Activate Customer Data More Effectively with a SmartHub CDP

Speakers:

• Alec: Host, CMS Wire
• Brian Carlson: Founder, ROC Consulting, CMS Wire Contributor
• Josh Francia: Chief Growth Officer, Blueshift

Welcome and Introduction

Alec: Good morning, good afternoon, and welcome to today's CMS Wire webinar. My name is Alec, and I'm here to help answer any of your general or technical questions. I'd like to welcome you all to today's webinar titled, "Activate Customer Data More Effectively with a Smart Hub CDP."

Here's a rough overview of today's presentation:

• My introductions will take about two minutes.
• We have about 35-40 minutes of presentation.
• We'll leave 10-15 minutes for Q&A at the end.

If you have a question at any point, please click the Ask a Question tab underneath our webcams. If you run into any technical issues, submit those in that Q&A box as well, and I'll work with you to get them resolved. You can download other resources from today's sponsor in the Resources tab, appearing above the slides.

If you stick with us until the end, you'll be automatically entered to win one of two $50 Amazon gift cards or a donation of equal value to a nonprofit. So stick with us!

A little bit about CMS Wire: Founded in 2003, we cover three primary topics: the digital customer experience, the digital workplace, and information management. Find out more at CMSWire.com.

I want to take a moment to thank today's sponsors, Blueshift. We've been working with them for the past couple of months, and it's been an absolute pleasure. I really appreciate their support. My guests with me today are Brian Carlson, founder at ROC Consulting, and Josh Francia, Chief Growth Officer at Blueshift. It's my pleasure to have both of these fellows with me here today. With that, Brian, let's go ahead and get things started.

Brian Carlson: Well, thanks so much, Alec. I really appreciate the introduction and looking forward to this webinar. My name is Brian Carlson. I am the founder of ROC Consulting. We're a consultancy that's really focused on the intersection of technology, marketing, and content as those three things affect the digital experience and customer experience. One of my absolute favorite topics is CDPs, so I'm very excited to be talking about them. They're a focus of mine, and CMS Wire is very heavily committed to the CDP space. I'm doing a webinar on CDPs at least once a month with them and lots of great content on CDPs as well. So check it out.

Josh Francia: Awesome.

Brian Carlson: Today we've got a really interesting discussion. I'm excited to be here with Josh. We're going to give you kind of an overview of today's discussion and some updates for the market. Things have changed a lot in 2020, and 2021 has already been an eventful year. Josh is really going to walk you through a comprehensive state of marketing. Then I'll talk a little bit about how CDPs are bucketed and how vendors are starting to define them, as this changes almost annually. We're here to talk about the Smart Hub CDP, how it works to activate customers, and orchestrate journeys in addition to managing data.

Moving from Compliance to Customer-Centricity

Brian Carlson: The acceleration of consumers engaging with brands through digital channels due to the pandemic has led to a concurrent expansion in the volume, velocity, and types of data. These trends were already happening, but the pandemic "hit the gas pedal" and accelerated them. This has increased the massive amount of data that needs to be handled by companies.

While the initial reaction to new privacy and compliance mandates like GDPR and CCPA was focused on compliance ("How are we going to get in compliance?"), forward-looking businesses are thinking beyond compliance. They're starting to think about how to leverage that customer data for business benefits. That's a lot of what we're going to talk about here. Smart CDPs can really take you to the next level.

All that disparate data needs to be centralized and managed. Without good, centralized, clean, and unified data, you can't run modern, customer-centric, data-driven strategies. That's a key point. Getting data integrated is only part of the challenge. Forward-looking marketers need to be looking at how they're going to activate their customers and orchestrate that data as well as secure it.

This will provide value to the customer as well as the business. The concept of value for the business and the customer is something that needs to be embraced in marketing departments. That's how you're going to build relationships with your customers. Being customer-centric means providing value. What does my customer want? What do they need? When am I going to give it to them? The facts of value and customer-centricity are integral.

