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December 14th, 2021

Why It's a Bad Idea to Play the Telephone Game With Your Customer Data

 

Without technology to handle customer data, marketing would be impossible today. Martech tools like Customer Relationship Management (CRM), Customer Data Platforms (CDP), Data Management Platforms (DMP), or Data Onboarders are essential for marketers to manage their relationships with millions of customers, and orchestrate the complex media campaigns aimed at reaching them across channels.

But those tools are also an enormous source of grief. In a recent post, my colleague Monica Pearson described them as a daisy chain of leaky buckets where four out of every five customer records gets lost or mismatched in the process. As bad as that waste is, there’s something that’s even worse: not trusting the one record that made it through unscathed. Let me explain.

Can you trust your customer data?

Marketing success is measured in part by branding metrics, and in part by outcome metrics. Understanding customers and prospects is fundamental to your success on both fronts. But how can you expect to achieve that understanding if all you have to go on is one out of five records? Data waste isn’t random. One data source might be less reliable or more outdated than another, or it might feature lesser-quality IDs that are more vulnerable to mismatches. Once all is said and done, there’s little chance that the one customer you end up with will be representative of the other four.

Think about it in terms of look-alike modeling. Say, for instance, you’re a retail bank, and simply by chance, all the customers you were able to onboard, target, and measure in your last campaign are 55 and older. You didn't do this on purpose, it's just the way the chips fell due to poor data hygiene and identity resolution upstream. What do you think your look-alike modeling is going to tell you? Do you give up on ever attracting younger customers? Do you stick to advertising on ‘oldies-but-goodies’ radio stations from now on?

To stay with metaphors linked to children’s games, I see today’s marketers not only having to play a game of leaky buckets with their customer data, but also a game of telephone: what goes in invariably gets distorted along the way. At the individual record level, every data conflict has the potential to weaken the reliability of that record (what do you do if your CRM, CDP, DMP, and Data Onboarder all give you a different primary email address for the same customer?). And collectively, you can’t count on the records that make it through to give you a reliable view of your true customer base and market potential.

While some uncertainty is to be expected in today’s complex, always-on, marketing world, the downstream impact of unreliable data on your customer retention and acquisition performance is undeniable. Thankfully, there’s a way to mitigate that risk. But before I get into it, let’s review how some of today’s most widely used martech tools are playing a game of telephone with your customer data.

This is how the martech stack is wreaking havoc with your marketing performance

CRM: The CRM platform is often seen as the first stop on the customer data journey. Marketers rely on their CRM platform to store all valuable customer identity and profile data, and it serves as the foundation for their data-driven marketing, sales, and support initiatives. The problem is, most CRM systems are riddled with holes and inconsistencies. The vast majority of records (90%) are incomplete, 20%-40% are duplicates, and it takes less than two years for 60% of the data to become obsolete. If you don’t do anything to improve the quality of the data in your CRM, you’re unlikely to get a chance to make up for it downstream.

CDP: A new and emerging technology, the CDP is a first-party data lake that centralizes customer data from all available touchpoints and systems. Quickly becoming the darling of the advertising and marketing ecosystem, the CDP is generally used to orchestrate omnichannel experiences to existing customers, and promote retention and loyalty in the process. Unfortunately, it doesn’t typically validate the accuracy or quality of your data before it gets used. Without the proper checks and balances in place, your data remains incomplete, inaccurate, and often bloated—resulting in a poor customer experience, and high data storage and management costs.

Data Onboarder: A data onboarder translate your CRM records into addressable IDs to connect them to programmatic and other digital channels. With average match rates in the 40%-50% range, this process produces one of the largest distortions to your customer data, and it’s about to get worse with the deprecation of third-party cookies and device IDs. As a brand manager, you shouldn’t limit your world view to customers you can reach programmatically, even if your match rate is 100%. But you should definitely think twice if the best you can do is reach barely half of them. Chances are, they’re not your best customers or most promising prospects.

DMP: The Data Management Platform (DMP), which many see as an outdated piece of technology, is still important in providing the segmentation, planning, syndication, and measurement functionalities that marketers rely on to execute their advertising campaigns. Many marketers will keep using their DMP until the last cookie is gone. But as the ecosystem of cookie-based publishers and platforms keeps shrinking, their campaigns are likely to be increasingly off-target, inefficient, and poorly representative of their brand’s real market impact.

Measurement & Attribution: Measurement is often fragmented and uneven across publishers, walled gardens, and tech vendors. The picture that emerges is often confusing, and marketers struggle to bring it all together into a cohesive attribution framework. If you only care about the media channels that you measure well, and dismiss those you can’t measure as well, you’re skewing your understanding of your brand’s impact and missing out on key opportunities. 

This game of telephone is hurting your bottom line

When the data that flows through your martech infrastructure is poor and unreliable, there’s a good chance that the customers you end up reaching are the wrong customers. And if you’re reaching the right people, you’re probably reaching them at the wrong time and with the wrong message (retargeting, anyone?).

Unreliable data is bad for customer acquisition too. When you transform poor customer data into addressable audiences at scale, you magnify the inconsistencies and inaccuracies present in the underlying data. The net effect is poor user experiences, and ultimately low returns on your ad spend. We’ve found that unreliable data typically affects 30% of sales and cuts your ROI in half. The viability of your data-driven marketing practice is at stake.

No more children’s games thanks to unified identity

The only way to address that enormous challenge, and mitigate risks going forward, is to unify your martech stack around a singular, consistent, and sustainable ID space. With a robust identity resolution framework in place to constantly clean up, repair, and enrich your data, you can establish a strong foundation for all your marketing use cases. And with the right identifiers across your onboarding and measurement infrastructure, you can activate and optimize those various use cases knowing that your decisions are rooted in real life—not some artificial composite picture that’s the sum-total of all your mistakes.

Industry analysts and proactive martech vendors are starting to refer to this telephone-game-busting solution as unified identity. It goes well beyond replacing today’s third-party cookies and device IDs. At Neustar, our unified identity solution is an overarching framework based on four key pillars:

Data hygiene: Marketers can use it to correct, update, and de-duplicate offline customer data records, leveraging Neustar’s identity resolution capabilities to reduce customer data inaccuracies by up to 40%. This results in much better audience data, targeting, and measurement accuracy.

Data enrichment: Marketers can use unified identity to connect to reliable second-party and third-party data partners, adding invaluable advanced demographics, psychographics, and behavioral datapoints to their customer records. With richer data on hand, their segmentation and targeting initiatives are much more likely to bear fruits.

Activation: With unified identity, marketers finally have a consolidated martech ecosystem at their disposal, with a straight line from CRM to audience syndication and beyond. No more undue data waste, and our clients typically save up to 20% right off the bat by consolidation data onboarding, enrichment, and syndication within their marketing stack.

Optimization: Unified Identity makes it possible for marketers to connect their legacy measurement solutions into a coherent set of unified analytics. No more tug-o-war between long-term planning and short-term media buying decisions. They can focus on using AI and machine learning to optimize their audiences and campaigns, knowing they're fully aligned with their organization's business outcomes.

Major brands across industries are already using our unified identity solution to boost the reach (5X) and return (2.5X ROAS) on their campaigns. Even more importantly, they're using it to insulate their marketing ecosystem from current and future market disruptions. It's time you stopped playing games with your customer data, and embraced the unified, privacy-centric, post-ID future of marketing.

Download The Future of Identity, the Ultimate eBook For Today’s Data-Savvy Marketer to learn more about how you might benefit from unified identity, and contact us to take your first steps.

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