The way brands approach customer identity and marketing has changed dramatically as privacy rules take hold, making CDP and CIAM strategic priorities.
A recent post by Ben Bloom of Gartner shined light on a rare topic in the CDP world: The cost and effort associated with building a first-party data asset, and the possibly diminishing returns of building a complex “customer 360” view.
Amid the hype surrounding the “cookie-less future” (albeit warranted by brands’ general lack of preparedness for it), the answer seems to be “collect more first party data with a CDP.”
While not wrong, the singular focus on data collection to make up for the scale and accessibility of third-party data misses the point. A better approach is based on the concept of data gravity.
Customer data & data gravity
Bloom correctly argues that the more you enrich the profiles in your data store, the more friction you create.
In a nutshell, while it may be relatively simple to go from A to B (moving from authentication to opting into first-party cookies, for example), getting to C and D (setting preferences, opting into a loyalty relationship, etc.) complicates things.
This is fairly obvious, but in the CDP boom we are living in, many brands are caught up in the notion that more data is better, and not considering that better data (and less of it) may be more impactful.
One of the lenses we can view this conundrum through is the concept of data gravity. Put simply, “data gravity” is when you reach a certain point in your collection efforts in which the more data you have, the more you attract.
Learn what matters today when managing customer data and how an effective strategy improves customer experience and boosts the bottom line.
The value exchange model
For example, the more I buy my groceries from Instacart, the better they know me. After the third time shopping with Instacart, I can basically pre-select a list of core items I’ve ordered previously, and consistently end up taking 75% of their “you might also like” suggestions before I check out.
They have me nailed. I keep giving them just enough shopping data, and they return an excellent experience. Instacart is amassing data gravity in the same way Amazon does: by appending my profile with the exact purchase and behavioral data needed to power next-better offer recommendations.
The basic model is a value exchange. I give Instacart both my weekly grocery business and the data related to it, and they save me countless hours shopping.
Brands looking to provision personalized experiences across channels need to think about what customers actually find meaningful. What’s the minimum level of value that needs to be exchanged to amass more data gravity – and the right data needed to power that experience?
For a delivery business like Instacart, knowing my address, stores I frequent, and items I tend to buy frequently are the core data driving experience. Instacart doesn’t need to collect 500 more attributes about me to provision my experience – just the kind of data needed to deliver it. Not more data, just better data fit to its use.
When first-party data overtook cookies as the top currency for marketers, we entered the CDP era. Discover CDP trends like CIAM that are rising.
Data gravity: Rethinking customer data collection
Brands that want to go beyond the “more is better” methodology and start to amass meaningful data gravity must consider a few things before they decide on the value exchange equation, however.
- Authentication: As discussed in my last post, no modern CDP strategy can begin without accounting for customer identity and authentication. The first value exchange with customers in the post-cookie world is giving them a secure and trusted way to provide their data. That means making CIAM part and parcel of a first-party data strategy. There’s no first-party data strategy without secure customer authentication, period.
- Consent & preferences: To get to the next layer of value, you also must have a scalable way of capturing detailed consent and managing preferences. This is today’s version of “permission-based marketing.” Thanks to GDPR and continuing privacy legislation, it’s no longer a marketing framework, but a real requirement. Enterprise consent and preference management enables brands to start a meaningful value exchange. As a brand, if you offer me something I never asked for, you’ve failed.
- Data governance & stewardship: With great amounts of data comes great responsibility. Even brands with strong technological capability to manage authentication and preferences need a strategy that defines exactly what types of data to collect, how they’re used, and who gets access. This is non-trivial. It goes well beyond buying software and requires carefully defining the benefits of creating a value exchange with the customer up front.
Companies that start their digital transformation with these three steps will be able to discover the actual cost of data collection and determine at which point the friction introduced in the process erodes, rather than adds, value.
Is more data better? This question will increasingly be answered by customers themselves. In the new world of first- and “zero-party” data, the answer is that customers will give you as much data as they receive back in real value.