David Raab is the Founder of the CDP Institute, and a widely known expert and consultant on marketing technology and analytics.
A single source of the truth – a 360-degree view of the customer – a “unified profile” – the “golden record”. Call it what you will, it remains a utopian vision for most organizations, despite a massive investment over the past decade in building intricate, cloud-based enterprise data stacks.
Marketers realize this better than anyone. Ever since the 1980s, when data-driven marketing first became practical for most companies thanks to PC-based computing, marketers have pined for a “single view of the customer”. They clamoured for easier access to customer-level data, at the time locked away under protective custody by the IT gatekeepers. The initial response to this rising demand for data was to build galactic data warehouses, usually on a costly Oracle or IBM relational database management system, and provide end users limited access for analytical reporting through custom built data marts. But that era was short-lived. In the early 2000s this monolithic architecture was overwhelmed by the deluge of “Big Data”. New storage solutions were needed to ingest many forms of raw data from many different digital channels.
Thus was born the “data lake”: a centralized repository that could store data of any kind, both structured and unstructured. Specialized tools were needed to query the data lake and pull raw data into BI platforms where it could be structured for analysis. However, this solution proved just as unwieldy. Data lakes quickly became “data swamps”, filled with extraneous data and difficult to wade through. So, the much maligned data warehouse was brought back into the picture, this time as a cheaper and more agile technology. The breakthrough came in 2012 with the launch of the cloud-based Amazon Redshift which was both fast and cheap. Its arrival unleashed a wave of other data technologies which modernized the practice of data management.
Yet despite all of this innovation the dream of a “Golden Record” remains on the bucket list of every marketer. Because processing large datasets and then moving sub-sets of data around to meet the needs of different users remains an immense challenge. It takes a gargantuan effort, no matter how automated the data stack may be. In fact, the technical challenges are so formidable, according to Gartner Research, that 80% of organizations are expected to abandon their efforts to create a single customer view in the next few years.
That’s why an alternative solution, which first appeared around the time Redshift was released, has become popular amongst marketers: The Customer Data Platform. A CDP is simply a purpose-built platform for storing customer-level data. Unlike most other end users, marketers are not simply passive consumers of data: their job is to put the customer profile information to commercial use, creating personalized messaging, serving up “next best offers”, managing the customer journey, and so on. A reliable, up-to-date, and comprehensive view of the customer, including all past interactions, is critical to success.
The term “customer data platform” was coined by David Raab who’s a highly regarded expert and consultant on marketing technology. In 2016 he founded the Customer Data Institute whose mission is to serve as a clearing house of information about this fast-growing but fragmented (and confusing) category. This fledgling industry is now valued at $1.5 billion, according to the CDI, and grew by 20% last year. David has chronicled the rise of martech ever since it first gained traction in the 1980s and so I began the interview by asking him to describe its evolutionary arc.
David Raab: Well, the big turning point, of course, was the internet or the web, in particular, which made us go from one or two channels to multiple channels or one or two data sources to multiple data sources. And on the other side, of course, opened up just this plethora of MarTech tools that grew from next to nothing, to this sort of infinite set that we have today. That really was the inflection point. So that started at the turn of the century, the end of the first dot com boom and then the growth of SaaS after that – software as a service, SaaS. That really was a fundamental change in the industry and we’ve just been on that huge expansion. Since then, I think the pandemic may turn out to be an inflection point where we’re seeing this sort of acceptance of digital, and it’s not something that just some companies do. It’s now something that everybody does, even if you’re a brick and mortar retailer, which you were doing before, but now you’re kind of almost tapped to do as a primary as opposed to a secondary thing at all levels, from the smallest company to the largest. So we’ll see what that does. I think that in the intermediate period, if you will, between say the turn of the century, the first 20 years of this century, MarTech was still sort of something that was kind of expensive and difficult and for large and midsized companies but now it’s kind of being democratized and really simplified in a way that we didn’t see before, which is good because it kind of got too complicated. So now it’s getting more manageable by human beings.
Stephen Shaw: So I think about it in terms of, we talked about database marketing, that early PC based-era, desktop marketing systems proliferated, were, in fact, based on single view of the customer. You had CRM come along in the ’90s, first disastrously then obviously eventually found its way and became accepted. And then there was this merger to me between, you know, what marketers were using for basically mailing lists and the CRM systems. And that was the ’90s, I guess. So those to me would have been the building blocks for a lot of what we’re seeing today. I often say that the principles that we talk about when we talk about customer experience management are some of the same fundamental relationship marketing principles that were laid down back in the ’80s and ’90s, would you think?