From Data Expiration to Dataception!
Data is on everyone's mind. The countdown from Third-Party to Zero-Party Data has already begun. What stage are you at? Where should you start? In this article, I look at how you should think about data and tech, CDPs, DMPs and getting the best out of your data and transformation initiatives. If we are now adopting the term "Zero-Party Data", will we have "Minus-One-Party Data" too?
Have you ever thought about adopting a hobby by first thinking about buying the gadgets or tech?
* I want to start running, I must buy a fitness tracker or a treadmill
* I want to do photography, I must buy a camera
* I want to write more, I must buy a keyboard for my mobile
* I want to play an instrument, I must buy a guitar
6 months to a year later, you are using the treadmill as a clothes stand and the guitar as a showpiece. The idea that we must first buy "shiny new thing" in order to do "something" is backwards. Start by doing, understand what you can and cannot do, and what you need to become better. Is it better equipment, a qualified trainer, more time in the week… think before you splurge on gadgets as you need to make an informed decision, not a blind one.
It's the same with data and digital transformation. How often do you hear in your organization that if only you could buy 6 or 7 different tools, you will attain the holy grail – data driven business decisions that bring in additional revenue and make customers happy? So you need to buy a CDP, a DMP, a CRM, a Marketing Automation tool and look at BI, ML and AI.
You definitely need some basics to get started. But if you don't already have a strategy and the right thinking embedded in your organization, the tools are not going to help.
Before you start buying and building, think of:
* The role that data is going to play for Customer Experience
* The problems to be solved
* What you can do even with the data you have now?
* What is preventing you from effectively using the current data?
* Who will sponsor this initiative and who will champion it?
* Where does the ownership lie?
* How will decision-making change as a result of investment in data?
* What skillsets do you need in your teams to derive full value from your investments?
* What is your data governance plan?
If you have done all that, the next thing on your mind will likely be – how do you build a single view of the customer, what are the data types and what technology do you need to support it? Should you get a Customer Data Platform (CDP) or a Data Management Platform (DMP)? Or both?
A CDP and a DMP have different functions though there is some overlap. A CDP is primarily for your First-Party Data. It collects information from the online and offline interactions of your customers and matches it to a single customer profile. The effectiveness of data matching plays a crucial role in determining which platform to select. A CDP can do this retrospectively (reverse stitching). So you can build a single customer view and segment your audience effectively, and then make that data available for other solutions such as marketing automation. Otherwise, you continually have to deal with data expiration – data that is no longer relevant and you can’t identify which data is relevant and which is not. Especially true in the Middle East with significant expat populations.
DMPs work mainly for new/ anonymous audiences, enable audience segmentation and have the ability to find look-alikes of your best customers who you can then reach via ad buys. That’s the short version. DMPs don’t have PIIs (Personally Identifiable Information) but are mainly dependent on Second and Third-Party Data that needs to be of good quality. There’s a lot of detailed analysis and information you can find on the merits of both and they complement each other so I won’t be going into that in depth. However, privacy concerns are definitely affecting DMPs. This is especially true in the light of GDPR and the privacy measures being introduced by Apple and Google. DMPs are also pivoting to privacy first models. But this further underscores the need to have good First-Party Data.
In a market like the Middle East, where companies still have data in silos and consequently is difficult to segment because of the challenges in building a single customer view, a CDP is a better starting point. For businesses where offline transactions are still a substantial share of revenue, it’s important to get First-Party Data in place and unify your data view throughout the customer lifecycle. Customers today don’t compare you only to your competition, they compare you to Amazon, Uber, Airbnb and many more based on their experience. Every personalized contact with your customer matters. If you want to go further into Martech stacks, read my earlier article on the subject.
There’s also a discussion around Zero-Party Data now, which is a subset of First-Party Data. Zero-Party Data is data that customers share with you voluntarily, through surveys or contests etc. Given that this is ultimately linked to an ID, how is it different from First-Party Data? It’s not different, it is essentially volunteered data as opposed to inferred data. I still think the term First-Party Data is good enough! The premise is that engaging content will encourage customers to share information with you and that information will be more accurate than even typical First-Party Data. Hence the idea of “conversational marketing” and offering customers something in return for the information that they share.
I wonder how easy this is going to be. Not the least because customer preferences can change based their own journeys and conversation marketing is in itself not that simple. If customers always responded to surveys and volunteered information, wouldn’t we already know a lot about them? Another key challenge will be how to keep this information relevant. Will the same customer answer questions at multiple points in time in order to build a consistent profile? How strong is the offer of “something in return” as we can see that people stop caring about over used methods e.g. loyalty points in many sectors? How strong is serendipity and impulse - buying things that a customer didn't think they really wanted and probably wouldn't have declared that they want to buy? Interesting times in the data world.
I am waiting for Minus-One-Party Data (Dataception?). Gathering customer intent and preferences by tagging their thoughts obtained through mind-reading chips. Not too far away given that the Chinese have already claimed that they have invented BCIs (Brain-Computer Interface Chips)!
This article was also published here.