First-party customer data collection and direct-to-consumer business models seem to be gaining in popularity… but why? As marketers are shifting their focus to first-party data, they’re pursuing new engagement programs designed to maximize this opportunity (see Use Customer-Directed Engagement Models to Earn First-Party Data for More Effective Personalization Gartner subscription required).
But all this leads to a large amount of friction. Marketers attempting to collect, manage, and unify customer data are faced with consumer privacy concerns, regulatory burdens, and the gyrations of big tech..
In physics, friction is defined as “the resistance that one surface or object encounters when moving over another.” In the context of customer data, friction is the term I use to describe the work, time, cost, guesswork, and complexity surrounding customer data. It is one element of the diminishing returns we see in assembling the 360-degree view.
Yet the friction moves both ways – customers will no doubt encounter greater resistance at various points in their journeys, via requests to provide consent or to create an account where previously not required. For everyone – not just your business – will find that it’s not going to get easier to collect, manage, or leverage customer data.
Friction impacts the business value and ROI of customer data efforts in multiple ways:
- Greater technology investment needed to collect consent prior to data collection/retention
- Development of meaningful content and engagement capabilities to incentivize customers to submit their data.
- New measurement strategies must be tested and adapted to deliver actionable recommendations with fewer data points
- New governance or data quality initiatives should be launched to improve stewardship of customer data which might slow down ideation or execution
- Customers may need to work harder to participate in order to supply their data to your first party strategy
- Regulators may impose new compliance burdens which have technical and activity costs
All of the above costs are likely to scale up in line with the size of your customer or prospect population. Costs also grow in proportion to your ambition to collect as much data as possible, instead of a narrower set of minimum requirements.
How much the friction inhibits your business outcomes is to a large extent outside your control. But some teams are now turning to customer data platforms. If you’re wondering, “Just what is a Customer Data Platform?”, we have you covered, too. See “A Guide to What Is — and Isn’t — a Customer Data Platform – Gartner subscription required).
Can CDPs mitigate the gaps caused by third-party data deprecation? Perhaps, but only for those marketers with access to consented first-party data and the patience to consistently provide value to customers in exchange for fresh data.
Meanwhile, sourcing the CDP capability that will support your efforts is the subject of our updated Market Guide for Customer Data platforms (Gartner subscription required). The current CDP market is impacted by three key trends:
- The trend toward CDPs that provide rich “Smart Hub” orchestration capabilities within their platform. If preference for marketing technology solutions reverts to a best-of-breed approach to the martech stack, standalone Smart Hub CDPs would be well-positioned. Smart Hub CDPs have received 54% of the investment/acquisition activity captured by Gartner and orchestration features have been the fastest growing feature set in the CDP market, aligned to a best of breed martech stack (see Top Trends in Marketing Technology for 2021).
- Further “integrated suite” approaches from multichannel marketing hubs, ABM and DXP solution vendors. Although ABM and DXP vendors have been acquirers, most multichannel marketing hubs have elected to build their own capabilities rather than acquire existing stand-alone CDPs.
- Integrations between CDP technology and identity resolution vendors. Matching short-lived cookies and mobile device identifiers with a proprietary identity graph to connect the fragments of a customer’s behavior into a single profile, even when consumers do not volunteer their own data, may appear as a salve but won’t eliminate the friction ahead.
Over the past year, we have been on an extensive and critical examination of the role of 1st party data in the martech stack. We’ve challenged the notion that more data is better, and revealed that the aspiration for a 360-degree view of the customer is widely held but rarely achieved. Attempts to bolster the enterprise tech stack to collect more data won’t eliminate the friction you’ll encounter when you attempt to collect, unify, and leverage this data, but we are committed to helping you make the right investments. Leverage our research linked here or set up an inquiry to discuss.