Pursuing the right customer data strategy: 360 and a sky full of North Stars

February 03, 2022 Mark Ardito

If you have been using third-party data as a central component of your customer data strategy, you are not alone. Companies of all sizes have relied on this data to understand their customers, learn pain points, and create products that offer solutions. Now, as Google phases out third-party cookies in Chrome and Apple removes access to device identifiers, businesses must consider other strategies to engage with customers, improve customer satisfaction, and increase retention.

I was recently joined by Greg Kihlström, CX, EX & Digital Transformation, Coach, & Best-selling Author, to discuss customer data strategies with technology leaders in companies spanning a range of sectors. The conversation centered on the need to develop and implement a strategy that allows a business to gain intimate knowledge of its customers through brand-owned data in lieu of third-party data.

Here are key takeaways and actions that can help customer data initiatives thrive in a cookieless world.

Takeaways:

With the departure of third-party data, first- and zero-party data will be in the strategic spotlight.

Most companies are collecting first-party data (e.g., tracking the activities of a user on a website) and zero-party (e.g., filling out an online form) data to some degree. However, third-party data is still very much at the forefront, and this data is integrated into the other types to augment the view of the customer. As third-party data disappears or at least takes a back seat, companies will need to put first-and zero-party data front and center. Meaning a first party data strategy will be critical to succeed.

The way of the future in this area is a customer 360 data strategy.

This strategy allows a company to aggregate data from wherever it originates into a single source of customer profiles. This underscores the increasing importance of first- and zero-party data capture.

A customer data platform (CDP) is critical to an effective customer 360 data strategy.

Today a company can unify its view of customers, but it requires stitching together a lot of things that don't originate from its own capture activity. The third-party data that collects data about users' behavior across the web is going away. Enter the CDP, which not only handles this kind of data collection by design, but also acts as the foundation of a customer 360 strategy.

Compliance and data governance need to be brought fully in-house.

This may seem burdensome, since right now the third party data owners carry the compliance responsibility for what they capture. However, with first- or zero-party data that you own, you have greater control over privacy consent compliance. This means that you will be able to comply with regulations such as the EU’s GDPR, much easier. Also, if a compliance or consent issue arises, you will be able to resolve it effectively because of the information readily available to you.

Some parts of a customer 360 strategy are not yet ready to implement.

Though we know that customer 360 is the desired outcome, some capabilities are not matured yet. These capabilities are North Stars that companies should aim for with the capabilities available today:

Omnichannel personalization provides a personalized customer experience based on user behavior data collected from a range of channels.
Multi-touch attribution measures marketing effectiveness by accounting for all touchpoints along the entire customer journey.
One-to-one personalization is the most north of the North Stars. Being able to tailor engagement on an individual basis has immense business value in terms of loyalty, retention, and customer lifetime value.

Before assessing options for a CDP, answer key questions.

Understanding your data needs and achieving clarity around what technology you have and need are keys to determining your criteria for a CDP.

Answering these questions serves as a good start:

What data is reasonable to collect?
What is relevant data to ask customers to share?
What are they comfortable sharing?
Why should they share this data with you?
What customer data is needed by the marketing team?
How will you measure marketing effectiveness and multi-touch without third party data?
Where does relevant data currently exist in the company?
Are there data siloes preventing creating of a unified view of customers?
What technologies do you have in place that either directly relate to customer data collection or could be integrated to improve in-house capture capabilities?
What technologies do you need to approach a customer 360 situation?
What strategies put in place now will prepare for future technologies?

Actions:

When evaluating CDP options, consider these five points.

Different CDP solutions have different strengths and weaknesses. Look at these five attributes and assess how the solution under consideration

Data collection and ability to build a unified customer profile
Ability to create audience segments from data
The ability to predict and make or recommend decisions based on data
Reporting, an area where most CDPs underperform
The ability to integrate data from wherever it is sourced

Use an off-the-shelf consent management platform (CMP) to manage compliance.

A CMP is essential for managing regulatory compliance. The best strategy is to implement an off-the-shelf solution. The solution provider is in a much better position to keep track of regulatory changes and to update the platform accordingly.

Consider adding or augmenting a Direct-to-Customer (D2C) sales channel if feasible.

If a D2C sales channel is applicable to your business sector (e.g., consumer packaged goods), this can be a rich source of first- and zero-party data. A D2C channel allows you to build direct relationships with customers, which can cultivate trust and enhance loyalty and retention.

Prepare for the North Stars as you craft your customer 360 strategy today.

There are actions that can be taken now as first steps toward the North Stars. For example, identifying and deconstructing data silos are constructive steps toward achieving the unified customer view that characterizes a 360 strategy. As another example, segmentation is a steppingstone toward one-to-one personalization.

Are you ready to transition to a first- and zero- party strategy?

Learn about our readiness evaluation

The minimization or disappearance of third-party customer data can actually be a great advantage to businesses. Collecting and owning your customer data can allow you to experiment with marketing strategies that increase customer loyalty and advocacy. Gaining detailed knowledge of your customers will significantly deepen your relationship with them and offer invaluable insights to help drive your product design and innovation strategies.