Monday, September 18, 2023

Do Self-Service Systems Really Lead to Better Results? Our Member Survey Offers Surprising Answers to Industry Questions

The CDP Institute just published its annual Member Survey, which is always a treasure chest of interesting data. I’ve already published my primary analysis on the Institute site (you can download it here) but wanted to call out a number of findings that either contradict or confirm martech industry conventional wisdom. After all, nothing’s more fun than tweaking the nose of authority.

Data unification is growing: false. Most of us have a deep-rooted confidence in progress, at least when it comes to technology (human nature is another matter). The need for unified customer data has now been so widely understood for so long that we just naturally assume that more companies will have developed it. That has been true since the survey began in 2017 through last year’s survey: both CDP deployment and presence of a unified customer database have increased steadily. But both measures fell in the current survey. It’s hard to imagine companies have actually abandoned their unified databases, but even if growth has only slowed, that would be a big surprise.

Budget pressures are slowing industry growth: true. Some industry vendors report business is booming, but most will admit buyers are taking longer to make decisions. Sure enough, the fraction of vendors who reported growth in CDP investment is down from last year’s survey, both for the past year and the current year. 

Budgets may not be the only reason for slower growth, but the budget pressures rose more quickly than any other obstacle (from 20% to 29%). Cooperation, which can also be a symptom of budget pressures, grew the second-fastest (36% to 43%). 


Budget-pressed buyers are making smarter decisions: false. I can’t point to anyone who has made this exact claim, but think it’s implicit in reports that companies have more martech than they need and hope to simplify their stacks in the future. 

The survey does show that budget pressures are changing martech selection methods: more are selecting on cost (up from 43% to 54% for operating cost and 42% to 51% for initial cost), while selection on feature sophistication and breadth have fallen the most (26% to 15% and 41% to 24%).

Unfortunately, our surveys have consistently found that selection on cost correlates with low satisfaction with martech investments, while selection on features correlates with high satisfaction. So it seems that a short-term focus on cost is likely to cause long-term problems with martech results.


Martech departments are growing: true. The fraction of survey respondents who said they work in a martech department has more than doubled since the last survey, which was the first that listed martech as an option. It’s unlikely that the number of people working in martech has actually doubled in the past year, but it does seem reasonable to believe that some meaningful fraction of employees have been moved from marketing or IT into a dedicated martech department.

IT staff is playing a larger role in martech decisions: true. Despite the growth in respondents who work in martech departments, the current survey showed a small increase in the fraction of respondents who reported that that corporate IT manages their marketing technology (28% to 30%) and sharp declines in the fraction reporting that a martech team was in charge (43% to 32%) or each department runs its own martech (27% to 18%). This may be another cost-saving measure or it may reflect the growing importance attached to customer data (and martech in general) throughout the enterprise.

The bad news is that IT responsibility also correlates with lower martech satisfaction. Bear in mind that survey respondents are themselves mostly martech and marketing people, who are generally happiest when their own team is in charge. IT people probably give a different answer but are a small fraction of the survey respondents.

CDP projects are easy: false. Past surveys have found that about 60% of deployed CDPs are reported as delivering value, while the remaining 40% are struggling. I have always suspected most of the 40% are new projects that will deliver value eventually. The success rate is much higher in the current survey (80%), possibly because the slowdown in deployment has meant there are fewer new projects. But I'd want to see similar results in one or two other surveys before accepting that as a trend.

A separate question, asking vendors about success rates, finds the fraction reporting that say almost all or the majority of projects are successful has grown from 48% to 54%. While this might suggest some improvement in success rates, the more important message is that a bare majority of vendors say most CDP projects succeed.  Even when answers from CDP vendors are tabulated separately, just 68% say nearly all or a majority of projects are successful. Figures are lower for service providers (45%) and other respondents (15%). 

