Data is the Key to Knowing What You Don’t Know About Consumers
Data is at the heart of everything a modern business does, especially when it comes to delivering the best service and experience to customers. But the way businesses can and do use data is changing – because of the coming deprecation of third-party cookies, because of new regulations and industry protocol around privacy, and because of the technology businesses can use to collect, process, analyze and activate data. It’s a lot to prepare for at the same time, and it’s easy to see brands being left in the lurch, with less-than-reliable data on hand and without the right tools in the ad tech stack to help the business meet its objectives.
As businesses turn to what’s readily available to them, first-party data strategies have emerged as a powerful tool for understanding the buyer’s journey. But the challenge is effectively collecting, managing, and driving the most value from this data in order to understand both known and unknown consumers.
First-party data: Where it all starts
First-party data is any data that a brand has collected from their customers directly and with their consent. With a range of data points collected both online and offline, it can provide a rich and insightful view of consumers, but brands must understand which data types offer them the most value and know how to use them. The most relevant first-party data sources can provide insights for engaging target audiences with personalized messages.
Known knowns and known unknowns
Existing and loyal consumers form the backbone of any first-party data strategy. Collected through activities such as newsletter sign-ups, loyalty programs, purchases, and subscriptions, these consumers allow brands to track them via a unique identifier — such as an email address — that they have willingly provided.
Not all of the consumers engaging with a business and its properties are known entities, though. There are the unknown audiences: users who have engaged, visited a website without making a purchase, clicked on an ad, or performed some other action without providing personal information. They’ve clearly signaled interest in the brand but are visible only as anonymized data.
Here comes a regular, and here comes — who?
Collecting and processing data from all sources allows marketers to understand how customers move throughout the sales funnel and to connect the dots between known customers’ touchpoints. There are two key tech solutions that can assist with this:
- Customer Data Platform (CDP): These are commonly used to bring together siloed sets of data. With a varied range of features and capabilities available to brands, CDPs allow for the centralization of everything from email engagement to the SKU of products placed in a shopping cart for a single user.
- Data Management Platform (DMP): Similarly, these allow for the pooling of data, anonymizing and aggregating first-party data gathered from unknown user profiles into audiences. These audiences can then be analyzed, so marketers can draw insights that can improve campaign strategy and performance, while gaining new customers in the process.
Know your toolkit, and use it well
While DMPs are familiar to many businesses, CDPs remain underutilized across the industry at large. Surveys have shown most companies are not using CDPs to their full potential for processing data — and many aren’t even close. Many marketing teams are using CDPs mainly to bring together their data lakes, and less than half are using them as they’re intended — to process the troves of data available from all possible sources, including from product usage, social platforms, apps, offline properties (including brick-and-mortar stores), and third-party data vendors. Only 60% of marketing teams are actually mapping customer journeys through their CDPs. That’s a lot of potential left unrealized.
The heat is on for businesses to learn how to best process their first-party data – and indeed, third-party cookie deprecation is a big part of why CDP adoption has been on the rise. But implementing a CDP isn’t enough in itself. For one thing, businesses need to choose a CDP that does everything a CDP is supposed to do – which might sound obvious, but with any tech tools experiencing a new surge in demand, it’s worth verifying. For another thing, businesses need to learn what a CDP can do, and allow it to do its best work. Consider all possible sources of customer data — including offline sources, where there’s a lot of fresh data available from consumers returning to in-store shopping — and enable the CDP to drive core marketing functions.
Data sources and tech are stronger when brought together
The more that is known about your customer base as a whole, the better a brand can deliver relevant and personalized advertising. A fully optimized marketing campaign involves driving acquisition and prospecting, not just reaching out to existing customers.
The dream of all marketers is to get closer to the individual while maintaining the ability to aggregate anonymous data and target it inside one system. DMPs and CDPs can combine to make this a reality, without the need to rely on third-party cookies. But despite the cookie deadline being pushed back, there is no time to waste – marketers must act now if they are to build a data strategy that delivers both now and in the future.
Alex Theriault is General Manager for Spherical, a suite of CDP accelerator solutions at Lotame.