Notes On Digital Transformation: Customer Data Hub

In “Notes On Digital Transformation: The Customer”, I discussed why customer data is important for business growth and the importance of the data system to be agnostic of any technology that connects to it and to be flexible and scalable to meet the future needs of the business.

So what does it mean to have the proper structure to store and organize customer data?

It is important for the business to structure and collect data based on objectives they want to achieve. A good number of businesses make the mistake of deciding to capture everything about the customer whether that data is relevant to their business or not and whether they will act on it or not.

Also it is important that the structure, a business designs today, is flexible enough to add more data types in the future. For example, WhatsApp communication was not a standard piece of the business communication channels a year ago but now it is, which means that businesses now need to efficiently store those conversations as part of the customer’s record.

The basic customer data structure should help the business answer the following questions (because remember the whole purpose of this is to empower your marketing team with the data they need to engage with those customers):

1- Who is my customer? This is basically the identity of the customer (name, birthday, gender, nationality, etc.)

2- What is the shopping behavior of my customer? This is related to transactions (online and offline).

3- What is the engagement behavior of my customer? (Open emails, clicks, and any other campaigns related data)

4- How does my customer feel about my brand? This is related to feedback (surveys, customer service, and Social Media) and referrals

Those are the fundamental questions that every business should be able to answer and they cannot do so without properly storing and organizing their customer data.

Now a lot of businesses would say that they already have a system to store the customer data and by that they mean a CRM system. That’s great but if we take a closer look, Customer Relationship Management (CRM), according to Salesforce, is a strategy for managing an organization’s relationships and interactions with customers and potential customers. CRM system helps companies stay connected to customers, streamline processes, and improve profitability. It can be used by different verticals in the organizations and also helps them to focus on the relationship with individual customers.

In other words, CRM give businesses visibility of customer contact information and sales opportunities. Some new generations of CRM even have some capabilities to automate marketing campaigns to those customers either directly or through additional execution tools. They help with lead nurturing, customer retention, and up-selling to existing accounts.

The Primary users of the CRM system is Sales and Customer Service representatives and NOT marketing teams. Case in point, one of the leading CRM companies in the world is Salesforce, so they have literally the word Sales in their name to emphasize the role of their system regarding sales teams.

However, if you remember from “Notes On Digital Transformation: An Introduction”, I mentioned that the main purpose of creating a centralized customer data structure, that collects and organize customer data from different kinds of sources, is to enable “Marketing” teams to engage with customers, pure and simple.


Ok so if CRM is only a “piece” of the puzzle, then what can a business do to create that Customer Data Hub that would serve “Marketing” teams?

In recent years, we have seen the rise of what is known as the Customer Data Platform (CDP), and according to the CDP institute, a CDP must have the following capabilities:

●     Ingest data from any source

●     Capture full detail of ingested data

●     Store ingested data indefinitely (subject to privacy constraints)

●     Create unified profiles of identified individuals

●     Share data with any system that needs it

Gartner defines a CDP as a “marketing system that unifies a company’s customer data from marketing and other channels to enable customer modeling and optimize the timing and targeting of messages and offers.

A few years ago, Salesforce started a CDP initiative to make it part of their products suite and they are acquiring companies to expand their capabilities in that area.

Whether you call it CDP or something else is not the point, what matter is for the business to setup a system that captures all different kinds of customer data to create one universal customer profile and then plug that data back into any tool that can use it for marketing purposes.

In other words, the CDP enables “marketers” to bring in huge amounts of online and offline data from a multitude of sources, then match, merge and remove duplicates to produce a Single Customer View, without the requirement of help from a team of engineers or IT specialists. Each unified customer record can then be segmented, analyzed and used to make recommendations to help create a personalized customer journey.

So, the aims of the CDP are to empower the marketing team to use clean, trustworthy and compliant data across all their marketing channels, and to act as a single source of truth about their customers to enable analysis, intelligence gathering and the automation of targeted, personalized marketing campaigns.

