[{"@context":"http:\/\/schema.org","@type":"Article","@id":"https:\/\/www.the-future-of-commerce.com\/2020\/10\/14\/customer-data-revolution\/#Article","articleBody":"Who are your customers? How do they want to be treated? These simple questions have vexed companies since the term \u201ccustomer\u201d came into existence. Now, with privacy and personalization taking starring roles in business, the customer data revolution is picking up steam.\nAs the digital era took flight, companies turned to customer relationship management (CRM) solutions. For years, these systems performed admirably by helping to:\nTrack transactions\nAnalyze pipeline\nManage customer health\nBut it\u2019s not enough to simply know your customers and their journey stage. Consumers want the freedom to engage with a brand on their terms and preferred channels \u2013 and they want relevant engagements, not to be spammed with offers that hold no interest for them.\nUnderstanding how customers want to be treated has grown more complex.\nThey want:\nTheir privacy protected\nTransparency into a brand\u2019s data practices\nControl over their own personal data\nTo meet these evolving expectations, market leaders are turning to customer data platforms (CDPs).\nThe customer data revolution: Format, source, and identity\nThree attributes are key to understanding the growing complexity of customer data management and the customer data revolution:\nFormat\nSource\nIdentity\nThese attributes also help demonstrate how CDPs differ from CRMs.\nFormat: Traditionally, customer data is structured, meaning it has a pre-defined model, fits into a database field, and is easy to search for. Name, shipping address, and email address are the most common examples.\nMost customer data, however, is unstructured. This means it has no pre-defined model and cannot be processed or searched using conventional methods.\nExamples include:\nVideo\nAudio\nEmail responses\nSocial media comments\nExperience data (e.g. survey responses)\nSource: Customer data can also be categorized by how it\u2019s acquired:\nFirst-party data is information collected directly from the customer\nSecond-party data represents customer information acquired from another brand within the enterprise or another company\nThird-party data covers information acquired from data aggregators\nIdentity: Anonymous data doesn\u2019t include any personally identifiable information (PII), meaning companies can\u2019t rely on it with high confidence to engage with customers directly.\nKnown data can be associated to a real person because it contains PII, hence the need for data protection. It\u2019s deterministic and volunteered by the customer, meaning it\u2019s highly reliable. Companies use known data to personalize interactions across channels and touch points. These interactions can feel a little too familiar to consumers, which has played a role in launching the customer data revolution.\nThe evolution of CRM systems\nBusinesses adopted CRM systems to support sales teams. Over the years, solutions grew from on-premise to cloud and from manual to automated processes. They\u2019ve also expanded to serve marketing, commerce, and service use cases.\nBuilt with first-party, structured, and known data attributes, a CRM profile includes the operational details businesses need to understand customers and prospects during a sales process.\nThrough integrations with other systems, the profile may include a consumer\u2019s purchase and engagement history, and \u201cpermission to contact\u201d status, among other data points. CRM is still crucial to organizations \u2013 businesses spent more than $48 billion on CRM software in 2018 alone.\nYet times are changing. Structured and known data provide only a small slice of the view needed to improve a customer experience. The recent explosion of unstructured, anonymous, and third-party data has outpaced the CRM\u2019s ability to consolidate customer information effectively at scale.\nThe evolution of the CDP\nA CDP is a prebuilt system that centralizes customer data from all sources within an enterprise, then makes the data available to other customer engagement systems, like marketing cloud solutions, e-commerce platforms, and customer service applications.\nThe CDP market category emerged in 2013. Early CDP solutions connected data sources across an organization to create unified customer profiles, primarily to fuel marketing technologies. This emphasis limited widespread adoption because enterprises wanted more holistic customer engagement systems.\nAs the solutions matured, the CDP market increased. Last year, CDPs held a prominent position in Gartner\u2019s Hype Cycle for Digital Marketing and Advertising. The analyst firm found marketers didn\u2019t understand the core capabilities, and that CDPs were often confused with other systems, such as CRMs.\nSo, what are the key differences between a CDP and CRM?\u00a0\nData ingestion\nA CDP is built to ingest huge volumes of data, collecting first-party, second-party, third-party, structured, unstructured, known, and anonymous attributes. Everything from operational data like in-store purchases to experience data like online survey results can be connected to a CDP profile.