Quest to build customer loyalty drives CDP market growth
The market for customer data platforms (CDPs) is going from strength to strength as companies strive to deliver more relevant and personalised customer experiences. Such experiences have been shown to build customer loyalty, and in turn, help businesses to outperform their marketing targets.
With an estimated value of more than $1 billion in 2019, according to the CDP Institute, and a Compound Annual Growth Rate of 29.3% to 2023 forecast by ResearchAndMarkets.com, the CDP market is growing exponentially.
This expansion has not gone unnoticed by large martech companies, who have started to make tactical acquisitions to enhance their own customer platforms, with some even creating their own CDP equivalent from scratch.
According to David Raab, founder of the CDP Institute, a CDP is a solution that has the ability to: ingest data from any source; capture full detail of that ingested data; store ingested data indefinitely; create unified profiles of identified individuals; and share data with any system that needs it. At its core, then, a CDP is an efficient, time-saving and consistent way for marketers to unify all of their available customer data into one place, enabling the creation of highly personalised and targeted customer experiences.
Marketers are beginning to see the benefits of a CDP, as quantified in the Customer Data Excellence report, published by London Research in partnership with BlueVenn. The report underlines the potential impact CDPs can have on your business and introduces the seven-stage Customer Data Maturity Model. The model is explained in detail by report co-author Andrew Campbell in a webinar, available on-demand here.
A key takeaway from the report is that CDPs are here to stay. A recent London Research survey of businesses with annual revenues of at least $50m found that over half (51%) are already using a CDP, while another third (35%) are planning to invest in one.
CDPs deliver on their core promise to unify customer data and help provide positive customer experiences. Unlike Customer relationship management (CRM) systems and data management platforms (DMPs), which serve their own purposes, CDPs are specifically designed to help companies foster loyalty by creating a highly personalised customer experience using previously fragmented and siloed data.
A data-centric approach to business pays dividends, as evidenced by the success of companies such as Amazon, Google and Netflix. Research by Dept agency found that the most data-centric businesses make on average 20% more in revenue and have a 30% reduction in costs compared to less tech-savvy peers. This reaffirms the London Research and BlueVenn report, which found that 24% of businesses with CDPs outperform against their organisation’s main marketing goal, compared to only 10% of those companies without CDPs. Clearly, in the both B2C and B2B arenas, CDPs have now become a vital aid to understanding and utilising customer data.
The promise of omnichannel capabilities and unique customer experiences has been at the heart of the rapid growth in the CDP market. As reported by the CDP Institute themselves, in 2018 alone the total number of vendors grew by 60%, related employment increased by 65%, and funding rose by 23%.
When discussing the growth of the CDP market, David Raab, who contributed to the Customer Data Excellence report, suggests that the need for unified, accessible customer data continues to increase throughout the business world. In his opinion, “any company that takes its customer data seriously will probably have one [a CDP].”
A significant change in the last couple of years has been the acceptance of CDPs, and CDP equivalents, by large martech companies. What was previously deemed a passing fad has now progressed into a potential multi-billion dollar industry. Salesforce and ARM Holdings have made related acquisitions in the form of Datorama and Treasure Data, while Adobe and Oracle have both announced plans to create their own CDPs.
David Raab told CMSWire that he sees this as “proof that marketers are pressing those vendors for CDP solutions”, and added that in his opinion these acquisitions “further validate the market”. Segment (a customer data infrastructure company) recently announced a $175 million round of new funding, bringing its total capital raised to $284 million. This gives credence to Raab’s statement within the Customer Data Excellence report that “there is considerable room for expansion as the industry grows beyond its initial base.”
In summary, customer data platforms are becoming increasingly sought after – in fact, the London Research report attests that 76% of businesses have adopted or will soon be adopting a CDP. Even the large martechs have started to appreciate that an outstanding customer experience, built upon the synergy of data a CDP provides, will positively impact both customer loyalty and business growth.
For more information on how successful marketers are harnessing the power of CDPs, download the Customer Data Excellence report, published by London Research in partnership with BlueVenn.