Another key aspect of CDP is simplicity and ease of use. Since the CRM database is highly complex, they require an IT team for setup and management, while CDP was created to be simple and manageable by marketing professionals.

So the key thing to emphasize here is that rather than working with a database (or databases) owned and controlled by IT. This means marketers do not have to go back and forth to IT and make requests to access data and get that data back. Marketers can manipulate and control data themselves, a simple but a very new concept.

A CDP (or CDP like systems) lets marketing teams leverage their data by putting the power in their own hands. This can be used for analysis and research, to make segments, to build and execute campaigns and get reports.

That all sounds good on paper (or screen) but the reality is that most businesses already have legacy systems, or they just spent millions installing a mammoth of a CRM system that was supposed to solve all their problems, or they already have several proper systems in place that do their jobs separately but are not connected, and the list goes on about the barriers that stand in the way of a business to even start thinking about centralizing their customer data and kicking off their digital transformation.


So what are the challenges to setting up a proper customer data hub?

Here businesses are presented with two options:

1- Replace existing system(s) with a modern one that is designed to propel the business into the future.

2- Gradually revamp their technology ecosystem by creating something that sits on top of the legacy systems and that has the ability to connect with modern day tools and systems, which gives the business the flexibility to get started fairly quickly without disrupting the existing infrastructure and some of the existing processes (which also means less cost).

It is important to highlight that until a few years ago, the first option was pretty much the only option available because that was how technology was structured and built. One mammoth system to rule them all. Then a few years ago technology evolved, like it always does, into open platforms and cloud technology, in other words technology now allows us to build different “specialized” systems (or products) that can easily connect to each other to do a lot of different things. What is interesting about those systems is that a lot of them follow the plug-and-play model, where no installation is required, no expensive hardware to buy, no costly support, and more importantly no expensive upgrades, so in theory those systems never get outdated.

Now you might be thinking, that is great and businesses are naturally gradually revamping their systems to move quickly without disrupting the business a lot and without spending tons of money. Unfortunately, that is not case for many reasons, one of them is old habits die hard.

Remember in “Notes On Digital Transformation: An Introduction”, I mentioned that part of the digital transformation journey is people and changing the mindset of those people. Some of those people are in IT where the mindset is still one system to rule them all and one big initiative to change the world. So we still see businesses (especially big ones) that go the route of changing everything and moving from one big system to another big system with very unrealistic expectations about time, benefits, and cost. This mindset gets even more challenging by the simple fact that this new concept, of centralizing customer data that easily plugs into different marketing systems, shifts the control and decision making power from IT to Marketing. A lot of organizations are still struggling with that shift.

This is why it is important that businesses start adopting the approach of building a solid data foundation on top of which multiple, connected, solutions can be plugged into to serve the different needs of the different divisions. As long as the data foundation is solid then implementing and changing systems on top of that foundation should be cost efficient and quick.

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Notes On Digital Transformation: The Customer

According to the late Peter Drucker, as he wrote in his book The Daily Drucker, there is one valid definition of business purpose, which is to create customer.

He explains this more by emphasizing that “it is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or for a service, converts economic resources into wealth, things into good.”

However, historically businesses focused more on selling rather than on customer. Even their marketing efforts were more about attracting more eyeballs, clicks, views, and feet through the door with minimum attention to who is actually looking, clicking, walking into the store, and most importantly buying. We have encountered many businesses that were generating millions in revenues and millions of transactions but with no clue about who they were selling to and without any way to know if those transactions were generated by one customer or a million customers.

With today’s very competitive landscape, very demanding customers, and the spread of technology, it is more imperative to focus on the customer and to identify who that customer is. You probably heard all the buzz words about businesses trying to be Customer Centric, Omni-Channel, 360 degree view of customer, Customer Experience, etc. and unfortunately, yet once again, the focus has been on IT systems with over hyped expectations.