The State of Marketing: Post-Pandemic

Things have changed a lot since the pandemic. Here are some key stats:

• 60% of customers now have higher expectations of their digital experiences than before COVID.
• Customers expect more personalized and relevant interactions.
• With so much happening across channels, marketers have a much smaller window of opportunity to communicate with individuals.
• Customers demand customer-centricity. "Don't waste my time. I'm overloaded."
• Brands who are slow to accelerate their digital transformation need to speed up to deliver personalized digital experiences.

This is a brand new report, it actually released yesterday, so I included it in our presentation. This is from Kite Technology.

• Audiences were 2x more likely to engage with personalized video compared to non-personalized video.
• Personalized creative drove 85% higher engagement than non-personalized creative.
• No surprise with such wonderful stats, 68% of CMOs at large-scale brands expect to increase their MarTech investments through 2021.

Personalization works. It drives better results, and you need modern technology to do it.

The CDP Market is Growing

This is a quick market update from January 2021, from the CDP Institute and a recent survey from Twilio:

• In the second half of 2020, the CDP industry added 13 vendors, 800 employees, and $250 million in funding.
• The revenue will reach $1.55 billion in 2021, a 20% increase over 2020. This shows that even with disruptions from the pandemic, businesses see CDPs as necessary for their future.
• There's a 29% growth in CDP deployment from 2019 to 2020.
• 73% of decision-makers say a CDP will be critical to their customer experience efforts.

In the past few years, CDPs have gone from a new technology category to something really well-established, with people seeing them as a central management solution. While the initial reaction to data privacy regulations was compliance, actually 70% of organizations report significant business benefits from prioritizing data privacy, from improving operational efficiency to accelerating agility and innovation.

The Active Customer: A New Growth Flywheel

Josh Francia: Great. Thanks, Brian. Very interesting stats on CDPs and on the market in general. I want to just take a few minutes and talk about some of the things that we've seen in marketing and where we believe the future, or current state, of marketing is.

The pandemic brought around a lot of unique circumstances. It's a very unique thing to have everyone on the globe experience the same thing at the same time. We had a lot more time at home, and we used that time in various ways, from streaming shows to exercising to learning a new craft online. One of the things that we've realized as consumers is that we reward the brands we like with our activity.

As we like brands, we will spend more time interacting with them. These people who spend that time are essentially active customers, and they are what drives a brand's growth. If you have more active customers, you can simply drive more growth. This is not a new concept, but it was once relegated to a certain part of the market. We've all heard of Facebook and other ad-supported companies whose value was tied to how many "active users" they had. They measured this to sell more ads and improve targeting.

Now, traditional transactional businesses have also migrated to this concept of managing their active customers.

Examples of the Active Customer Concept

• Wayfair: In a recent quarterly report, they talked about their 31 million active customers and how those customers drive the majority of their volume, repeat purchases, and revenue.
• Uber: A transactional business, their main focus for 2021 is to get more active members, people who spend more time and have more value.
• Nike: A huge transactional brand, their former Chief Digital Officer said one of the keys for them is to grow active membership in Nike Plus. They found that active members spend 3x more than passive or guest customers across Nike's properties.

This active customer concept is now proliferating all businesses, from transactional to media-focused.

The Shift to Activation Marketing

This requires a different approach. Traditional marketing has always been channel-first: you have a channel marketer, a channel platform, and channel data, and you advertise in those channels to bring people back to an experience (on a website, in a mobile app, in-store).

This needs to shift to be customer-first. Activation marketing looks at the customer and asks:

• How do I bring the experience to wherever the customer is?
• Based on all their past interactions, what's the next best thing I can recommend?
• Where is the best place to recommend it?
• When is the best time to recommend it?

These are fundamentally different questions.

The Growth Flywheel

The growth flywheel has three core components that most marketers understand:

1. Awareness
2. Acquisition
3. Advocacy

But there's a missing piece: activation. Brands that add this activation element to the flywheel can leapfrog competitors. By having advocates and activated customers, you don't need to reconvert them, which is a huge value proposition.

This is a shift from:

• Using marketing data to optimize channel experiences (e.g., optimizing email campaigns with click and open data).
• To using customer data to optimize the customer experience wherever it occurs (email, mobile, website, store).
• From a one-size-fits-all marketing blast ("We have a big sale, check us out") to using AI to be relevant to each individual at every interaction.
• From siloed communication (thinking only through the lens of one channel) to connected orchestration across every touchpoint.