It's important to realize this is no worse than success rates for other large system deployments.  In fact, it's apparently better than average, since most studies put failure rates at 60% to 70%.  (See this page for a compendium.)  But these findings should dispel any notion that CDP deployments are easy. 

CDP projects fail because of technical complexity: false. It's also important to recognize that CDP failure rates are not due to any inherent problem with CDP technology.   As in previous surveys, by far the top reason for CDP project failure is organization. This has grown even more prominent in the current survey, while problems with poor requirements and CDP performance have fallen.

Comparing CDP status with satisfaction offers additional insight.  The satisfaction measure reflects success with martech in general, not with CDP in particular.  In other words, companies with a high score are "good at martech".  So, while it's not surprising that satisfaction rates are high among companies with a successfully deployed CDP and low among those who have not, this does support the position that CDP success is based more on the skills of the organization than CDP technology in particular. 


Privacy is growing more important: true. Last year’s survey showed a distressing decline in the priority given to data privacy regulations, with the share of firms making little effort to comply growing from 12% to 20%. That trend has now reversed, with the share of companies using privacy as a selling point increasing from 21% to 27%. 

Privacy was also listed in the CDP benefits question for the first time.  It was cited by 22% of respondents, ranking seventh of eleven items, and shows a below-average satisfaction score. This may indicate that most CDP users are looking elsewhere for their primary privacy management solution.


Self-service leads to success: false. The martech management section of this year’s survey added a new question about whether companies seek systems that empower business users to execute tasks without technical assistance. The concept of “no-code” is directly relevant here, although we didn't use the term.  This capability was by far the most common management technique, which wasn’t surprising: “empowering end-users” is a popular goal that saves money and makes users more effective.   But it also correlated with a low satisfaction score, which was surprising indeed. Is it possible that self-service doesn’t save money or make users more effective after all?


Answers to another survey question shed a bit more light. Among the options listed for CDP capabilities were self-service data extracts and self-service predictive models. Self service extracts were a common requirement (41%) correlated with a roughly average satisfaction rating, while self-service models were an uncommon requirement (8%) correlated with a very low satisfaction rating. My interpretation is that self-service extracts are a simple task that’s well understood by business users, so companies with well-run martech operations provide that capability.  By contrast, self-service predictive models are a complicated task that few users are equipped to handle on their own, so they are prioritized largely by companies with a poor understanding of what makes for martech success.  The larger message is that self-service should be deployed only when users are ready for it – and pushing beyond those limits can cause problems despite the apparent savings in cost and time.


Real-time processing is a high priority for most users: mixed. Real-time processing is commonly cited as an important CDP capability. In fact, the CDP Institute’s RealCDP requirements include real-time access to profiles and real-time event triggers. Again looking at the capabilities question, we see that real-time profiles are indeed a common requirement (42%), while real-time recommendations are much less common (15%) but correlate with very high satisfaction. The lesson here is that there are different types of real-time processing, and users consider some more important than others. Discussions about real-time should include similar nuance.

CDP must load data from all sources and retain full details: mixed. Both of these items are on the RealCDP requirements list. But loading data from all sources is the highest ranked capability (78%) and correlates with roughly average satisfaction, while loading full detail is cited by just 14% of respondents and correlates with much lower satisfaction. As with real-time and self-service, I take these answers to show that users have a mature understanding of what they do and don’t need from the CDP.  Loading all data sources is a core CDP promise and goes back to the problem CDP was originally designed to solve: getting access to all customer data. Storing full detail is not needed in most situations.  In practice, users choose which data elements are worth the cost. That said, I still believe that users want the option to store any particular details they need.

CDP users want to access their data warehouse directly: false. This year’s survey added a capabilities question about reading data from an external source without loading it into the CDP. This is a hot topic in the industry, both as a way of supplementing a traditional CDP (which maintains its own data store) and as a way of building a CDP-equivalent system that relies only on data in the enterprise data warehouse. Only a small fraction of respondents (14%) were interested in this and that group reported exceptionally low satisfaction levels. I interpret this to mean that, despite all the marketplace noise, there is actually very little interest among knowledgeable users in building a CDP that relies primarily on external data.


