the B2B Marketing Automation Vendor Selection Tool (VEST), an in-depth guide to marketing automation products.
