Customer expectations are rising each and every day and brands are feeling the pressure to meet these demands. Compounding this challenge is the fact that the amount of customer data available to marketers is constantly increasing while the work they must do to acquire, engage, and retain customers is becoming more difficult. The need to leverage data to meet rising customer expectations for real-time, personalized communication is one of the main reasons why more brands are adopting Customer Data Platforms (CDPs). As a direct result, recent research found that the CDP market size is projected to grow from $2.4 billion in 2020 to $10.3 billion by 2025.
But beyond the need to meet heightened customer expectations, what are the other key factors driving the growth of this market?
Key Influences Behind Growth of CDP Market
There are four main areas that are contributing to the crowding of the CDP landscape:
The Proliferation of Communication Touchpoints:
Over the years, organizations have assembled a complex assortment of Marketing tools, platforms, and databases with the goal of improved customer targeting. But for these separate platforms to be effective, they require an underlying layer of accurate and complete customer records.
The question for businesses is: how can we bring together disparate touchpoints to more effectively communicate with customers? Most often, the answer is a CDP.
Changing Data Regulations:
From GDPR to CCPA, new data privacy regulations are changing the game for digital marketers. In this new world, not only do marketers need to prove to customers that they understand them in order to retain their personal information, but they also need to work with less data overall.
This is why first-party data and CDPs are more important than ever. With all available first-party data collected in one system, marketers can ensure that they’re working with the most complete picture of the customer possible. Ideally, the CDP should also make it easier for an organization to respond to customer or regulator requests for information.
As the value of CDPs becomes more clear, the software itself often gets overhyped by marketers eager for a good solution and vendors who are eager to show value.
A common result? New companies migrating into the space to take advantage and more Cloud vendors such as Salesforce and Adobe entering the fold with their own CDP platforms. This rush of new offerings muddles the marketplace even further.
Development of Innovative Technology:
But the truth about these innovative technologies is that they require large amounts of high-quality data to function successfully. So, as more companies look to leverage AI and MachineLearning tools in their business processes, more CDP vendors will enter the market to meet this imminent need.
CDP Buyers: Here’s What to Look For
As the CDP market becomes even more congested, buyers will need to have a critical eye when selecting a solution that best fits their use case.
The baseline qualifications for a CDP include: ingesting data from all sources, retaining full detail of ingested data, storing the ingested data as long as the user wants, converting the data into unified customer profiles, and making the profiles available to all external systems.
But as customers continue to evolve and become even more demanding, CDPs will need to do more. Simply pushing lists of customers into a specific channel to receive a static offer is not enough.
The true differentiation arises when a CDP can orchestrate individual offers based on a customer’s up-to-date history across every channel. Additionally, the CDP should provide tools to suppress, extend, or change the offer based on a customer’s action at the moment.
The multiple layers of real-time come to life in data acquisition – matching, merging, and updating bits of customer data into a golden record, and in the decisioning – recognizing and engaging with the customer in the moment across channels, and choosing a next-best offer or action accordingly.
Read more: CCPA and Future Data Regulation Compliance
Future-Proof Your Business with the Right CDP
With Omnichannel customer experience well-defined as the most important competitive differentiator for brands today, it’s inevitable that more businesses will adopt CDPs and more vendors will enter the fold to meet the demand… or to benefit from the hype!
While this certainly makes it harder for CDPs to stand out, it’s good news for marketers – it means that they have a strong element of choice. They can choose the solution that directly meets their unique needs.
The key for Marketing leaders will be having a forward-looking perspective – as more customer touchpoints arise, data regulations progress, and the world becomes increasingly automated, marketers must choose a solution that addresses each of these areas and propels their business into the future.