This report contains more bad news about industry growth and budget pressures than I like to see, but the tech sector’s troubles are well known and it’s not surprising that CDP projects should suffer with everyone else. I’m especially reluctant to highlight the data about success rates, because I know it will be taken out of context by vendors eager to promote alternatives to CDPs. I should stress again that the main obstacles to CDP success are organizational, not technical, and that success rates reported here are consistent with tech project success rates in general.  Bottom line: CDPs are major projects that don’t always go smoothly but are not more failure-prone than any other major IT effort.

What worries me more than bad news is the hints that companies are making poor decisions. Prioritizing cost over requirements will surely lead to more companies purchasing unsuitable products. Putting IT in charge of martech will almost surely lead to unhappy martech users. While budget issues are unavoidable, poor management decisions are unforced errors. Your company should work hard to avoid them.

All that said, the most interesting results are the ones that challenge conventional wisdom. Do self-service systems really lead to bad results? Is the importance of real-time overstated? Is there really so little interest in reading data directly from a warehouse? These are headline topics in martech today, and are often accepted as truth with little discussion. The questions are worth asking because the reality is almost always more complicated than the simple answers. When is self-service useful and when is it over-used? What kinds of real-time processes are really important? How is external data best integrated with a conventional CDP? Answering those questions will help companies make better decisions and ultimately lead to greater martech success.

Thursday, September 14, 2023

Unleashing the Power of Customer Data Platforms (CDPs) and AI: A Game-Changer for Modern Marketing

For some unknown reason, my last three presentations all started as headlines (two created by someone else) which I then then wrote a speech to match. This isn’t my usual way of working. It does add a little suspense to the writing process – can I develop an argument to match the title? It also dawns on me that this is the way generative AI works: start with a prompt and create a supporting text. That’s an unsettling thought: are humans now imitating AI instead of the other way around? Or have I already been replaced by an AI but just don’t realize it? How would I even know?

The latest in this series of prompt-generated presentations started when I noticed that the title shown in a conference agenda didn’t match the speech I had  prepared. When I pointed this out, the conference organizers said I could give any speech I want, but the problem was, I really liked their title: “Unleashing the Power of Customer Data Platforms (CDPs) and AI: A Game-Changer for Modern Marketing”. 

The idea of “unleashing” a CDP to run wild and exercise all its powers, is not something I get to talk about very often, since most of my presentations are about practical topics like defining a CDP, selecting one, or deploying one. And I love how “and AI” is casually tucked into the title like an afterthought: “there’s this little thing called AI, perhaps you’ve heard of it?”

And how about “game changer for modern marketing”? That’s an amazing promise to make: not just will you learn the true meaning of modern marketing, but you'll find how to change its very nature so it’s a game you can win. Who wouldn’t want to learn that?

This was definitely a speech I wanted to hear. The only problem was, the only way for that to happen was for me to write it. So I did. Here’s a lightly modified version.

Let’s start with the goal: winning the modern marketing game. The object of the game is quite simple: deliver the optimal experience for each customer across all interactions. And, when I say all interactions, I mean all interactions: not just marketing interactions, but every interaction from initial advertising impressions through product purchase, use, service, and disposal. I also mean every touch point, from the Internet and email through call centers, repair services, and the product itself.

That’s a broad definition, and you will immediately see the first challenge: all the departments outside of marketing may not want to let marketing take charge of their customer interactions. Nor is your company’s senior management necessarily interested in giving marketing so much authority. So marketing’s role in many interactions may be more of an advisor. The best you can hope for is that marketing is given a seat at the table when those departments set their policies and set up their systems. This requires a cooperative rather than a controlling attitude among marketers.