\nAs a result, the solution can build a customer profile CRMs can\u2019t match. CDPs offer brands the opportunity to understand customer context \u2013 like emotions, feelings, and intentions \u2013 in addition to their names, addresses, and email information.\nIdentity resolution\nCustomers engage with a brand across a variety of channels and regions: web, mobile app, phone, etc. Identity resolution ensures these channels \u2013 and the data streams they produce \u2013 are matched with the correct individual.\nCRMs don\u2019t specialize in identity resolution, while CDPs do.\nIf a customer interacts with multiple brands and regions in the enterprise\u2019s portfolio, CRM systems alone cannot provide the visibility into when, how, and why these interactions occur, nor can they drive targeted and personalized engagements across channels. \u00a0\nCDPs collect data from every channel and brand, mapping and matching it to create unified customer profiles, so a CDP can become the single source of truth for customer engagement across an enterprise.\u00a0\nData cleansing\nCDP solutions include features and functions that deliver actionable customer insights at scale.\nUnlike CRMs, CDPs cleanse all the data in their stores, fueling analytics applications and machine learning technologies with high-quality, high-confidence customer data. Then the applications provide more robust intelligence and insights, helping brands add context to every customer engagement.\nA new wave of CDP innovation born via the customer data revolution\nToday, the CDP market is maturing rapidly. Two key innovations include:\n1) A data privacy focus\nCDP consent and preference data management capabilities can help brands put customers in control of their own data, engage on the customer\u2019s preferred channels, and address data privacy regulations.\n2) Expanding the scope beyond marketing\nNew CDPs can seamlessly connect with commerce, sales, and service systems, in addition to marketing. This means every engagement can be created with accurate, up-to-date customer data.\nDefining a future-facing customer experience strategy\nIt\u2019s tempting to think of CRMs and CDPs as competing software programs, but you\u2019d be comparing apples to oranges. In practice, both play a role in the wider customer experience strategy of an organization.\nAs CDP adoption grows, brands can use them to power CRM systems with accurate customer data, enabling brands to go far beyond simply knowing their customers to build long-lasting, trusted, and valuable relationships.\nCustomers first. Engagement, loyalty, and long-term trust follows. Watch our interactive CDP demo\ud83d\udc40","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/2020\/10\/14\/customer-data-revolution\/#Article_Person","image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/2020\/10\/14\/customer-data-revolution\/#Article_Person_ImageObject","url":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/uploads\/2020\/10\/Naomi-Ko-150x150.png"},"name":"Naomi Ko","sameAs":"https:\/\/www.linkedin.com\/in\/naomiko\/","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/naomi-ko\/"},"dateModified":"2021-09-24T19:15:06+00:00","datePublished":"2020-10-15T02:40:21+00:00","description":"CDP solutions offer businesses an answer to the consumer privacy concerns that fueled data privacy laws and the customer data revolution.","headline":"The customer data revolution: CRM and CDP roles evolve","image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/2020\/10\/14\/customer-data-revolution\/#Article_ImageObject","height":"630","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2020\/08\/customer-data-revolution-1200x630.jpg","width":"1200"},"mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2020\/10\/14\/customer-data-revolution\/","name":"The customer data revolution: CRM and CDP roles evolve","publisher":{"@type":"Organization","@id":"https:\/\/www.the-future-of-commerce.com\/","additionalType":"https:\/\/www.wikidata.org\/wiki\/Q1193236","description":"Relevant, timely information & analysis on commerce trends, both consumer-facing and B2B.","logo":{"@type":"ImageObject","@id":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/themes\/hybris_foc\/assets\/images\/layout\/logo-new-2x.png?_=1","height":"96","url":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/themes\/hybris_foc\/assets\/images\/layout\/logo-new-2x.png?_=1","width":"500"},"name":"The Future of Customer Engagement and Experience","sameAs":["https:\/\/podcasts.apple.com\/us\/podcast\/a-call-for-a-better-experience\/id1479742201","https:\/\/twitter.com\/FutureOfCEC","https:\/\/www.linkedin.com\/groups\/4844282","https:\/\/www.the-future-of-commerce.com\/feed\/"],"url":"https:\/\/www.the-future-of-commerce.com\/"},"url":"https:\/\/www.the-future-of-commerce.com\/2020\/10\/14\/customer-data-revolution\/#Article"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2020","item":"https:\/\/www.the-future-of-commerce.com\/2020\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"10","item":"https:\/\/www.the-future-of-commerce.com\/2020\/\/10\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"14","item":"https:\/\/www.the-future-of-commerce.com\/2020\/\/10\/\/14\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"The customer data revolution: CRM and CDP roles evolve","item":"https:\/\/www.the-future-of-commerce.com\/2020\/10\/14\/customer-data-revolution\/#breadcrumbitem"}]}]