The Role of Technology: The Smart Hub CDP

To make this strategic shift, you need new technology. Consumers are producing a lot of data, and they are generally okay with it as long as the brand responds with relevant and personal experiences.

You need to fill the gap between the data being produced and the experiences being consumed. You do this with a Smart Hub CDP.

• A Smart Hub CDP unifies your data, providing an underlying customer data platform as a foundation. It organizes data at the customer level.
• Once data is organized, you can use AI to its fullest potential. AI thrives on organized data. It can help you predict things like:
  • Who is most likely to purchase certain products.
  • When is the best time to talk with them.
  • Where is the right channel to message them on.
  • What type of content they will respond to.
• Lastly, the hub component is critically important to orchestrate all this and actually reach that last mile, delivering the activation wherever your customer is.

Blueshift is a Smart Hub CDP that connects these pieces, allowing you to do relevant, connected activation everywhere your customers are.

Brian Carlson: Josh, that was awesome. You made some really interesting points. The concept of active customers growing out of the idea of active users is great. I'd say the same thing happened with customer-centric behavior. Twenty years ago, we called it "reader-centric" in publishing, then "audience-centric," then "user-centric" within a UI sphere, and eventually "customer-centric." Seeing these important trends broaden from one industry to another is fascinating.

Josh Francia: It's interesting to think about how traditional brands often over-index on the transaction. They focus on the conversion moment, which is important, but they miss the bigger picture of whether they are building active customers and capturing their mindshare. They often spend a lot of time and energy reacquiring customers because they're forgotten between transactions.

Brian Carlson: That's a great point. I remember five years ago, having this conversation in an enterprise digital marketing department, and it was heavily resisted. The company I worked for hated a piece of content we created on "how to remove an ice dam from your roof," because they saw it as a liability. But it was the most popular piece of content we had. People loved it, and it brought them back to buy products. It's nice to see this has become a much more predominant conversation in marketing.

CDP Categorization and Components

Brian Carlson: Now, let's talk about how vendors are categorizing CDPs. A lot of vendors came from different starting points. Some may have repackaged existing offerings or tacked on APIs. In my opinion, a true CDP is one that is built from the ground up with APIs to interconnect and provide interoperability. They're built with the intent to deliver data out to other platforms like digital asset management systems and personalization engines to tailor the digital experience in real-time.

The way you can slice CDP vendors and products is debatable, as the market is still developing. Gartner currently slices them into four different buckets. I'm going to talk about a few of those buckets that are relevant to our context here.

Data Management vs. Data Activation CDPs

• Data Management CDPs: These are more IT-led. They are focused on moving data from one place to another and bringing data together. They may have a core CDP engine with toolkits (which may be open source) that allow IT-led teams to build new apps on top. They're really focused on data handling, not marketing operations.
• Data Activation CDPs (Smart Hub CDPs): This is a Gartner terminology. These are more inclusive, taking data management capabilities and adding the ability to activate the customer. Smart Hub CDPs have AI that allows them to do orchestration and personalization at scale for event-triggered and buying journeys. They fit into a hub-and-spoke configuration, allowing marketers to focus on messaging from a single interface. Typical features include predictive analytics, segmentation, and a UI for customer journeys.

Core Components of a Smart Hub CDP

A Smart Hub CDP is essentially a Customer Data Platform and a Marketing Automation Platform rolled into one system. It helps you gather and unite all your data and uses AI and machine learning to deliver personalized experiences at scale. It connects applications around a single, unified customer profile, which is the beauty of the CDP. You use that unified profile to direct interactions in real-time, enabling you to deliver relevant, connected experiences throughout the full omnichannel journey.

A Smart Hub CDP:

• Integrates data unification with intelligent automation.
• Provides intelligent, actionable recommendations for marketers and other people in the organization.
• Enables journey orchestration, which is knowing where a single user is in their journey.

This is made to fit within your existing tech ecosystem, acting as a hub that unites the stack around a single view.