The second challenge to winning at marketing is the fragmented nature of data and systems. Most marketing departments have a dozen or more systems with customer data; at global organizations, the number can reach into the hundreds.  Expanding the scope to include non-marketing systems that interact with customers adds still more sources such as contact centers and support websites. Again, marketing will rarely control these. At best, they may have an option to insert marketing recommendations directly into the customer experience, such as suggesting next best actions to call center agents.

The third challenge is optimization itself. It’s not always clear what action will result in the best long-term results. A proper answer requires capturing data on how customers are treated and how they later behaved as a result. Some of this will come from non-marketing systems, such as call center records of actions taken and accounting system records of purchases. Again, those systems’ owners may not be eager to share their data, although it’s harder for them to argue against sharing historical information than against sharing control over actual customer interactions.

But the challenge of optimization extends beyond data access. Really understanding the drivers of customer behavior requires deep analysis and no small amount of human insight. Some questions can be answered through formal experiments with test and control groups. But the most important questions often can’t be defined in such narrow terms. Even defining the options to test, such as new offers or marketing messages, takes creative thought beyond what analysis alone can reveal.

And even if you could find the optimal treatment in each situation, the playing field itself keeps shifting. New products, offer structures, and channels change what treatments are available. New systems change the data that be captured for analysis. New tools change the costs of actions such as creating customer-specific content. These all change the optimization equation: actions that once required expensive human labor can now be done cheaply with automation; fluctuating product costs and prices change the value of different actions; evolving customer attitudes towards privacy and service change the appeal of different offers. The optimal customer experience is a moving target, if not an entirely mythical one.

None of this is news, or really even new: marketing has always been hard. The question is how “unleashing” the power of CDPs and AI makes a difference.

Let’s start with a framework. If you think of modern marketing as a game, then the players have three  types of equipment: data systems to collect and organize customer information; decision systems to select customer experiences; and delivery systems to execute those experiences. It’s quite clear that the CDP maps into the data layer and AI maps into the decision layer. This raises the question of what maps into the delivery layer. We’ll return to that later.

First, we have to answer the question: Why would CDP and AI be game changers? To understand that, you have to imagine, or remember, life before CDP and AI. Probably the best word for that is chaos. There are dozens – often hundreds -- of data sources on the data layer, and dozens more systems making choices on the decision layer. The reason there are so many decision systems is that each channel usually makes its own choices. Even when channels share centralized decision systems, those are often specialized services that deal with one problem, whether it’s product recommendations or churn predictions or audience segmentation.

CDP and AI promise to end the chaos by consolidating all those systems into one customer data source and one decision engine. Each of these would be a huge improvement by itself:

  • the CDP makes complete, consistent customer data available to all decision systems, and
  • AI enables a single decision engine to coordinate and optimize custom experiences for each individual.

Yes, we’ve had journey orchestration engines and experience orchestration engines available for quite some time, but those work at the segment level. What’s unique about AI is not simply that it can power unified decisions, but that each decision can each be tailored to the unique individual. 

But we’re talking about more than the advantages of CDP and AI by themselves. We’re talking about the combination, and what makes that a game-changer. The answer is you get a huge leap in what’s possible when that personalized AI decisioning is connected to a unified source of all customer information. 

Remember, AI is only as good as the data you feed it. You won’t get anything near the full value of AI if it’s struggling with partial information, or if different bits of information are made available to different AI functions. Connecting the AI to the CDP solves that problem: once any new bit of information is loaded into the CDP, it’s immediately available to every AI service. This means the AI is always working with complete and up-to-date data, and it’s vastly easier to add new sources of customer data because they only have to be integrated once, into the CDP, to become available everywhere.

To put it in more concrete terms, one unified decision system can coordinate and optimize individual-specific customer experiences across all touch points based on one unified set of customer data. 

That is indeed a game-changer for modern marketing, and it only reaches its full potential if you “unleash” the CDP to consolidate all your customer data, and “unleash” the AI to make all of your experience decisions.

