The impact of digital disruption on the business world isn’t a new story. If anything, it’s been talked about so much in the past 10 years that it’s easy to imagine that everything has already been disrupted and settled into a new normal. Except that isn’t the case. Recent McKinsey research found that digital technologies and processes have only penetrated about 35 percent into the average industry, which means only about a third of the products, services, and operations that can be digitized have been.
The McKinsey report noted that digitization is continuing, and this transformation is affecting the way brands do business across industries. Any effective digital transformation has a significant impact in a few areas, but especially in the way brands interact with their customers. As consumers adopt new digital technologies and shatter traditional customer service models, companies will need to reevaluate precisely what kind of experiences they provide and how to improve.
Digital Transformation and the Customer Experience
Consumers have historically adopted innovative technologies at a much faster pace than the brands they interact with. It’s because of this dichotomy in technology adoption that brands must focus their digital transformation efforts on the customer experience. Brands, that fail to adapt to how customers want to be communicated with, stand to lose tremendously. How much loss is an open question, but Frost & Sullivan recently found that brands lose $300 billion in revenue from poor customer experience every year and, by 2020, customer experience is expected to overtake price and product as key differentiators.
Brands need to understand that the modern customer wants personalized, relevant, and immediate interactions anywhere and anytime through any device or touchpoint. Delivering this type of experience is part and parcel of digitizing any business model for long-term success. Companies that successfully personalize their customer interactions stand to reap substantial financial gains. To get a picture of the benefit, consider recent Boston Consulting Group research which found that personalization will drive an $800 billion revenue shift to the top 15 percent of companies in just three industries who get it right.
And getting personalization “right” doesn’t require completely re-platforming with new tools, or replacing processes whole cloth – although those could occur. What it does take, however, is knowing everything there is to know about your customers and then being able to activate and operationalize that understanding in the moment of need. To do that, you need a centralized point of control. You need a customer data platform.
Customer Data Platforms and Digital Transformation
The idea behind a customer data platform (CDP) is to provide a centralized source of information that empowers business users with insight about a customer. What is important to understand, however, is that a customer data platform isn’t a database – it’s an operational capability. By tapping into existing databases and unifying that information across silos, a CDP operationalizes all that is knowable about a customer so you can deliver that knowledge at a point of engagement or point of contact across the enterprise.
The most complete understanding of a customer is crucial to a successful engagement. You can adopt every possible digital communication technology, but it is worthless without the underlying insight that a customer data platform provides. With the insight of a CDP, brands can deliver relevant offers to consumers through the right touchpoint at the right time. In this way, a customer data platform enables brands to optimize their engagement with customers.
Delivering a personalized, targeted customer experience is a key facet of a successful digital transformation. To accomplish this goal, it’s necessary that you know everything there is to know about customers and – more importantly – deliver that knowledge across the enterprise. A customer data platform achieves this goal, operationalizing the information you need and serving up the necessary insight when you need it. It’s for this reason, if nothing else, that you can’t spell digital transformation without “CDP.”