The combination of COVID-19 uncertainty, accelerated digital transformation, and the imminent end of third-party cookies have made Customer Data Platforms (CDPs) an essential part of marketers’ technology portfolios.
Research firms expect annual growth rates of more than 25 percent in the CDP market for the remainder of the decade. Tealium’s third annual study, “The 2022 Status Report on CDP: The Art of What’s Possible in the Age of Data,” shares how marketers can stay competitive in the rapidly changing digital landscape using CDPs.
Technology spending continues to rise
According to a Tealium report, 87 percent of marketers expect technology spending to increase in 2022 while 40 percent plan to increase significantly — compared to 32 percent in 2021.
Among the solution areas reported as most important to CDP for marketers, customer experience (41 percent) ranked highest, followed by loyalty and customer retention (38 percent) as well as growth and customer acquisition (33 percent).
CDPs have been critical in helping companies achieve their ultimate goals in 2021, including protecting customer data (cited at 57 percent), accelerating customer acquisition (54 percent), creating more personalized customer interactions (53 percent) and delivering a more unified experience across channels. (51 percent).
Among the top five reasons why respondents invested in CDP, customer data privacy protection and/or security compliance, were listed first, followed by leveraging real-time data collection to be more responsive and improve capacity via technology investments.
Return on CDPs Tangible ROI
As CDPs are becoming more specific, so are CDP use cases to see ROI. As CDPs drive relevant and timely interactions, the growth of business and organizational processes across internal departments has become more efficient.
Nearly 70 percent of marketers reported a positive ROI within six months of investing in a CDP while 96 percent got a full return within one year. Among the metrics marketers use to measure ROI, 37 percent cited data quality as the most important — especially in the financial services industry — followed by customer experience (22 percent) and operational savings (22 percent).
Many external factors disrupt business
Privacy regulations, the loss of third-party cookies, and the COVID-19 pandemic are the three most cited external factors that are rapidly changing business. Data-driven companies are increasingly relying on CDPs as a fundamental change agent necessary to adapt. In fact, 91 percent of Tealium respondents said digital transformation is the primary driver for CDP adoption.
Regulatory changes around customer data (40 percent) are the external market factor expected to have the largest impact on business in 2022, followed by disruption/advancement of technology (40 percent) and the lasting effects of COVID-19 (38 percent).
Retail respondents cited obstacles to customer identity management and changes to privacy consent management regulations as considerations while choosing a CDP far more than other industries.
92 percent of retail respondents cited pandemic-related disruption as a single factor in their choice of CDP, compared to 79 percent of respondents across the board and 68 percent in the technology sector. Healthcare participants reported that the ripple effects of the pandemic will have a significant impact on their sector in 2022.
Besides accelerating the shift to e-commerce, the pandemic has also caused consumers to rely more on reviews and promotions and demand more value from retailers. Thirty-one percent of respondents to a survey conducted by Firecast They consider themselves “price-conscious,” up from 23 percent in 2020.
Budgets are going down
After making budget cuts during the first quarter of the pandemic, between 50 percent and 60 percent of marketers increased spending in eight of the nine critical technology categories in 20221.
Digital marketing makes up 58 percent of the total marketing budget and is expected to increase by 15 percent in 2022. Virtual engagements are the primary area in which marketers intend to invest in customer engagement this year. Five percent of survey respondents said budgets are a limiting factor in purchasing AI tools.
The age of intelligence is the dawning
Ninety-seven percent of CEOs reported that AI capabilities were essential to successfully implement marketing goals in 2021. Consumers have grown to anticipate or rely on AI input into their customers’ experience, and IDC It predicts that 90% of new enterprise applications will use AI by 2025.
Marketers across the board enjoy the power of AI to improve customer experience, increase speed, and improve productivity. Data-backed machine learning algorithms offer value in many ways.
Voice recognition systems, for example, are now able to detect emotions in a customer’s tone and pass them on to the service representative best suited to address their needs. Machine-generated content is now indistinguishable from people-generated content. And predictive insights enabled by machine learning allow marketers to target potential customers more accurately and suppress individuals least likely to make a profit.
Despite its many uses in retail, it has been rated as less important to marketing efforts there than in other sectors.
Customer trust is king
Customers are now demanding increased privacy and respect for how their data is collected, stored, and used. At the same time, customers are seeking more use of their data by the company they interact with. Marketers have responded to this dichotomy by prioritizing the protection of customer data, citing privacy protections as the main reason for their investment in CDP.
About 75 percent of respondents to a Tealium survey—and 84 percent of those working in retail—report that managing privacy consent as an important market factor influenced the decision to choose a CDP. Respondents’ top criteria for choosing a CDP were customer service (cited 61 percent) and compliance (57 percent).
For 57 percent of CEOs, increased protection of customer data is the most desirable and important outcome in 2022. Technology respondents indicated far less interest in protecting customer privacy than respondents in retail, healthcare, and financial services. Only 38 percent of tech executives reported privacy as a priority in 2022. Likewise, tech respondents also showed less interest in improving brand perception than in other sectors studied, with only 13 percent citing it as a major business trend. in 2022.