Creating the Customer from Customer Data

If the purpose of a business is to create a customer then it comes without saying that the foundation, for any solution that the business can build on, is customer data. So as a result the starting point for digital transformation should be customer data, not the CRM or marketing system or the E-commerce platform or robots.

Now it is important to highlight that the online business is to a certain extent ahead of the brick-and-mortar one because it is easy to collect customer data online than it is offline, for two simple reasons: delivery and payments. Customers shopping online must provide some personal details to receive the goods and to pay, a requirement that does not exist in the brick-and-mortar world. In other words, online customers are easy to track while offline ones can be totally anonymous.

This is why most of the advancements related to customer data collection and analysis is actually for the online world. That is not to say that no data is being collected offline but that effort is dwarfed compared to the capabilities that exist online. Also this created another challenge for businesses, which is the huge gap between online and offline and the ability to bridge that gap. The same customers shop online and offline, one of the challenges that businesses face today is how to connect the two and create a seamless journey for the customer.

If you are thinking that online shopping is the dominant one then why worry about off-line customers then it is important to highlight the fact that, according to stats published on Digital Commerce 360, e-commerce in the US accounts for 16% of total retail purchases after factoring out the sale of items not normally purchased online, such as fuel, automobiles and sales in restaurants. That is in the US, while in many parts of the world that number is still in the single digits realm. What we have seen in the past few years is a blending of the channels and a realization from retailers that to properly compete they need to have a presence everywhere, online and off.

Even with the COVID-19 crisis, which eventually will subside, and where a lot of retailers are now scrambling to establish or ramp-up their e-commerce presence, that number is forecasted to jump to the mid twenty and it is yet to be seen if it is a long term up-tick or a temporary one.

This brings us back to the concept of customer data, which for the most part still lives in silos, out of date, and in a lot of cases hard to reach. Customer data by nature is system agnostic, my name does not change if it was captured online or offline, on a piece of paper or on social media. As a result, the customer data system, if we want to call it that, should not care about where the data is coming from, as it will be coming from different channels that are known today and many more that will be created in the future. Its sole purpose is to store, unify, and organize the customer data in a way that can be used for “marketing” purposes, pure and simple.

A business should not only focus on building a proper structure to store and organize data today but also one that is scalable and flexible to accommodate new trends in the future. WhatsApp, Facebook, Instagram, Pinterest, and SnapChat did not exist a 15 years ago and now businesses, online and offline, are struggling to accommodate the influx of data that is flowing about customers from social media.

The mistake that businesses make is they look at customer data as part of a product while it is completely independent of any product and/or vendor. Customer data structure should be completely independent and should be able to accept data from any product or channel as long as it adheres to the structure designed to meet the specific needs of the business.

Once the proper structure, for data to be collected and organized, is established then the business has the flexibility to leverage the unique advantages of different systems to collect different pieces of customer data. On top of that, the business would have a bigger flexibility of leveraging different marketing and customer engagement systems to serve its needs because they have the data that they can feed into those system to engage with their customers properly.

If the primary goal of a business is to create a customer then it goes without saying that the first thing the business needs to do is to know what kind of customer they have and that can only be done by properly planning to collect and organize the “right” customer data that is “relevant” to your business.


Customer data creates opportunities and optimizes your marketing efforts

The power of data is that it allows businesses to have visibility about potential opportunities, ideas, and ways to optimize their spend. For example, businesses can send smaller marketing campaigns to a specific target with relevant content, which would reduce marketing cost while increasing revenues. Data becomes more critical on social media as you want to make sure not to target your own customers when you are looking for new ones.

Data creates opportunities as it reveals trends and sometimes a segment of customers that your marketing team never thought about. This would would enable the business to create different engagement campaigns to maximize the revenues from the newly identified segments.

Data is like the fuel that the business needs to operate whatever customer experience systems they get. The cleaner the fuel the better those systems would operate but without it, no matter how sophisticated the technology is, you will only achieve a fraction of what you should.

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