Sunday, March 04, 2018

State of Customer Data Platforms in Europe

The Customer Data Platform Institute will be launching its European branch later this month with a series of presentations in London, Amsterdam and Hamburg. We’ve seen considerable CDP activity in Europe – nearly one quarter of the CDPs in the Institute's latest industry update are Europe-based, several others with European roots have added a U.S. headquarters, and some of U.S.-based CDPs  have significant European business. A recent analysis of CDP Institute membership also found that one quarter of our individual members are in Europe. So what, exactly, is the state of CDP in Europe?

 It’s long been an article of faith on both sides of the Atlantic that the U.S. market is ahead of Europeans on marketing technology in general and customer data management in particular. That (plus the larger size of the U.S. market) is why so many European vendors have relocated to the U.S. This study from Econsultancy suggests the difference is overstated if it exists at all: 9% of European countries reported a highly integrated tech stack, barely under the 10% figure for North American companies. North American firms were actually more likely to report a fragmented approach (48% vs 42%), although that was only because European countries were more concentrated in the least advanced category (“little or no cloud based technology”) by 20% vs 13%.

 The assumption that cloud-based technology is synonymous with advanced martech is debatable but, then again, the survey was sponsored by Adobe.  What is clear is that European firms have generally lagged the U.S. in cloud adoption -- see, for example, this report from BARC Research.

Lower cloud use probably hasn’t directly impeded CDP deployment: although nearly all CDPs are cloud-based, a substantial number offer an on-premises option. (The ratio was seven out of 24 in the CDP Institute’s recent vendor comparison report, including nearly all of the Europe-based CDPs.) But the slower cloud adoption may be a hint of the generally slower pace of change among European IT departments, which could itself reduce deployment of CDPs.

A Salesforce survey of IT professionals supports this view. Answers to questions about leading digital transformation, being driven by customer expectations, and working closely with business units all found that U.S. IT workers are slightly but distinctly more business-oriented than their European counterparts. Interestingly, there’s a split within the European respondents: UK and Netherlands are more similar to the U.S. answers than France and Germany. I should also point out that I’ve highlighted questions where the U.S. and European answers were significantly different – there were quite a few other questions where the answers were pretty much the same.

Organizational silos outside of IT are another barrier to CDP adoption. A different Salesforce survey, this one of advertising managers, also found that North American firms are generally more integrated than their European counterparts. The critical result from a martech perspective is North American marketing and advertising departments were much more likely to collaborate on buying technology.

Then again, a Marketo survey found that European respondents (from a mix of IT, marketing, sales, and service departments) were generally more satisfied with their tools and performance, even though they lagged North Americas in slightly innovation and more clearly in strategic alignment with corporate objectives. This isn’t necessarily inconsistent with the previous results: being less integrated with other departments may free the Europeans to pursue their departmental goals more effectively, even if they’re less fully aligned with corporate objectives. Other surveys have given similar results: people are generally happier with technology when they buy it for themselves.

Not surprisingly, one area where the Europeans are clearly ahead in preparation for GDPR: a Spiceworks survey at the start of this year found that 56% of European companies had allocated funds for compliance compared with just 31% of U.S. companies. (Almost half the U.S. respondents believe GDPR wouldn’t affect them, even though GDPR applies globally.) While the result clearly relates to the fact that GDPR is a European Union regulation, it may also reflect a generally higher interest in privacy among European consumers: to take one example, ad blocking is much more common in Europe than the U.S. That’s good news for CDP vendors, since GDPR has emerged as one of the primary use cases.

On the other hand, a survey from Aspect found that U.S. consumers are generally more demanding than Europeans about customer service: they care more about having a choice of service channels, are more willing to pay extra for good service and are quicker to stop buying after a poor experience. This is probably bad news for European CDP vendors, since unified customer data is a foundation for modern customer service.

In sum, things really are a bit different in Europe. Integration, the primary CDP use case, is lagging compared to the U.S. So it makes sense that CDP adoption is also lagging.  But GDPR may be changing the equation and consumer attitudes are certainly adding external pressure.  The need for CDP is growing and we hope the CDP Institute’s European operations will make it a little easier for European companies find right solutions.

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