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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