Smart Hub CDP Functionality

A Smart Hub CDP is made up of a core, enterprise-grade CDP (scalable and built with APIs) and is designed to handle key functionalities:

• Persistent Unified Customer Profile: A key differentiator over DMPs. It combines real-time behaviors, predictive future actions (with AI), from all channels, devices, and systems in real-time. Unlike DMPs, which rely on cookies and third-party data, CDPs are built to handle compliance and privacy mandates like GDPR and CCPA from the ground up. DMPs show a snapshot in time; CDPs show a user's persistent behavior over time.
• Infrastructure for Data Management: The hub is the connecting point for all your company's MarTech solutions. It's infrastructure for data management, connecting all channels and apps, allowing you to craft experiences at scale.
• Automated Triggered Interactions: The hub allows you to automatically trigger interactions in response to real-time customer behaviors. AI and ML enable these real-time experiences by incorporating a customer's complete history, current context, and predictive behaviors. This continuously optimizes who is targeted with what content, on which channel, and at what time.
• AI for Objectivity: AI enables a one-to-one personalization engine. It also helps alleviate mundane tasks like image tagging or reporting. It provides an objective voice in the room, cutting through the noise of internal politics. For example, AI might determine that Brian wants a specific product, even if another business unit wants to push their product. This objectivity ultimately benefits the whole company, not just one channel or product.

Josh Francia: I could almost summarize and say AI enables customer centricity. I mean, I love it. It allows that objectivity and helps deal with internal battles that happen in digital marketing departments working across different business units. It's a way to bring in a neutral party to tell you what the data says.

Q&A Session

Alec: All right, Brian and Josh. Thank you guys. We are going to get into the Q&A, and we have some questions in the queue already. The first question, I'm going to start with you on it, Brian. It comes from an attendee named Chee.

Q: How can I help my executives pick the right MarTech tool?

Chee (Audience Member): I'm working on a MarTech project to map out the CRM ecosystem, and I am overwhelmed with all the tools and applications. Everyone wants to use AI, ETL, and automation to max a tool. My question is, how can I help my executives paint a picture and pick and choose the correct tool?

Brian Carlson: This is a struggle that so many people face who have technology responsibilities and are trying to communicate the value of these things to business leaders. First, you need to get executives to define their goals. Their goal is not to use AI; their goal is to grow revenue, grow active users, or something else.

1. Get a list of business goals and needs from the business side.
2. Take those goals and start looking for the right applications that match them.
3. Sell the features and functionality of the right system to the business leaders. You can then say, "Oh, and guess what? It's got this really cool AI stuff."

This way, you're addressing what the business leaders want to hear (AI, automation) but bringing them back to the core business discussion. You're going to evaluate the software and find the right solution for the business's goals, and then you're going to sell them on the features. Hopefully, that gives you a foundation.

Josh Francia: Just to add to that, I would definitely start with the business goals, as Brian mentioned, which are generally measurable outputs. Then, rewind and say, "What are the use cases that you can't solve today that you believe will give you the best chance of hitting those goals?" These use cases are the "how." You should be able to outline several use cases that you believe will drive the biggest impact.

Once you have that set up, you can go to the market and say, "Listen, I have five to ten use cases that we believe will push our company to the next level. Can you guys help us with these?" Then you're very specific. You can weed through a lot of the noise and say, "This partner can do these two, but they can't do this one." And then you find the one that can do most of them, and you go deep with that handful. You don't waste time evaluating 20 or 30 CDPs at that level.

Brian Carlson: Josh makes a good point there. The use cases you should start with are the simpler, easier to implement ones. You can then use those as a pilot to prove to executives that, "Hey, this works." So, take low-hanging fruit for your initial use cases to show internal people the success and value.

Alec: Great. Thank you both for that. Chee sent in a message thanking you for all the wonderful recommendations during that answer.

Q: How is a Smart Hub CDP different from a Marketing Automation Platform?

Josh Francia: A marketing automation platform (MAP) generally comes out of a single-channel marketing automation solution that then adds additional channels. It's all about the orchestration side, but it doesn't really have any of the "smarts" or the CDP side. You think about lists as static flat files. Their ecosystem just exists with whatever channel you're hitting from that automation platform. It's fairly limiting.

