Wednesday, November 30, 2016

3 Insights to Help Build Your Unified Customer Database

The Customer Data Platform Institute (which is run by Raab Associates) on Monday published results of a survey we conducted in cooperation with MarTech Advisor. The goal was to assess the current state of customer data unification and, more important, to start exploring management practices that help companies create the rare-but-coveted single customer view.

You can download the full survey report here (registration required) and I’ve already written some analysis on the Institute blog . But it’s a rich set of data so this post will highlight some other helpful insights.

1. All central customer databases are not equal.

We asked several different questions whose answers depended in part on whether the respondent had a unified customer database. The percentage who said they did ranged from 14% to 72%:

I should stress that these answers all came from the same people and we only analyzed responses with answers to all questions.  And, although we didn’t test their mental states, I doubt a significant fraction had multiple personality disorders. One lesson is that the exact question really matters, which makes comparing answers across different surveys quite unreliable. But the more interesting insight is there are real differences in the degree of integration involved with sharing customer data.

You’ll notice the question with the fewest positive answers – “many systems connected through a shared customer database” describes a high level of integration.  It’s not just that data is loaded into a central database, but that systems are actually connected to a shared central database. Since context clearly matters, here is the actual question and other available answers:

 The other questions set a lower bar, referring to a “unified customer database” (33%), “central database (42%) and "central customer database” (57%). Those answers could include systems where data is copied into a central database but then used only for analysis. That is, they don’t imply connections or sharing with operational customer-facing systems. They also could describe situations where one primary system has all the data and thus functions as a central or unified database.

The 72% question covered an even broader set of possibilities because it only described how customer data is combined, not where those combinations take place. That is, the combinations could be happening in operational systems that share data directly: no central database is required or even implied.  Here are the exact options:

The same range of possibilities is reflected in answers about how people would use a single customer view. The most common answers are personalization and customer insights.  Those require little or no integration between operational systems and the central database, since personalization can easily be supported by periodically synchronizing a few data elements. It’s telling that consistent treatments ranks almost dead last – even though consistent experiences are often cited as the reason a central database is urgently required.

This array of options to describe the central customer database suggests a maturity model or deployment sequence.  It would start with limited unification by sharing data directly between systems (the most common approach, based on the stack question shown above), progress to a central database that assembles the data but doesn’t share it with the operational systems, and ultimately achieve the perfect bliss of unity, which, in martech terms, means all operational systems are using the shared database to execute customer interactions.  Purists might be troubled by these shades of gray, but they offer a practical path to salvation. In any case, it’s certainly important to keep these degrees in mind and clarify what anyone means when they talk about shared customer data or that single customer view.

2. You must have faith.

Hmm, a religious theme seems to be emerging.  I hadn’t intended that but maybe it’s appropriate. In any event, I’ve long argued that the real reason technologies like marketing automation and predictive modeling don’t get adopted more quickly are not the practical obstacles or lack of proven value, but lack of belief among managers that they are worthwhile. This doesn’t show up in surveys, which usually show things like budget, organization, and technology as the main obstacles. My logic has been that those are basically excuses: people would find the resources and overcome the organizational barriers if they felt the project were important enough.  So citing budgets and organizational constraints really means they see better uses for their limited resources.

The survey data supports my view nicely. Looking at everyone’s answers to a question about obstacles, the answers are rather muddled: budget is indeed the most commonly cited obstacle (41%), followed closely by the technical barrier of extracting data from source systems (39%). Then there’s a virtual tie among organizational roadblocks (31%), other priorities in IT (29%), other priorities in marketing (29%) and systems can’t use (29%). Not much of a pattern there.

But when you divide the respondents based on whether they think single customer view is important for over-all marketing success, a stark division emerges.  Budget and organization are the top two obstacles for people who don’t think the unified view is needed, while having systems that can extract and use the data are top two obstacles for people who do think it’s necessary for success. In other words, the people committed to unified data are focused on practical obstacles, while those who don’t are using the same objections they apply to everything else.

Not surprisingly, people who classify SCV as extremely important are more likely to actually have a database in place than people who consider it just very important, who in turn have more databases than people who consider it even less important or not important at all.  (In case you're wondering, each group accounts for roughly one-third of the total.)

The same split applies to what people would consider helpful in build in building a single customer view: people who consider the single view important are most interested in best practices, case studies, and planning assumptions – i.e., building a business case.  Those who think it’s unimportant ask for product information, vendor lists, and pricing. I find this particular split a bit puzzling, since you’d think people who don’t much care about a unified database would be least interested in the details of building one. A cynic might say they’re looking for excuses (cost is too high) but maybe they’re actually trying to find an easy solution so they can avoid a major investment.

Jumping ahead just a bit, the idea that SCV doubters are less engaged than believers also shows up in at the management tools they use.  People who rated SCV as extremely important were much more likely to use all the tools we asked about. Interestingly, the biggest gap is in use of value metrics. This could be read to mean that people become believers after they measure the value of a central database, or that people set up measurements after they decide they need to prove their beliefs. My theology is pretty rusty but surely there’s a standard debate about whether faith or action comes first.

Regardless of the exact reasons for the different attitudes, the fundamental insight here is that people who consider a single view important act quite differently from people who don’t. This means that if you’re trying to sell a customer database, either in your own company or as a vendor, you need to understand who falls into which category and address them in appropriate terms. And I guess a little prayer never hurt.

3. Tools matter.

We’ve already seen that believers have more databases and have more tools, so you won’t be surprised that using more tools correlates directly with having or planning a database.

Let's introduce the tools formally.  Here are the exact definitions we used and the percentage of people who said each was present in their organization:

Of course, the really interesting question isn’t which tools are most popular but which actually contribute (or at least correlate) with deploying a database. We looked at tool use for three groups: people with a database, people planning a database, and people with no such plans. 

Over all, results for the different tools were pretty similar: people who used each tool were much more likely to have a database and somewhat more likely to plan to build one. The pattern is a bit jumbled for Centers of Excellence and technology standards, but the numbers are small so the differences may not be significant. But it's still worth noting that Centers of Excellence are really tools to diffuse expertise in using marketing technology and don’t have too much to do with actually creating a customer database.

If you’re looking for a dog that didn’t bark, you might have expected companies using agile to be exceptionally likely to either have a database or be planning one. All quiet on that front: the numbers for agile look like numbers for long term planning and value metrics, adjusting for relative popularity. So agile is helpful but not a magic bullet.

What have we learned here? 

Clearly, we've learned that management tools are important and that long term planning in particular both the most common and the best predictor of success.

We also found that tools aren’t enough: managers need to be convinced that a unified customer view is important before they’ll invest in a database or tools to build it.

And, going back to the beginning, we saw that there are many forms of unified data, varying in how data is shared, where it’s stored, how it’s unified, and how it’s used. While it’s easy enough to assume that tight, real-time integration is needed to provide unified omni-channel customer experiences, many marketers would be satisfied with much less. I’d personally hope to see more but, as every good missionary knows, people move towards enlightenment in many small steps.

No comments: