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Beyond CRM: Why Retailers Need a New Approach to Data Management with a CDP

CRM VS CDP

The secret to success in retail sales and marketing is simple: provide customers with great experiences. Increasingly, these experiences need to be personalized and delivered at the right time and over the right channel.

Research from McKinsey backs this up, finding that 80% of consumers say they want personalized experiences from retailers. They are willing to reward companies that get this right: personalization at scale yields 20% higher customer-satisfaction rates, a 10%-15% increase in sales conversions, and a 20%-30% boost in employee engagement.

The key question facing retailers and grocers is how precisely they go about delivering these tailored and timely experiences. The first step is to understand what customers want at the individual level. As such, customer experience excellence is largely a question of effective data management.

The limitations of CRM

Many retailers address their data management needs through customer relationship management (CRM) software. CRM solutions store customer information on a database that can be used to improve customer service and support sales and marketing efforts.

However, as implementations of CRM systems have become mainstream, retailers and other organizations are finding that the software does not meet all their requirements. According to one poll, 50% of companies say that they cannot access customer data across marketing, sales, and service systems despite having a CRM database in play. Nearly one-third say that their customer data is incomplete, out of date, or inaccurate. Without these capabilities in place, personalized customer experiences will remain a pipe dream.

If retailers are to deliver the differentiated and tailored experiences people demand, and which drive business success, then they need to be able to ingest all data, in real-time, and from any source, and to be able to seamlessly share that data with marketing, sales, operations, and other business systems. CRM solutions are useful, but they are not designed for data management at the scale required by modern retailers.

 

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Enter the Customer Data Platform

Instead, retailers should look for a vertical-specific platform capable of providing live data collection and enabling a much greater range of use cases that have been possible in the past. This is where Customer Data Platforms (CDPs) come into play.

CDPs are the foundation of effective, real-time customer experience personalization in retailers and grocery businesses. The platforms help businesses bring all their customer data together from multiple on- and offline sources, cleanse that data, and use it to create 360-degree customer profiles. These profiles can then be enriched with attributes such as preferences, affinity, Customer Lifetime Value, and Churn Rate. Most importantly, simple APIs enable this data to be distributed right across the retail organization, enabling all business stakeholders to use this data for engaging loyalty programs, personalized offers, exclusive content, analytics, and dashboards, and offer exceptional customer service.

With CDPs, retailers can unlock true real-time activations. This is because CDPs can ingest and cleanse data in real-time, meaning that it is ready for immediate use in campaigns. CRM software can automate the population of a field or two of data, but this is a world away from the dynamic automation afforded by CDPs. The choice is clear: manage data (CRM) or use it (CDPs).  CRM databases have provided an important source of customer data. However, today’s retailers need access to much larger and richer datasets if they’re to understand their customers on an individual bases and provide against a broad range of customer experience requirements. Customer Data Platforms enable retailers to meet these new requirements and launch compelling marketing and sales activations that will resonate deeply with customers and keep them coming back for more. Now an important differentiator, soon CDPs will become mandatory to success in retail.

 

How to master your customer data

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