Marketing Procurement

Ensuring Customer Data Platforms align with business requirements

Laser Focused

“When deploying a CDP, it is natural to get excited and want the CDP to consume all possible data. More sources can be added at any time, so focus only on what you need to get going.

The same applies for touchpoints, or subscribers to the CDP data. 

First off, what is a CDP?

A Customer Data Platform is a type of software that collects, organises and manages customer data from various sources into a single, unified database.

The main goal of a CDP is to provide companies with a comprehensive view of each customer by aggregating data from multiple touchpoints — such as websites, mobile apps, email campaigns, CRM systems and social media.

They are used in marketing to improve customer experience, deliver personalised content, and optimise marketing strategies.

Here are the key features of a CDP:

1. Consolidation: it gathers customer data from different systems in one place.
2. Segmentation: it enables businesses to segment their audience based on behaviour, demographics and preferences, helping future targeted marketing.
3. Data Activation: CDPs can activate customer data in real time for personalised marketing campaigns, improving customer interactions.
4. Data Ownership and Compliance: CDPs ensure that companies own and control their customer data while helping them comply with regulations like GDPR or CCPA.

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I thought we had a CRM. Does that have a different name now?

No; the terms Customer Data Platform (CDP) and Customer Relationship Management (CRM) system both deal with managing customer information, but they serve different purposes and have distinct functionalities.

A CDP collects and unifies customer data (online and offline) into a centralised database to create a profile.

A CRM system is focused on managing direct interactions between a company and its customers, typically involving sales and customer service teams. CRMs are therefore just one data source for CDPs, designed to track individual customer relationships, manage sales pipelines and assist with customer service.

How can Procurement become a CDP MVP?

Challenges in Implementing Effective CDPs

While Customer Data Platforms provide significant benefits, there are also several common challenges that companies face in using them.

1. Many companies struggle to connect all their systems (like CRMs, email platforms, ad tech, etc.) to the CDP, leading to fragmented data. Some businesses find that not all data sources or legacy systems integrate smoothly, resulting in time-consuming and costly implementations.

Tim Biddiscombe of Customer Experience Advisory company, Purple Square says “We often get approached to support with vendor evaluation, since there are so many great options on the market it can be difficult to decide which is best for you. Other times they are experiencing data integration challenges, or connecting their CDP to the rest of their infrastructure.”

2. High Implementation Costs and Time: smaller organisations may feel priced out of many top-tier solutions or wary that a change can take months to properly implement, requiring IT resources and external consultants. However, as Biddiscombe says: “Interestingly, the size of business does not determine the need or value of a Customer Data Platform” Biddiscombe  continues. “CDPs can be advantageous for businesses of all sizes, from small to medium-sized companies to large enterprises. Many CDPs have competitive SaaS price points so as not to be a barrier for entry to small companies. The single biggest advantage small companies have is the ability to fail, and pivot faster than large companies.“

3. User experience: some platforms are still highly technical, requiring training or specialised support. Marketers often need help with data management and analysis.

4. Data Quality and Accuracy: poor data quality — inaccurate customer information — can result in ineffective segmentation and personalisation. Bad data can lead to sub-optimal marketing efforts and poor customer experiences.

5. Data Privacy: managing customer data across various sources can create compliance issues with data privacy laws like GDPR. Ensuring customer data is handled ethically and securely is paramount.

6. Lack of Real-Time Capabilities: some CDPs struggle to provide real-time data processing, which is critical for personalised marketing and customer engagement in fast-paced digital environments.

7. Overlapping Features with Other Tools: companies may find that their CDP overlaps with existing marketing automation, CRM or analytics tools. This duplication can lead to confusion or under-utilisation.

Alternatively, in the right hands, even be an opportunity to build a business case for future cost-effectiveness.

8. Vendor Lock-In: due to the inherently complex ecosystems they operate in, companies may become dependent on a particular CDP and find it difficult to change platform without losing data or significant investment.

These issues highlight the importance of carefully evaluating a CDP’s capabilities, compatibility with existing systems and the specific needs of an organisation before committing to a platform…

Are all features of a CDP absolutely necessary?

While CDP has several core functions, there are some features that are considered optional depending on a client’s business needs and existing technology stack.

Features such as Advanced Customer Analytics, Machine Learning, AI-Powered Insights or Audience Segmentation & Activation may not be those your organisation needs or should pay for, or certainly areas of scope negotiated as ‘value add’.

As Biddiscombe says: “When deploying a CDP, it is natural to get excited and want the CDP to consume all possible data. More sources can be added at any time, so focus only on what you need to get going. The same applies for touchpoints, or subscribers to the CDP data. Many CDPs also offer predictive/ML [Machine Learning] modelling capabilities, while trendy, they will add time and complexity at a time when an MVP [Minimum Viable Product] would be nice.”

Procurement, once familiar with the technical aspects of the various CDP providers’ offerings as well as the defined (and even challenged) ‘needs’ of the stakeholders, should be able to list and quantify the scope into ‘must haves’, ‘nice to haves’ and ‘no need at all’ as per any complex supplier offering…

Other Areas Procurement can Add Value

• Contract duration and termination: make sure the contract duration and notice period for termination match both your ability as a customer to assemble a credible team to assess and agree scope for a future RFP.

If the RFP and contract took a long time to execute previously you are making a rod for your own back if the contract clauses don’t match this for the future.

• Minimising the barriers to future change of provider: as per point no. 8 above, due to the obvious complexity of technologically interdependent purchases a ‘buy today, think tomorrow’ attitude is one that may come back to bite eager buyers in a hurry.

Discuss up-front your concerns with potential providers and which deliverables would mitigate future changes in need or the need to extricate yourself from undesirable running costs. The use of an independent consultant is one way of preparing for such eventualities.

• Take future requirements into account. Like any large technical investment that is both new and liable to several updates (according to the mores of market advancement) unlisted features and functions will not be easy to negotiate should they suddenly become necessary.

Try to leverage these in an ‘optional’ price list as early on in the RFP or negotiation as possible (i.e. before contract award).

• Budget and negotiate training and other technical support, as per point 3 above

Summary

Choosing the right CDP requires aligning platform features with your true business needs, ensuring you avoid overpaying for features you don’t need. It also means making sure that you’re not missing out on critical functionalities.

As a Procurement professional, don’t drown in the over-abundance of technicalities and freeze up; take your time, do your homework on the subject, understand all stakeholder needs and survey the marketplace’s capabilities.

It’s key to do this early and plan a future change project along timelines that are preferential to the business in the long term and that maximise your ability to leverage the best deal.

About the author

David Little has over 20 years’ experience in procurement. David has worked on several areas in Marketing, including Media, Creative, Influencers and Sponsorships. He is based in Stockholm, Sweden.