The role of customer data platforms

The data integration challenge

In the report, Forrester analysts discuss the challenges marketers face when data is spread across multiple sales, marketing and customer success applications. These generally do not communicate well with each other, which is why the main focus of a CDP is to integrate, consolidate and unify data sources across the tech stack.

“The B2B CDP unifies this data at the contact, account and buying group levels to give revenue teams a comprehensive view of the members of buying groups and where they are in the customer journey,” says Forrester.

One of the primary challenges identified in the Forrester report is that organisations undervalue their customer data, failing to invest at a pace that keeps up with growing buyer demands. According to Forrester, these organisations often deprioritise data initiatives in favour of sales and marketing investments that they can associate more directly to revenue generation.

Luxury fashion retailer Luisaviaroma is an example of an enterprise using a CDP – in this case, a combination of two offerings from Twilio – to address challenges of fragmented customer data, which is spread across multiple touchpoints, including web, mobile and social media.

Without a unified view of customer behaviour, its marketing campaigns lacked precision, driving up acquisition costs while limiting customer retention. To tackle its customer data fragmentation, the retailer previously required manual CRM and engineering processes, which not only drained valuable resources but also slowed innovation and efficiency.

To overcome these challenges, Luisaviaroma implemented Twilio’s Segment’s Profile Sync and Identity Resolution features to integrate customer data, enabling real-time personalisation and predictive insights.

The company says the Twilio software has enabled it to achieve a significant improvement in marketing precision and helped it to optimise advertising spend. It has also enabled engineering teams to focus on innovation instead of manual data processing and saved CRM hours, which, according to Luisaviaroma, has led to more high-value customer engagement strategies.

Other benefits include a reduction in customer acquisition cost (CAC) thanks to improvements in targeting accuracy and efficiency gains, plus an increase in customer lifetime value (CLV) through enhanced personalisation, fostering loyalty and long-term engagement.

Discussing the benefits, Giacomo Vannucchi, head of data at Luisaviaroma, says: “Twilio Segment has been instrumental in allowing us to fully understand our customers, anticipate their needs and deliver exactly what they want when they want it. Our marketing efforts have become more precise, personalised and efficient.” 

The role of AI

Forrester sees AI as a potential disruptor in the CDP market, driving a change from traditional data management practices, which can unlock real-time personalisation. Among the features Forrester says a CDP should provide are: data quality; streamlined data management; completion of buying groups; natural language access to metrics, segments and insights; and campaign and journey optimisation.

Generative AI (GenAI) is the biggest opportunity in the short history of this category to accelerate innovation in data and marketing processes.

Sportswear brand Castore – which partners with Andy Murray, England Cricket, Newcastle United Football Club, and a number of Formula One teams, including Red Bull – uses Klaviyo’s data store for its proprietary customer data. 

From the data Castore has within Klaviyo, the team can understand which products and ranges might interest a customer. The CRM team uses this data to segment those customers, working with Castore’s paid media team to target customers with the most compelling adverts for them on Google and social platforms. 

Castore data is fed into Klaviyo’s Smart Send Time feature, which it says has increased its campaign open rates, leading to more site visitors, more transactions and stronger customer retention.

It also uses Klaviyo AI to share products with consumers based on their shopping and browsing habits. By combining these features in Klaviyo, Castore says it can set up and execute smooth buying experiences from the word “go”.

“With Klaviyo AI, we can effectively deliver content that customers want to receive,” says Max Holland, Castore’s senior CRM manager. “That leads to stronger conversions and click-throughs, more sales on site and greater customer retention in the long term.”

Data regulation considerations

While many CDP products are cloud-based, there are some that offer hybrid or on-premise deployments.

Vikrant Gajbhiye, senior research analyst at Global Market Insights, says the increasing emphasis on data privacy and regulatory compliance will fuel the market growth. According to the latest market analysis from Global Market Insights, the CDP market is expected to record over 26.5% compound annual growth rate between 2024 and 2032, driven by the increasing demand for personalised customer experiences across various industries.

With stringent data protection regulations, such as the General Data Protection Regulation (GDPR), Gajbhiye says organisations are under pressure to manage customer data responsibly and ensure compliance. “CDPs offer robust data management and governance features that help businesses maintain data accuracy, security and privacy,” he adds.

Getting CDP on track

Omdia’s Clarke’s analysis of the CDP market suggests that there are more than 170 products, which is likely to lead to industry consolidation. She believes smaller firms will either combine forces to drive business growth or they will be acquired by larger, more established providers. IT decision-makers will need to do their homework on what they are buying and research the viability of the CDP businesses they shortlist.

Clarke recommends that IT leaders consider the challenges of implementation. Stakeholders need to understand what a CDP can do for them. She urges IT leaders to set objectives they want to achieve to deliver value from a CDP purchase. She also suggests that IT leaders may want to consider working with the professional services offered by CDP providers or external IT services firms, to help their organisation attain their CDP objectives.