• You can't do great segmentation.
• You can't get a single customer view.
• You don't have good AI because you're missing the full customer view.

A Smart Hub CDP takes all the benefits of a MAP and adds a lot to it. It really allows you to have that full view of the customer and then allows you to orchestrate anywhere the customer is, not just on a couple of marketing channels. A Smart Hub CDP has a CDP layer and AI, which MAPs generally do not, and it has rich segmentation that allows you to do a lot more.

Q: What new KPIs should we be tracking for active customers?

Luis (Audience Member): Josh mentioned active customers are very important. Are there any comments on what new KPIs that we should be tracking or correlating? NPS in active user time, customer effort score? Which one has been the focus at your company mainly?

Josh Francia: Luis, great question. As you're moving into this activation marketing philosophy, you need KPIs to measure success. I would say the very first thing companies need to do is define what an active customer is for them. Go back and say, "Which customer are we considering active?" That may be based on activity, revenue, or a bunch of different things.

First, define that, and then figure out how to grow that cohort. So, track that cohort over time. The most important thing is then to figure out what interactions led to them becoming an active customer. You want to find ways to influence those interactions because that's how you grow your active customer base. One of the core KPIs I look at is whether the number of active customers is growing. If you're doing that as a company, you're in really good shape because you're aligning everything to driving growth into that cohort.

Q: Is a Smart Hub CDP a DMP replacement?

Brian Carlson: Good question. The answer is probably not. No. A CDP sits over a DMP. A DMP may feed data into a CDP to be centrally managed. A CDP is a broader system in terms of application and use cases than a DMP. A DMP is typically used to inform advertising systems. Like I said, a DMP typically doesn't have persistent customer data and deals with cookies, which are becoming an issue.

The DMP is more traditional, more mature than the CDP. The CDP is a broader, more inclusive type of a platform. DMPs are going to evolve somewhat, either to be complementary to a CDP or they will repackage and try to compete with CDPs. So, right now, I don't think it's a replacement. It depends on your needs, requirements, and business. You may have a CDP with no DMP. You may have a DMP that feeds into a CDP and helps to deliver all that data so that that data can help inform other experiences outside of advertising.

Q: How does a Smart Hub CDP allow me to turn my data into personalized experiences at scale?

Josh Francia: It's a great question. First, you unify your customers. Without a unified view, it's very hard to be personalized. You need to know what they're doing, where they're doing it, and when they did it.

Once you have that, you can use AI to help. It's very hard to do personalization using business rules only; it just doesn't scale. You can do that if you have a couple of thousand customers, but when you get into hundreds of thousands or millions, business rules and workflows fail. AI really soars at that point.

Once you have all the interactions in place, you can run very simple recommendation algorithms. These are point-and-click, marketer-friendly experiences. The data science is behind it, but the user experience for the marketer is just like clicking a few buttons.

Then you can orchestrate it. Once you have all the recommendations built out, you can orchestrate it anywhere that customers interact. The recommendation content (the next best offer, the next best content piece) is not limited to one channel. It can be on your website, sent to your call center, sent through a text message, sent through an email, or through direct mail. That's really powerful because that recommendation is for that customer, not for that channel. And that customer may interact with you on a variety of channels. As they do, the recommendations change, and you can orchestrate it all together when you have a Smart Hub CDP that allows you to break apart those pieces and really connect the entire journey.

Conclusion and Farewell

Alec: We are at the top of the hour. So thank you both, and thank you to all of our attendees for participating. It really makes a webinar more enjoyable when we have an active audience. If you stuck around to the end, you're entered in to win one of the two $50 gift cards. Keep an eye on your inbox, as we'll be emailing you within the next couple of days.

Thanks again to Brian and Josh. We really appreciate you taking the time. A lot of time was spent on today's presentation. We really appreciate that. I want to again thank Blueshift for sponsoring. It's been a pleasure working with them on today's webinar, and we really appreciate their support here at CMS Wire. If your company is interested in sponsoring a webinar like this, just email us at webinars@CMSWire.com. But in the meantime, thanks again to everybody, and we'll see you all next time.