That’s a lot of unleashing. I hope you find it exciting but you should also be a little bit scared. The question to ask is: How can I take advantage of this ‘game changing potential’ without risking everything on technology that is relatively new and, in the case of AI, largely unproven. Here’s what I would suggest:

Let’s start with CDP. So far, I’ve been using the term without defining it. I hope you know that a CDP creates unified customer profiles that can be shared with any other system. No need to get into the technical details here. What’s important is that the CDP collects data from all your source systems, combines it to build complete customer profiles, and makes them available for any and every purpose.

Some people reading this will already have a CDP in place but most probably do not. So my first bit of advice is: Get one. It’s not such easy advice to follow: a CDP is a big project and there are dozens of vendors to choose from, so you have to work carefully to find a system that fits your needs and then you have to convince the rest of your organization that it’s worth the investment. I won't go into how to do that right now. But probably the most important pro tips are: base your selection on requirements that are directly tied to your business needs, and ensure you keep all stakeholders engaged throughout the entire selection process. If you do those two things, you can be pretty sure you’ll buy a CDP that’s useful and actually used.

That said, there are some specific requirements you’ll want to consider that tie directly to ensuring your CDP will support your AI system. One is make sure you buy a system that can handle all data types, retain all details, and handle any data volume. This does NOT mean you should load in every scrap of customer-related data that you can find. That would be a huge waste. You’ll want to start with a core set of customer data that you clearly need, which will be data that your decision and delivery systems are already working with. This lets the CDP become their primary data source. Beyond that, load additional data as the demand arises and when you’re confident the value created is worth the added cost.

The second requirement is to ensure your CDP can support real time access to its data. That’s another complicated topic because there are different kinds of real time processes. What you want as a minimum is the ability to read a single customer profile in real time, for example to support a personalization request. And you want your CDP to be able to respond in real time to events such as a dropped shopping cart. Your AI system will need both of those capabilities to make the best customer experience decisions. What’s not included in that list is updating the customer profiles in real time as new data arrives, or rebuilding the identity graph that connects data from different sources to the same customer. Some CDPs can do those things in real time but most cannot. Only some applications really need them.

The third requirement relates to identity management. The CDP needs to know which identifiers, such as email, telephone, device ID, and postal address, refer to the same customer. At CDP Institute, we don’t feel the CDP itself needs to find the matches between those identifiers. That’s because there’s lots of good outside software to do that. We do feel the CDP needs to be able to maintain a current list of matches, or identity graph, as matches are added or removed over time. That’s what lets the CDP combine data from different sources into unified profiles.

My second cluster of advice relates to AI. I’d be surprised if anyone reading this hasn’t at least tested ChatGPT, Bing Chat Search, or something similar. At the same time, there’s quite a bit of research showing that relatively few companies have moved beyond the testing stage to put the advanced AI tools into production.

And that’s really okay, so my first piece of advice is: don’t be hasty.  You should certainly be testing and probably deploying some initial applications, but don’t feel you must plow full speed ahead or you’ll fall behind. Most of your competitors are moving slowly as well. 

That said, you do need to train your people in using AI. They don’t necessarily need to become expert prompt writers, since the systems will keep getting smarter so specific prompting skills will become obsolete quickly. But they do need to build a basic understanding of what the systems can and can’t do and what it’s like to work with them. That will change less quickly than things like a user interface. The more familiar your associates become with AI, the less likely they are to ask it to do something it doesn’t do well or that creates problems for your company.

Third, pay close attention to AI’s ability to ingest and use your company’s own data. Remember the game-changing marketing application for AI is to create an optimal experience for each individual. The means it must be able to access that individual’s data. This is an ability that was barely available in tools like ChatGPT six months ago, but has now become increasingly common. Still, you can bet there will be huge differences in how different products handle this sort of data loading. Some will be designed with customer experience optimization in mind and some won’t. So be sure to look closely at the capabilities of the systems you consider.

