2019 was another big year for the customer data platform (CDP) industry. According to the CDP Institute, the number of worldwide CDP vendors increased to 96 as of June 2019, up from 63 vendors in June 2018 and 38 in June 2017. The CDP Institute also found that CDP funding had reached its highest level since it began tracking the CDP market, totaling $2.4 billion as of June 2019.
This growth in the number of CDP vendors is a direct result of increased adoption in the software. A London Research report found that 86% (!) of businesses it surveyed had already implemented or planned to implement a CDP. This signals that the transition of customer data platforms from niche software to must-have MarTech tool is well underway.
But what exactly has fueled this growth in CDP adoption? And will the CDP ‘bubble’ burst? Here are three reasons why customer data platforms are poised to continue gaining steam in 2020.
1. Customer data platforms are no longer just for marketingHistorically, the draw of customer data platforms has been the capabilities they provide marketers, such as customer data segmentation and the ability to create unified customer views, just to name a few. CDPs continue to provide these capabilities (and more) for marketers, but their uses now reach outside of just the marketing department.
Their data analysis capabilities can help merchandising or finance teams better plan resource allocation, and their data storage abilities free up IT teams from managing data lakes/warehouses and running queries. And as vendors add more sophisticated functionality to their customer data platforms, such as machine learning, the organization-wide value of CDPs will only continue to grow.
2. Customer experience requires customer intelligence
The predominant focus in today’s B2C landscape is undoubtedly on customer experience management. Meeting the needs and expectations of customers and subsequently keeping them happy is pivotal in both customer acquisition and customer retention efforts. Today’s consumers also favor businesses that provide them personalized experiences in their interactions, and want them across all channels.
Delivering experiences that include relevant, meaningful content to customers (such as personalized offers/discounts) isn’t possible without customer actionable customer data. The ability to have single customer record that houses all brand interactions (like order history, email opens, etc.) is invaluable, as is the ability to quickly segment and analyze large groups of customers based on commonalities (like demographics, order value, etc.). These are, of course, both areas where customer data platforms shine. The interwoven nature of customer experience management and customer data ensures that CDPs will continue to have a comfortable place in any organization’s technology stack.
3. Major software players are trying to get in on the action
Imitation is the sincerest form of flattery as the saying goes, and this became the case for the CDP industry in 2019 when a number of the major players threw their hats into the ring. Adobe, Oracle, Salesforce, and SAP all ventured into the burgeoning CDP market, further signaling that CDPS are much more than a passing fad. And competition is always good for the consumer, so there will undoubtedly be new and exciting capabilities coming to CDPs in 2020 and beyond as vendors look to bolster their products and move the industry forward.
Bigger doesn’t always mean better though, and this is especially true when it comes to customer data platforms. Most of the larger players entering the CDP market are not offering standalone products, opting instead to package CDP-like features or functionality into larger suites. Further, most of these offerings are not yet finalized, so any company looking to implement one of their products in the near-future is out of luck. But with more and more companies adopting CDPs and experiencing near-immediate and sizable business gains from them, this wait could prove extremely costly. So while these major players add credence to the CDP industry, it could be quite some time, if ever, that their offerings impact the marketplace.
As such, companies in the market for a CDP should be looking to proven vendors, like us here at QuickPivot. QuickPivot has been in the CDP industry since the beginning, and our experience and superior product speak for themselves.