Fourth, and closely related, the industry faces a huge backlog of unresolved issues relating to privacy, intellectual property ownership, security, bias, and accuracy. Again, these are all evolving with phenomenal speed, so it’s hard for anyone to keep up – even including the AI specialists themselves. Unless that’s your full time job, I suggest that you keep a general eye on those developments so you’re aware of issues that might come with any particular application you’re considering. Then, when you do begin to explore an application, you’ll know to bring in the experts to learn the current state of play.

Similarly, keep an eye on the new capabilities that AI systems are adding. This is also evolving at incredible speed. Some of those capabilities may change your opinion of what the systems can do well or poorly. Some will be directly relevant to your needs and may form the basis for powerful new applications. We’re still far away from the “one AI to rule them all” that will be the ultimate game-changer for marketing. But it’s coming, so be on the alert.

This brings us back to the third level of marketing technology: delivery. Will there be yet one more game-changer, a unified delivery system that offers the same simplification advantages as unified data and decision layers? The giant suite vendors like Salesforce and Adobe certainly hope so, as do the unified messaging platforms like Braze and Twilio. The fact that we can list those vendors offers something of an answer: some companies think a unified delivery layer is possible and would argue they already provide one. I’m not so confident because new channels keep popping up and it’s nearly impossible for any one vendor to support them all immediately.

What seems more likely is a hybrid approach where most companies have a core delivery platform that handles basic channels like email, websites, and advertising and supports third-party plug-ins to add channels or features they do not. These platforms are already common, so this is less a prediction of the future than an observation of the present, which seems likely to continue. The core delivery platform offers a single connection to the decision layer run by the AI. This gives the primary benefits gained from a single connection between layers, although I wouldn’t call it a game-changer only because it already exists.

My recommendation here is to adapt the delivery platform approach, seeking a platform that is as open as possible to plug-ins so it can coordinate experiences across as many channels as possible. In this view, the delivery platform is really an orchestration system. Which channels are actually delivered in the delivery platform and which are delivered by third-party plug-ins is relatively unimportant from an architectural point of view.  Of course, vendors, marketers, and tech staff will all care a great deal about which tools your company chooses.

While we’re discussing architectural options, I should also mention that the big suites would argue that data, decision, and delivery layers should all be part of one unified product, reducing integration efforts to a minimum. That may well be appealing, but remember that most of the integrated suites were cobbled together from separate systems that were purchased by the vendors over time. Connecting all the bits can be almost as much work as connecting products from different vendors.

And, of course, relying on a single vendor for everything means accepting all parts of their suite – some of which may not be as good as tools you could purchase elsewhere. The good news is most suite vendors have connectors that enable users to use external systems instead of their own components for important functions. As always, you have to look in detail at the actual capabilities of each system before judging how well it can meet your needs.

So, where does this leave us?

We’ve seen that the object of the modern marketing game is to deliver the optimal experience for each customer. And we’ve seen that challenges to winning that game include organizational conflicts, fragmented data, and fragmented decision and delivery systems.

We’ve also seen that the combination of customer data platforms and AI systems can indeed be game-changing, because CDPs create the unified data that AI systems need to deliver experiences that are optimized with a previously-impossible level of accuracy.

CDPs and AI won’t fix everything. Organization conflicts will still remain, since other departments can’t be expected to turn over all responsibility to marketing. And fragmentation will probably remain a feature of the delivery layer, simply because new opportunities appear too quickly for a single delivery system to provide everything.

In short, the game may change but it never ends. Build strong systems that can meet current requirements and can adapt easily to new ones. But never forget that change is inherently unpredictable, so even the most carefully crafted systems may prove inadequate or unexpectedly become obsolete. Adapting to those situations is where you’ll benefit from investment in the most important resource of all: people who will work to solve whatever problems come up in the interest of your company and its customers.

And remember that no matter how much the game changes, the goal is always the same: the best experience for each customer. Make sure everything you do is has that goal in mind, and success will follow.